Short answer - this is assuming that you are a Singapore citizen or PR... otherwise, things work quite a bit differently.technickly wrote:Dear all,
been googling and searching high and low for answers, decided that this is the best place as i've read through some of the threads and I really hope some of the self-employeds/professionals here can offer some advice.
Short intro of myself, i'm 26 this year, diploma holder with no business/accounting background, or studied any business courses. I plunged into business just last month with my partner. If it helps, it's actually a Pasar Malam business. Didn't set up a company/sole proprietorship/partnership as I'm not too sure which to choose.
If 2 people are involved in the business, is it compulsory that we set up a partnership business? Is there any possibility that I can actually set up a sole proprietorship but still pay him the profits accordingly through some other means which is 50-50 sharing?
And also, if let's say I set up a proprietorship now, can i actually set up another one in the future if let's say I want to start another business which is not related to the first one? Which in short, what I'm trying to ask is can i have the following,
1. Sole proprietorship followed by 2nd sole proprietorship?
2. Partnership followed by proprietorship for 2nd business?
3. Sole proprietorship followed by a partnership for 2nd business?
4. Partnership followed by another partnership with another partner for 2nd business?
Any percentages of profits that you pay out are simply additional expenses to your SP. Using your numbers, your P&L looks like:technickly wrote:First of all, thank you for the really detailed explanation.
Yes i am a Singapore citizen. Ok if i were to pay my partner 50% of the profits, how do I report the profits accordingly? Let me give an example to illustrate my question.
My sole-proprietorship business is as follows:
Whole year gross profit = $150,000
Salary each/annum = $72,000 (assuming 3k/month each)
Balance: $78,000
After deducting expenses, and claims, and all other miscellaneous, let's assume the leftover profit is 50k. So 50% profit that would be 25k each.
How do I report to IRAS then? I have to pay him 50% profit, but because it's a sole proprietorship, IRAS might assume that I earn a total of 50k for the whole year, but in actual fact i only earn 25k (after paying my partner the other 25k)
Hope I somehow made sense.
ACRA is the business registration organization for the Singapore government. All businesses and companies must file an annual report of activities for the prior year, and, they must file if there has been a material change. For example, a company would have to report a new director, a SP would have to report if it was sold to another person.technickly wrote:Hi there, thank you for the prompt replies once again.
Sorry may i check if the following is correct:
So I have 2 places to report to,
ACRA is for me to report my accounts.
IRAS is for me to report my personal income?
My apologies, i am really confused.
In short, does it have to be very accurate? Can i just estimate the COGS?technickly wrote:Also, may i ask,
Do I have to do accounting myself? Or do i have to hire a part-time book-keeper?
Because I'm pretty confused with the accounting part. I sell about a variety of 200-300+ different type of items, and I don't run a physical shop, that's also why I don't have a cashier machine or a system to track the movement of goods.
So in that case, how do I actually calculate COGS aka Costs of Goods Sold.
For example, start of the year, I use 100k to buy goods.
Sales generated: 500k for the entire year.
At the end of the year, I have to physically go count my leftover stocks? In order to arrive at the COGS?
But my COGS will not be accurate, as a particular product, can be a cost price of $5, and maybe $4.45 at different times of the year.
Which makes me wonder how do those fruit shops do accounting?
Since durians have fluctuating prices, fruits have fluctuating prices as well, and spoil fruits that aren't sellable? They also do not have a cashier with a cashier machine. Please bear with me, I'm trying hard to figure things out and visualize the entire process. And also that's why I am here to seek help. Thanks in advance.
You can do all the accounting yourself. Or, you can hire an accountant or a bookkeeper to keep the records for you.technickly wrote:Also, may i ask,
Do I have to do accounting myself? Or do i have to hire a part-time book-keeper?
Because I'm pretty confused with the accounting part. I sell about a variety of 200-300+ different type of items, and I don't run a physical shop, that's also why I don't have a cashier machine or a system to track the movement of goods.
So in that case, how do I actually calculate COGS aka Costs of Goods Sold.
For example, start of the year, I use 100k to buy goods.
Sales generated: 500k for the entire year.
At the end of the year, I have to physically go count my leftover stocks? In order to arrive at the COGS?
But my COGS will not be accurate, as a particular product, can be a cost price of $5, and maybe $4.45 at different times of the year.
Which makes me wonder how do those fruit shops do accounting?
Since durians have fluctuating prices, fruits have fluctuating prices as well, and spoil fruits that aren't sellable? They also do not have a cashier with a cashier machine. Please bear with me, I'm trying hard to figure things out and visualize the entire process. And also that's why I am here to seek help. Thanks in advance.
I will preface my answer with, "You are beginning to ask questions very specific to your business. You need to engage a CPA to get proper answers, as you will want to ensure that you are following GAAP for your circumstances. Failure to do so may result in audits and dis-allowances of expenses."technickly wrote:Ok thank you so much for the detailed reply, I've a better idea on what to do now.
Anyway because I order goods from other countries, the currency fluctuations, how do I consider these currency fluctuations on top of cost prices?
For example, the same product can be 10Ringgit, at the exchange rate of 3.03
And 2 months later, the same product can be 15 Ringgit, at the exchange rate of 2.80.
And also shipping charges, and GST, do i take into consideration into the cost prices? Or should they be calculated differently under costs incurred by the business?
I hope I'm not asking too much
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