Understanding Financial Year End in Singapore

Your financial year end or FYE is a very important aspect that you should pay attention to if you are running a business or manning a company.

It may seem like a mere date on the calendar, but your company’s FYE has far-reaching implications. Learn more about this concept so you’d have a bird’s eye view of its significance.

What is a Financial Year End?

FYE represents the last day of a company’s accounting period (the interval for completing a business’s accounting cycle), which usually recurs every 12 months.

Your company, like any other businesses established in Singapore, is not bound to end its financial year on 31 December. You can choose any date that’s convenient for you.

Accounting periods can be either 12 months or 52 weeks. Your FYE differs for both cases. If you opted for a 12-month AP starting 1 January 2024, your FYE will be 31 December 2024.

On the other hand, if you choose to have a 52-week AP that starts 1 January 2024, your company’s FYE will be 30 December 2024.

Choosing Your Company’s FYE

As mentioned, you are not limited to a single date for the financial year end. Common choices of many companies are 31 March, 30 June, 30 September, and 31 December.

Decide on your FYE carefully because it determines when your corporate filings and taxes are due every year. If your business is a private company, you will be required to:

• Hold your Annual General Meeting with six month after the FYE
• File your annual returns within seven months after the FYE

Refer to the illustration below. It’s a sample of an FYE and when you should conduct your AGM and AR for the specific FYE.

Refer to the information and the second table below if you have a private or a public non-listed company with share capital that maintains a branch overseas.

• AGM is due six months after FYE
• AR is due eight months after FYE

Factors You Should Consider When Choosing Your FYE

You might want to think about the following factors when finalising on your financial year end.

1. Choose a date that aligns with the natural cycle of your business. For instance, you have peak sales seasons, right? You identify when these are and have your FYE after that period.
2. Also consider the timing of tax returns and how different FYEs might affect your tax planning and cash flow.
3. It might be beneficial to align with industry standards too, especially for comparative purposes.
4. If you want to maximise tax benefits and you have a newly incorporated company, you can leverage the Tax Exemption Scheme for New Start-Up Companies. Set your FYE on the last day of the 11th month or a date close to the 12th month from the date of incorporation.

Your choice is not just a formality. It can have real implications on your company’s operations and finances. So decide carefully.

First Financial Year for New Companies

The primary rule is that, the first financial year of your company should not be longer than 18 months unless the Registrar otherwise approves. Any period longer than 12 months will be assessed as two independent periods.

So if you’ve started on 31 December 2024, you can choose a date like 31 December 2025, or 31 March 2026. Every subsequent financial year starts immediately after the previous one ends and lasts for 12 months.

Changing Your Company’s FYE

Before you can do so, you must notify the Registrar if you wish to make changes to your FYE. They may modify the FYE for the current or the immediate previous financial year.

However, you cannot change your company’s FYE if the statutory deadlines for the following requirements have elapsed.

• Holding of AGM
• Filing of AR
• Submission of financial statements

ACRA’s approval will be needed for a change of FYE if…

1. The change will result in a financial year exceeding 18 months, or
2. The change of FYE happened on or after 31 August 2018 for an FYE ending on or after 31 August 2018, and it’s within five years from the end of the previously changed FYE.

Best Practices for Managing Your Company’s FYE

Here are some best practices you can follow to have smooth company operations and compliance.

1. Start preparing well in advance. Are your financial records up-to-date and accurate? If not, start from there.
2. If everything’s too much to bear, consider hiring an accounting service provider in Singapore to help with year-end tasks and compliance.
3. Conduct regular internal audits, as this can help identify and rectify discrepancies before the FYE.
4. Make sure that all financial statements are reviewed and reconciled.
5. Submit all required documents to ACRA and IRAS on time.
6. Keep shareholders and other stakeholders informed about the financial health of the company.
7. Use the year-end review to set financial goals and strategies for the upcoming year.

Common Mistakes to Avoid when Managing FYE

The following are dire mistakes that you might commit unknowingly, especially if you overlook the best practices part.

1. Late filing – missing the deadlines only means you are due for paying penalties/fines.
2. Inaccurate records – failure to keep them accurate and updated; it can cause errors in your financial statements and tax filings.
3. Ignoring changes in regulations – not staying updated with the most recent changes in regulations and compliance requirements means you’re not equipped with the right information. The result? Non-compliance still.
4. Lack of assistance from professionals – trying to manage everything internally without professional help is like a bombing waiting to blow off. Don’t risk your business’s financial health.
5. Poor communication – not effectively communicating with stakeholders regarding the financial health and performance of the company may cause misunderstandings and mistrust in corporate management.
6. Inadequate planning – as they say, failing to plan is planning to fail. No business owner wants rushed and disorganised financial processes. Mistakes will be all over the place.

Conclusion

Business owners and companies in Singapore must be fully aware of this seemingly trivial information like the financial year-end. It creates a big impact when neglected.

But when you outsource your accounting processes to professionals, you can rest assured that your company is in good hands. Your financial health impacted by their accurate services will reflect how successful and sustainable your business is in the long run.