If you are a business owner in Singapore, or you are managing the accounting practices of a business, you will inevitably require accounting expertise. This section has been designed to answer the questions and queries that you may have, and provide you with insights into the general expectations and issues of accounting practices in Singapore.
Many business owners in Singapore, particularly owners of SMEs, start their businesses based on great ideas or innovative solutions. Few business owners consider the critical contributions of proper accounting management as a core aspect of their business — in fact, many business owners would prefer never having to deal with accounting. In reality, proper management of accounts is an integral aspect of business in Singapore, as it is in many other parts of the world.
It is also a legal requirement for all business entities in Singapore to maintain proper accounting records, and it’s worth taking the time to understand what’s required, and how professional accounting firms in Singapore can help make it much easier to comprehend and oversee.
Is account keeping required by law in Singapore?
The Singapore Companies Act states that all companies have a duty to keep accounting records and to prepare a balance sheet and profit and loss account annually. These accounts have to be presented at the AGM (Annual General Meeting) by the directors of the company. Singapore law also imposes penalties on companies who do not comply with this requirement. Professional accounting firms in Singapore will have the expertise to deal with such matters and help companies to manage such mandatory stipulations.
What does the term ‘accounts’ refer to?
In accounting terminology, the term ‘accounts’ refers to:
the trading and profit / loss statement of the company
the balance sheets of the company in a given financial year.
What types of records should a business entity keep?
Business entities in Singapore are required to keep three main types of records as part of their accounting practices and procedures:
These are documents that show the record of all transactions in the company, and can include receipts, invoices, or other documents that are issued or received from your customers or suppliers. Source documents are important to retain and record. In the event of a dispute, source documents can be invaluable in tracing the issue. Professional accounting firms in Singapore can retain these documents for you through record-keeping means that comply with the laws of Singapore.
These are records of your assets and liabilities, revenue and expenses and profits and losses — and can be kept in manual or electronic form. Accounting records may be subject to audits in Singapore. Professional accounting firms in Singapore are able to manage these records on your behalf to ensure compliance with audit or other requirements.
These are statements issued by your bank(s) detailing account activities and balances in your corporate bank account(s). Bank statements are usually issued on a monthly basis. They record the financial health and activity of your business for that particular month. Bank statements may be subject to audits in Singapore. Bank statements may also be required when making applications, including but not limited to travel visas, loans, tenders, grants, registration of activities, and subsidies from the public and/or the private sector. Professional accounting firms in Singapore can, among other things, help you to analyze your bank statement to properly posit your business’s financial health and spending trends.
Any other transactions connected to your business activities should also be recorded. In Singapore, the law for account keeping (under the Income Tax Act and the GST Act) require companies to keep records for a period of at least 5 years. In addition, there may be other requirements to comply with that you may or may not be aware of. It is important to note that SMEs have their own compliance criteria that must be met, whether or not the SME is aware of these criteria. Professional accounting firms in Singapore provide relevant advice on such matters to SMEs. RCW provides an excellent SME accounting package that is designed for businesses with limited cash flow and revenue.
How do I go about managing and recording my business accounts?
Depending on their sizes, companies’ accounting departments can consist of several people, or even just one person. In many SMEs, an office administrator, director, or business owners / partners also takes on the responsibility of account keeping. As long as the person(s) in-charge is / are aware of Singapore’s accounting requirements and are able to satisfy relevant criteria, the business can manage its own record keeping and accounts. If, however, the business does not possess such expertise in any person, it is highly advisable to seek advice or retain the services of a professional accounting firm in Singapore. It is important to note that while the law does not make it mandatory for businesses to use the services of accounting firms in Singapore, there are penalties for not complying with proper accounting requirements and ignorance or lack of experience are not justifiable reasons in a court of law. Choosing to work together with a professional accounting firm in Singapore can help your business to fully comply with the law, and even save you money through strategic accounting expertise. RCW, like any professional accounting firm in Singapore, is fully aware of the budgets and cash flows of SMEs and works with small and large businesses alike to create a perfect solution that can help you to understand your finances and grow you business.