Annual Filings Needed for Singapore Companies

Annual Filings Needed for Singapore Companies

Preparation of Financial Statements

You are required to prepare your annual financial statements in accordance with the Financial Reporting Standards of Singapore and it should be based on your company’s financial activities during the accounting year. It is highly recommended for companies with medium to large number of accounting transactions each month to perform monthly bookkeeping to keep your ledgers in order. However, if the accounting transactions are small, bookkeeping can be done on a quarterly or annual basis. Financial statements should include Statement of Comprehensive Income, Cash Flow Statement, Statement of Financial Position and Statement of Changes in Equity. This guide will let you have more information on the annual filings needed for Singapore Companies.

Filing of Estimated Chargeable Income (ECI)

Revenue amount and Estimated Chargeable Income must be declared by filing the ECI form with Inland Revenue Authority of Singapore within the 3 months of the Financial Year End for the company. Even if the estimated ECI is zero, companies are still needed to file a “Nil” ECI.

Audit of Financial Statements

When the preparations for the financial statements are ready, the company might be required to have its financial statements audited if the company meets any 2 of the following 3 conditions:

• Total annual revenue exceeding S$10 million;
• Total assets exceeding S$10 million; or
• Has more than 50 employees

Company will be assessed on a group consolidated basis if the company is part of a group.

Annual General Meeting (AGM)

Every company in Singapore must hold an Annual General Meeting once every calendar year. Following rules apply to AGMs:

• First AGM must be held within 18 months of its incorporation;
• No more than 15 months between the subsequent AGMs;
• Accounts need to be prepared and presented up to a date not more than 5 months before the AGM;
• Members of private companies with voting rights can dispense with AGMs if they came up with a resolution during a general meeting.

Filing of Annual Return with ACRA

Within 1 month of the company’s AGM, every Singapore Company must submit an Annual Return with ACRA. It must include particulars of the company officers, auditors and registered address. Company’s account is governed by the applicable rules here.

Filing of Annual Tax Return with IRAS

By November 30, every Singapore Company must file its annual tax return with IRAS. Preceding year basis is adopted for taxation. Preceding’s year financial year ending profits will form the basis for filing the tax return in the current year.

Directors of the company are accountable and have to comply with the annual filing requirements. It is an office and they can be fined if they don’t comply with the filing requirements.

Singapore private limited companies must do annual filing and it will apply to both active and inactive companies.

For an overview, please view Compliance Requirements for Singapore Companies.

Accounting Practise: Preparing Balance Sheets

The preparation of balance sheets is one all accountants should master as an accounting practise, since this process is one that will require performing frequently. Balance sheets can be considered amongst one of the major financial statements that are produced after all. If you are beginning with basic accounting practise, here’s what you should know about the process:

Accounting balance sheets represent the financial position of a corporation at a specified end of a certain date- all transactions spanning through the set end date is recorded and reported. Accounting balance sheet information allows creditors to keep track of what the corporation currently owns, and what it still owes to other relevant parties. This is also the information required by bankers to gauge if the corporation qualifies for more credit or more loans. As basic accounting practise, focus on three important aspects in the overall formula used- Liabilities, the Owners’ Equity as well as Assets. The total amount of assets a corporation has is equivalent to the sum of both it’s liabilities and the Owners’ Equity.

Assets

Assets are resources the corporation acquires through the process of transactions. These resources typically own future economic value that allows accountants to measure and express through dollars. Assets can also include costs that are paid in advance but not expired, for example: Advertising services. Asset accounts typically contain debit balances, where contra assets contain credit balances.

Liabilities

Otherwise known as corporate obligations, these are currency owed to the company’s creditors for transactions. Liabilities are either treated as a contributing source of a corporation’s assets, or a claim against the corporation’s assets. They can also be the currency that is received in advance for future products or services. These liability accounts usually contain credit balances, whereas those with debit balances are referred to as contra liabilities.

Standard accounting practise allows corporations to term liabilities as commitments (where liabilities are only considered on balance sheets when the services/goods are received), potential liabilities ( product warranties, loan guarantees, lawsuits) and long-term liabilities ( loans that are paid through monthly payments over a period of time).

Owners’ Equity

The Owner’s Equity or Stockholder’s Equity is used when referring to the corporation’s book value, where the asset amounts reported are a sum between the equity as well as liability amounts. Depending on the nature of the corporation, different terms apply- sole proprietorships make use of the Owner’s Equity where Stockholder’s Equity is often used for corporations with multiple stockholders. Both accounts should normally carry credit balances.

An owner’s equity is typically represented with either two or three accounts on the accounting balance sheet. A stockholders’ equity however, would be represented in a section of the balance sheet through considerations like treasury stock, accumulated comprehensive income, paid in capital, and retained earnings. Revenues earned and gains typically increases the owner’s equity while expenses and losses causes it to decrease. For corporations performing services and increasing assets, the equity increases when the service revenue account is closed at the end of the year.

These are the accounting basics to keep in mind when preparing balance sheets. Different accounts contain different sectors to refer, doublecheck and report on. Make sure to pay attention to these details when preparing your balance sheets and use the notes or foot notes section of balance sheets to inform or address any additional information that facilitates better comprehension and analysing of the overall financial statement.

All To Know About Preparing Cash Flow Statements

Another part of accounting basics that all accountants should take care to remember would be the procedure of cash flow statement preparation. If you are a beginner with accounting basics, here are some things to be acquainted to:

A comprehensive cash flow statement should involve the cash that was generated/used in operating, investing, supplemental information as well as financing activities. As a standard accounting practise, each different sector can be reported with emphasis on different formats since their focus will be on different factors. All accountants are advised to carefully monitor the corporation’s activities so as to accurately prepare their cash flow statements.

One of the general accounting basics often observed and practised in cash flow statement preparation would be inventory purchase when it comes to displaying changes in operational activities of a corporation. For example, if a corporation invests in the purchase of inventory stock, accountants should make note of the cash decrease in the cash flow statements under operational activities. However, this should not affect the profit or loss, since the corporation technically would not have sales or expenses.

This decrease is noted as inventory is increased. Pay attention to the financing activities section, if any personal investment has been made before the purchase of inventory. The financing activities section should match up with the increase in overall investment increase. Make sure net change of the investment and the cash outflow regarding inventory be subsequently verified in the balance sheets.

Another accounting practise often relied on would be the calculation of revenue and expenses. Presuming that the corporation sold products or services to a customer and issued an invoice that has been paid- Accounting basics dictate that the revenue is only recognised during the time of delivery for products/services and not when the payment is received. The expenditure of the corporation appears in the cash flow income statement when they match up with the corporation’s revenue and not when the products/services are paid.

For corporations who require dealing with supplies, the supplies expenses account only reflects changes when the supplies are used. Standard accounting basics reveal that whatever cost the supply order displays will be recorded on the balance sheet under asset account supplies. If payment has yet to be made, liabilities are recorded under the accounts payable section.

If there are depreciation expenses, another good accounting practise worth noting would be that there will be situations where the amount will require to be added back to the net income. The situations that fit into this category of treatment would be when there is no cash spent and yet the depreciation expense account entry results in net loss. In order to convert the income statement’s bottom line into the cash used in operating activities or other relevant areas, accountants will need to add back or remove the depreciation expense.

5 Accounting Practises To Keep When Preparing Income Statements

When it comes to preparing income statements on behalf of your corporation, great care must be exercised in order to keep information accuracy and minimise the potential risk of errors. To successfully prepare income statements, there are 5 accounting practises every accountant should bear in mind:

1. Revenues and Gains

A corporation can achieve revenue from primary and secondary activities. Revenue earned from primary activities are mostly known as operating revenues (sales revenue or service revenue) whereas revenue earned from secondary activities are known as non operating activities. This accounting practise is one of the most essential to note since beginner accountants often confuse revenues earned with receipts. These revenues are usually displayed around the top of income statements, usually in the period they are either earned or delivered- not when payment is collected. So make sure to report both operating and non operating revenues in the profit and loss statement only when the sale is made and earned.

Gains, on the other hand, is an accounting practise that is reported in income statements as the net of proceeds received from long term asset sales with the subtraction of the book value. When proceeds are more than book value, that is when the gain occurs.

2. Expenses and Losses

Much like revenues, expenses can be categorised under primary and secondary activities as well. Expenses that are incurred to earn operating revenues are considered primary activities and should show up under the same income statement where the related sales was reported, regardless of if payment has been made or not. Costs that are used up or expiring in the accounting period displayed under the income statement will also be considered to be a part of the expenses of that particular accounting period.

Certain expenses can be matched against the sales under the income statement since there is a cause and effect link, whereas others with no direct link to sales are usually matched to the period where they are used/consumed. For example: Advertising expenses are typically not linked to sales or specific accounting periods, so they are usually reported as part of expenses as soon as the advertisements occur.

Losses are often reported when there are situations where the corporation incurs a loss from long term asset sales or lawsuit results from transactions that are outside of primary activities. As part of the general accounting practises, losses are reported typically as the net of two amounts- book value minus proceed received, where the proceeds are less than book value.

3. Single Step Income Statements

One of the two most commonly used accounting practises when it comes to income statement preparation would be the single step income statement format. This particular format relies only on one subtraction to derive the net income. Take care to note that single step income statement formats involve critical information within the heading, time interval reported and precision of the time period data. One can typically expect single subtotals for revenue line items, expense line items, and a report on net gain or loss. This format is usually more suitable for businesses that rely on simple operations.

4. Multi-Step Income Statements

True to it’s name, multi step income statements usually involve multiple subtractions to compute the net income. Another most commonly practised step out of all accounting practises, one can expect details and segregation on operating revenues, operating expenses, nonoperating revenues, non operating expenses, losses, gains and gross profit.

5. Discontinued Operations Reporting

For corporations who have gone through with eliminating significant parts of their business, discontinued operations is something accountants should observe in their accounting practises. Take note that income tax expenses should be included as part of the income statement generated. Gains in discontinued corporation operations should be reduced by income tax expenses that are associated with the gain, whereas losses incurred are reduced by income tax savings associated with it.

Everything To Know About The Accounts Payable Process

As part of accounting basics, all accountants are expected to be able to fully understand and explain what goes on within the accounts payable account. If you are beginning or possess no accounting knowledge, here is a simple guide to understanding what happens:

The Accounts Payable account is an open account that contains liabilities to creditors. If corporations make purchases for good and services in advance (without payment first), the purchases are made on account/credit while the invoices/bills are recorded into the Liability account (Accounts Payable). As a part of Double entry accounting basics, the Accounts Payable should be credited while another account is debited when the vendor invoice requires recording. Once the payment is made, the Accounts Payable should be debited while cash is credited. Basic accounting practise dictates that corporations who are to receive goods/services on credit are required to make reports of the liability no later than the date in which they are received. This same date has to be recorded within the debit entry to asset accounts or an expense when appropriate.

In order to ensure that the accurate amount is entered within accounting systems, there are certain details one should pay attention to: purchase orders and receiving reports issued by the corporation, company vendor’s invoices, contracts and other agreements. As a good recommendation for accounting basics regarding running an accounts payable process, accountants should ensure that- vendor invoices are processed in a timely fashion, general ledger accounts are recorded accurately, and that the accrual of obligations/expenses are not yet completely processed.

The goal of the Accounts payable process is to identify legitimate invoices and bills of the corporation. Before the invoice issued by creditors/vendors are entered into accounting records, the invoices should reflect/include: The corporation’s purchase order, what the corporation has received, unit costs, totals, calculations, additional terms and more.

Another recommended accounting practise for accountants would be to advise and ensure that there are internal controls for the accounts payable process. This ensures that the corporation’s assets and cash are safeguarded. Part of the account basics for internal controls include fraudulent invoice payment prevention, inaccurate invoice payment prevention, double payment prevention, as well as organisation practises to ensure that all vendor invoices have been accounted for.

Purchase orders are highly recommended to be prepared by corporations when there is intent to order from vendors. Relevant people or departments should be able to receive a purchase order copy detailing: a PO number, date of preparation, corporation name, vendor name, contact details, purchase item description, quantity of purchased items, unit prices, date required, shipping methods and other relevant details. Receiving reports should also be generated to document services or goods the corporation has received since they will be used to reconcile with the purchase order information.

Once both purchase orders and receiving reports have been generated and reconciled, they will require comparison with the vendor’s invoice in an accounting practise known as three way match. The three way match involves the comparison of service/product description, quantity, price, terms of the purchase order, description and quantity of the receiving report and description, quantity, cost, and terms of the invoice. The process is done when all three documents are in agreement and the vendor’s invoice will be input into the Accounts Payable account for payment scheduling.