The purpose of starting a business is to make a profit, so all businesses are keeping financial records to monitor their income and expenses. Like other countries, in Singapore also a business should file tax returns depending on its income and provide financial statements to the designated government agencies. Since many business owners do not have a financial background, they will have to hire the services of an accountant to do the accounting and taxation work for the business. The business can either hire a full-time accountant paying a salary or outsource the accounting work.
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Business owners would like to evaluate the pros and cons of each option before taking a decision. However, for most startups, small and medium businesses there are many reasons why an outsourced accountant is better than hiring in-house. One of the main reasons is that for financial and accounting work, high levels of accuracy, compliance are required, and any kind of mistake could be very expensive for the business. Hence the business should only use the services of a competent, experienced accountant who is updated with latest laws and regulations.
Most of the startups and small businesses have low revenues, so that they cannot afford to pay high salaries. The salary paid will depend to a large extent on the experience, skills of the employee, so the small business will often only be able to hire comparatively inexperienced staff. There may be no one to train the staff in the small business, so mistakes may be made. Also since the small business or startup has only a few customers, and limited revenues, there may be only a few transactions in a month. So the in-house accountant may not have any accounting related work for most of the time, though the business has to pay a full salary.
On the other hand, accounting service providers usually are founded by individuals who have many years of experience in provide business accounting services. Most of their staff have accounting related qualifications and are also well trained. Since the business is only focusing on accounted and related services, they are extremely proficient in all the accounting and tax laws, loopholes. They will also have systems in place to ensure that they are updated with the latest accounting, tax rules and regulations, filing the returns of their clients as specified by the government laws.
The accounting service provider will also incorporate the best accounting practices in the services which they provide to their client. They have the latest accounting and taxation software installed for calculating taxes, generating financial statements. To ensure that there are no mistakes, they will also ensure that the calculation and other work done by one staff member is checked by another staff member before it is submitted to the client or government agency. Since the service provider has many clients, their fixed cost is distributed among all the clients, and they can offer the service at a low cost.
Hence, for better quality and cheaper accounting services it is often advisable to outsource the accounting work to a reliable service provider.