Incorporating a company doesn’t end with deciding on a company name and paying a registration fee. In fact, there’s plenty of paperwork and checks involved, even for a country as business-friendly as Singapore.
Upon incorporation, you must comply with the Companies Act and other statutory requirements to avoid hefty penalties or legal repercussions. This also ensures good corporate governance for your business. From balance sheets to submission of statutory financial statements, here is your guide to the financial reporting and tax compliance requirements for companies in Singapore.
Determine your accounting period
First, determine your company’s accounting period, or Financial Year End (FYE). Your company’s FYE does not need to coincide with December 31. However, most companies go with the end of each quarter – March 31, June 30, September 30 or December 31. New start-ups may consider keeping their FYEs within 365 days to enjoy tax exemptions for the first three Years of Assessment (YAs).
Appoint an auditor
Upon incorporation, your company must appoint an auditor within 3 months. However, your company may qualify for an exemption if it satisfies any two of the conditions below for the last 2 FYEs:
- Total annual revenue ≤ S$10 million
- Total assets worth ≤ S$10 million
- Number of employees ≤ 50
Publish your UEN
Like how each Singapore citizen has a NRIC number, your Unique Entity Number (UEN) is the standard identification number for your entity. From filing corporate tax returns to applying for permits, your UEN helps you interact with government agencies conveniently. Under the Companies Act, you are required to publish your UEN on all letters, statements of account, invoices and notices.
Keep business particulars accurate
Companies in Singapore must maintain the latest business particulars in BizFile+. If your company is changing its business activity, business address, or business owners, you must update the Accounting and Corporate Regulatory Authority (ACRA) within 14 days. There is no fee to file these changes. However, a penalty may be imposed for late notification. To appoint or withdraw a business owner, you will require endorsements from other business owners, if any.
Obtain a business permit
Even if you have registered a business, it does not mean you can begin operations. Businesses such as hotels, spas, real estate, shipping and financial services require a special license before they can operate. For instance if your business involves importing and exporting, your company must be registered with Singapore Custom upon which you will obtain a Central Registration (CR) number.
While applying for a permit may be easy and straightforward, it is usually a good idea to engage a professional corporate services provider to ensure you are on the right track and save you time.
Open 3 hours a day
Once incorporated, your company must have a registered office address to which all communications and notices may be addressed to. It should also be open and accessible to the public for a minimum of three hours during business hours each day. Failure to do so is an offence.
File corporate income taxes
All companies in Singapore are taxed on the income earned in the preceding financial year. This means that income earned in the financial year 2019 will be taxed in 2020. The prevailing corporate income tax rate is 17%.
Your company will be required to submit two corporate income tax forms to the Inland Revenue Authority of Singapore (IRAS) every year:
- Estimated Chargeable Income (ECI), within three months from your company’s first FYE.
- Form C-S/ C, which must be submitted by 30 Nov each year, or 15 Dec if you e-File on myTax Portal.
However, these requirements may be waived if your company meets certain criteria.
Prepare employees’ tax forms
As an employer, you will be required by law to prepare the necessary forms for each of your employees such as the Form IR8A, Appendix 8A, Appendix 8B or Form IR8S (where applicable) by 1 March each year. Your employees will then file their taxes based on the information you provide in these forms.
Alternatively, register your company for the Auto-Inclusion Scheme (AIS), which ensures that you submit your employees’ employment income information to IRAS electronically. Come March, you then simply have to inform your employees of their respective filing obligations.
Register for GST
Goods and Services Tax (GST) is a tax charged on the import of goods, as well as all supplies of goods and services in Singapore. The prevailing rate for GST is 7%. Most of your business’ sales in Singapore involving goods and services, such as computer software or marketing services, are taxable. These are known as taxable supplies.
If your company’s annual taxable turnover exceeds or is likely to exceed S$1 million from the sale of taxable goods and services, you will need to register your business for GST.
From 2019, you may monitor the value of your business’ taxable supplies on a calendar year basis instead of a quarterly basis. Your business is required to commence charging GST from its effective date of GST registration.
You may also choose to register for GST voluntarily, which requires approval from IRAS. Once approval is given, you must remain registered for at least two years.
Register with CPF
The Central Provident Fund (CPF) is a compulsory pension fund scheme in which your company and your employees contribute a percentage of their monthly salary to the fund. CPF contribution by employers is mandatory for all local employees who are Singapore citizens or Singapore permanent residents earning more than S$50 a month. Work and employment pass holders, however, are exempt from CPF contributions.
As soon as you intend to hire your first employee, you should apply to submit your contribution details to CPF. To apply, you will need your SingPass or CorpPass and UEN. Upon approval, you will receive your CPF Submission Number (CSN). The CSN must be quoted when making CPF-related transactions such as paying CPF contributions or correspondences.
Your company will also be required to contribute to the Skills Development Fund (SDF) for all its employees. The levy goes up to the first S$4,500 of each employee’s total monthly wages at a levy rate of 0.25% or a minimum of $2 (for total wages of $800 or less), whichever is higher.
Hold Annual General Meetings
An annual general meeting (AGM) is a way for your company to present its financial statements and accounts to shareholders, and where shareholders can enquire or discuss the financial health of your business.
All companies in Singapore are required to hold Annual General Meetings (AGMs), except if they send financial statements to their members within five months after the FYE. Companies also need not hold AGMs if all the members pass a resolution to dispense with the meetings.
Submit annual returns
All Singapore-incorporated companies must submit their annual returns to ACRA. Information required when filing the annual return includes company details, shares, financial statements and where applicable, date of AGM. If you own a sole proprietorship, partnership, or limited partnership, you are not required to file financial statements with ACRA.
Engage a One-Stop Corporate Solutions Provider
To be effective at governance, consider engaging a one-stop professional corporate service provider that can provide you with all the support you need. Services may range from keeping and maintaining of statutory books and registers, to helping you meet the various statutory compliance deadlines, as well as the preparation of AGM documents. Besides leaving you with more time and resources to focus on your core business, this ensures that your start-up would never miss a submission or statutory filing.
Corporate Services Singapore offers a complete suite of solutions to ensure that your business runs smoothly from Day 1. To keep up with the latest regulatory updates, give us a call at 6602 8286 or email us at firstname.lastname@example.org today.