Record-Keeping Requirements for Companies in Singapore

In Singapore, it is mandatory for companies to keep proper records of their financial transactions. These records should be kept to outline a company’s transactions and financial position and to make sure the company’s financial statements are accurate and fair. 

Proper record-keeping is also required because it ensures that a company complies with its tax obligations, such as corporate tax or Goods and Services Tax (GST). Moreover, practicing good business record-keeping also helps you build a strong foundation and pave the way moving forward for your business.

This article provides a comprehensive guide on record-keeping requirements for Singapore companies as instructed by the authorities.

What records must a Singapore-registered company keep?

The Inland Revenue Authority of Singapore (IRAS) requires companies to maintain proper records and accounts of their business 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.

Note that the records required to be maintained depend on whether your company is GST-registered and non-GST registered. For example, GST-registered companies must keep tax invoices issued for revenue purposes and records of the disposal of business goods, but these are not required for non-GST registered companies.

Below is the record-keeping checklist:

How should a company keep its records?

You can keep your company’s records either manually or electronically as long as they can be conveniently and appropriately audited.

Manual method

If you choose to keep your notes manually in physical form, you should keep them in a legible and well-organized manner. For example, photocopies must be made from receipts printed on thermal paper if the original receipts fade over time. However, there is no significant benefit from keeping paper records as they are more susceptible to incidents such as coffee spills or misplaced documents.

Digital method

Keeping your company’s records digitally is a wise move because it is safer and more efficient. You can use cloud-based accounting software to store digitized versions of your invoices, receipts, accounts payable, etc., in a secure, centralized repository. This way, there is no need for you to maintain the physical copies of source documents to support your business transactions during tax season.

In addition, you must also keep your business records at your registered office or at a place deemed appropriate by your company director (if you use the manual method). Make sure that your business records are always available for inspection by your company director.

How long should a company keep its records?

As mandated by IRAS, your company’s records must be preserved for a minimum period of 5 years from the end of the financial year in which the relevant transactions were made. For instance, if your company’s financial year-end (FYE) is the 31st of December 2020, you must keep your business records until the 31st of December 2025. Although your company’s FYE does not fall on the 31st of December, you must still preserve your company’s records until the end of December in the following five years. 

What if the company has been struck off or wound up?

If your company has been struck off and dissolved, a person who was an officer of the company must ensure that all the company’s records are retained immediately for at least 5 years after the date on which the company was dissolved.

Furthermore, if your company is being wound up, the company’s liquidator must ensure that all the business records are preserved for at least 5 years from the date of dissolution of the company.

What will happen if I don’t comply with the record-keeping requirements?

If your company does not comply with the record-keeping requirements, it could face serious consequences. IRAS can consider your business records improperly maintained if:

• Your accounting and related records are not kept for a minimum period of five years;
• Your accounting and related records are not retained; or
• Your accounting and related records are not kept in a proper manner or place.

As stated in the Company Act, your company and any related officer could face a jail term of up to 12 months or a fine of up to $5,000 if your business records are not properly kept. 

Moreover, improper recording is considered an income tax violation, resulting in the IRAS banning your company’s capital allowances and expense claims. Besides, under the Income Tax Act, those guilty of improper business registration could also face up to six months in prison if they fail to pay or a fine of up to $1,000.

Conclusion

Proper record-keeping is essential to ensure that your company complies with legal requirements in Singapore while also enabling you to improve the way you manage your business matters. However, keeping business records can be overwhelming, especially if you have just started your business. The good news is that you can always get help from us to get all the work done professionally and affordably. So talk to our expert to get the best offer for your company!

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