Record-Keeping Requirements for Singapore Companies
In Singapore, it is compulsory for companies to keep proper records and accounts of their business transactions. These records must be kept for two main purposes:
- To explain the transactions and financial position of the company; and
- To enable true and fair financial statements of the company to be prepared.
Proper record-keeping is also important because it ensures that your company complies with its tax obligations, such as corporate tax or Goods and Services Tax (GST). In addition, it enables your company to better handle its finances and be constantly updated on the financial status of the business.
This article provides a comprehensive guide on the record-keeping requirements for Singapore companies, including:
- What records must be kept?
- How should company records be kept in Singapore?
- How long should company records be kept for?
- Where should company records be kept?
- Effects of non-compliance
What Records Must be Kept?
Your company must maintain proper records of its financial transactions. These include:
- Source documents that substantiate all business transactions, such as receipts, invoices, vouchers, bank statements, and other relevant documents issued to or received from customers;
- Accounting ledgers, schedules and journals documenting your company’s assets and liabilities, income and expenses, profits and losses; and
- Any other written evidence of transactions connected with your business.
A record-keeping checklist can be found here. Note that the records required to be maintained are different depending on whether your company is GST-registered and non-GST registered.
For example, GST-registered businesses are required to keep tax invoices issued for income purposes and records of disposal of business goods, but these are not required for non-GST registered businesses.
How Should Company Records be Kept in Singapore?
The records of your company can be kept either manually or electronically, in a manner such that they can be conveniently and properly audited.
If your records are kept manually in a physical form, they should be kept in a legible and well-organised manner. For example, photocopies should be made of receipts printed on thermal paper in case the original receipts fade over time.
If your records are kept electronically, your company should ensure that proper internal controls are put in place to ascertain the integrity, completeness and reliability of the electronic records. This can be done by stating, for example, the manner in which records should be kept, when and how documents should be filed and stored in a database, or how image captures should be saved.
The First Schedule of the Evidence (Computer Output) Regulations sets out guidelines for storing imaged business records, which you may refer to.
There should also be security arrangements to ensure that the records cannot be improperly tampered with. Where records are kept electronically, you do not need to keep physical copies of source documents to substantiate your business transactions for tax purposes.
How Long Should Company Records be Kept For?
The records must be retained for at least 5 years from the end of the financial year in which the relevant transactions were made.
For example, if the financial year of your business ends in December, then the records for your business’ financial year of 2016 (i.e. from 1 January 2016 to 31 December 2016) should be kept until at least 31 December 2021.
Where Should Company Records be Kept?
The records should be kept at your company’s registered office, or at any other place that the directors of your company think is suitable. At all times, these records should be open to inspection by the directors.
Effects of Non-Compliance
Business records can be considered not properly kept if the required accounting and related records are:
- Not maintained
- Not kept for at least 5 years and/or
- Not stored in a proper place or manner.
If accounting records are not properly kept, the company and any relevant officer will be liable to a fine of up to $5,000 or to a jail term of up to 12 months, as well as a default penalty under the Companies Act.
In addition, improper record-keeping may constitute an income tax offence that results in the Inland Revenue Authority of Singapore (IRAS) disallowing your company’s expense claims and capital allowances.
Persons found guilty of improper keeping of income tax-related records may also be liable to a fine of up to $1,000 or a jail term of up to 6 months in default of payment under the Income Tax Act.
Proper record-keeping is essential when conducting your business to ensure that your company complies with the legal requirements relating to this matter in Singapore, while also allowing you to better manage your company’s financial affairs.
In this regard, you may wish to consider engaging a corporate secretarial firm for professional assistance on record-keeping.
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