Why is Bookkeeping Mandatory?

Bookkeeping is mandatory because :

1. Legal Requirement: The law in Singapore mandates businesses to maintain proper accounting records under the Companies Act and the Income Tax Act.
2. Tax Compliance: Accurate bookkeeping is essential for fulfilling tax obligations, including filing tax returns and paying taxes on time.
3. Regulatory Compliance: Regulatory bodies such as the Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Singapore (IRAS) require businesses to maintain records for regulatory purposes.
4. Financial Reporting: Proper bookkeeping ensures the preparation of accurate financial statements, which are required for statutory reporting and compliance.
5. Transparency and Accountability: Transparent financial records promote trust and confidence among stakeholders, including shareholders, investors, and creditors.
6. Audit Requirements: Businesses may be subject to audits by regulatory authorities or external auditors, and comprehensive bookkeeping facilitates these processes.
7. Business Decision Making: Maintaining organised financial records enables businesses to make informed decisions based on financial analysis and insights.
8. Avoiding Penalties: Failure to comply with bookkeeping requirements can lead to penalties, fines, or legal consequences imposed by regulatory authorities.