Accounting and the Success of your Online Business

Like it or not, your small business online is going to outgrow your expectations of remaining small. To be successful, you will need to be consistent though. Ever since the rise of the Covid-19 pandemic, most businesses are taking their “existence” online. Businesses which solely relied on physical business, will now jump on the “online” band-wagon.

Again, like it or not, your tax regime is going to find a way on how to tax you. The simple question is, are you ready? Will you be ready to exhibit your online business transactions properly when IRB calls you for an audit?

As you must know, it is our responsibilty to pay our taxes. Otherwise, our country won’t be able to pursue an expansionary fiscal policy. A fiscal policy plays the role in stabilising our country’s economy.

To make sure that our online business enjoys sweet success, we will need to make sure that we have a proper accounting system up and running. You may thinks that it is going to be boring and costly to maintain an accounting system. However, you can talk to us as we have a system exactly how you need it to be: affordable, user friendly and easy to use.

Apart from getting ready for IRB and making sure your business succeeds, here are some points you should know about accounting systems:

1. First and foremost, if you are not familiar with accounting and what IRB wants to see in your business, get yourself an accounting system. You can talk to us and we will be glad to assist you in this as we have multiple choices for you to choose from.
2. An accounting system assists you in tracking your cash flow. You will need to know that your business is making money. And the easiest way to see this is to watch your cash flow. You will also want to know if your business can pay off it’s creditors. Otherwise, your business is going to face liquidity issues (Even though you may think your business is small and did not get past “Micro-enterprise” stage).
3. An accounting system will also assist you on how to count your inventories. This inventory system will also help you count all the materials you use to build your product. You must also make sure that costs for wrapping or packaging your product is also accounted for. Please be highly aware that your inventories equals money. You will eant to keep a close tab on this point.
4. An accounting system will assist you understand your costs. As you may know, cost mof goods sold are direct costs to your sales. After minusing out our direct costs, you will want to know what is your Gross Profit Margin. Consistency in your Gross Profit are one of the key highlights to the health of your business. Please keep this in mind.
5. After ubderstanding your gross profits, an accounting system will assist you in computing your nett profit margin. This is after you calculate all other expenses in your business. You will also want to make sure and understand how much everything else is costing you. After minusing out your other costs from your gross profit, nett profit is then realised.
6. An accounting system can definitely assist you in figuring out your break even sales requirements. As you may be aware, budgeting and planning are important parts of running a business. You will obviously want to know whether your business is going north or south and preparedness is vital.
7. On tax, an accounting system will assist track your sales and profits before tax. After knowing your break even point, an accounting system assists you in the calculating what is left after minsing tax. For your awareness on tax regulations, there are tons of accounting rules around when to recognize revenue. The timing for when to recognise sales and expenses can get very complex.
8. An accounting software will assist in stting up proper tax rates for your customers. Even though there is no longer any GST in Malaysia, you must be aware that there is SST. A fully fledged accounting system will take care of this.
9. An accounting system assists in planning your tax. As said earlier, we need to be ready for our tax. Malaysia practices a Self Assessment System where we will need to assess our own income taxes. We will want to make sure that we declare accurate amounts of our income. Penalties can be harsh if we are found to be declaring inappropriate figures to IRB.
10. An accounting system will assist us to understand our financial positions or Balance Sheet. A balance sheet illustrate 3 main points of our business which are our assets, liabilities and the equity of our business. Multiple finance ratios could be utilised to compute the health of your business. An accounting system could prepare the data needed for the ratios.

Even though it is not compulsory for us to get an accounting system, we could spare ourselves from future headaches if we get one up and running in our business. Customer trusts will also increase if our customers knows that we have a system. Futhermore, there are lots of additional accounting rules and tricks that can help you save money at tax time.

To know more, kindly do not hesitate to contact us via direct phone call or you can WhatsApp us at +06.011.359.11.377