Incorporating your company
Incorporating your company is the first step to getting your business up and running. You will need to take several steps next to allow your business to run smoothly without any hiccups. If you aren’t sure where to start next after incorporation, here are some things that you will need to do within the first year.
First 6 months:
Choose a Financial Year End
Your Financial Year End (FYE) is the deadline for you to file your annual reports with the Accounting and Corporate Regulatory Authority (ACRA) and IRAS. This date is completely up to you, but 31 March, 30 June, 30 September, and 31 December are the most popular dates.
The date you choose will affect the following tasks:
- Filing of Estimated Chargeable Income (ECI),
- Submission of Annual reports,
- Holding the Annual General Meeting (AGM).
If you aren’t sure how to choose a proper FYE for your company, here’s a guide to help you
Open corporate bank account
Opening a separate bank account for your company and business will help you to keep your personal and corporate finances separate. Make sure that you choose a bank that is suited to the nature of your business and budget.
To open a bank account, you will need to prepare a certificate of your company’s incorporation, the company’s Constitution, proof of identity from beneficiaries, and a board resolution.
You will also need the physical presence of the accountant’s signatories and at least 2 company directors or 1 director and 1 secretary when the corporate bank account is opened. Since everything is done digitally nowadays, this process can be completed online in no time.
Organise accounting system
Organising your company’s expenses and income will help you stay ahead of your company’s financial situation, business profitability, and most importantly, adhere to tax regulations.
In Singapore, you must keep your accounting books up-to-date according to the Singapore Accounting Standards. An organised accounting system will help you avoid being charged with tax evasion penalties.
Get business license
Appoint an auditor and corporate secretary
An auditor is responsible for your company’s reporting standards. They can be a public accountant or an ACRA-approved accounting company.
You won’t have to appoint an auditor if:
- Your company’s total annual revenue does not exceed $10M
- Your company’s total assets for the FYE does not exceed $10M
- The number of full-time employees you have at FYE does not exceed 50
Since most startups do not meet these requirements, they will not have to complete this step. However, if your company does, you will have to appoint an auditor within three months of the company’s incorporation.
A corporate secretary is responsible for administrative duties like drafting and informing authorities of changes in company structure, name, or directors. Filing document required by the government also falls under their list of duties. They will also inform directors and shareholders about annual filings and AGMs.
You will need to have a corporate secretary within 6 months of incorporation. If your company secretary resigns, you will need to replace this position in the next 6 months.
Register for SDL
Under the Skills Development Levy (SDL) Act, all employers are required to pay a monthly SDL for all their employees rendering services in Singapore. Only domestic servants, gardeners,, and chauffeurs are exempted from the SDL Act.
SDL payable is at 0.25% of your employee’s monthly remuneration, with the minimum payable being $2 and the maximum being $11.25.
All funds collected using SDL are channeled towards the Skills Development Fund (SDF), which supports workforce upgrading programs and provides training grants to employers. The SDL and SDF are both managed by the Skills Future Singapore Agency.
Register for CPF
All employees are also required to contribute to their employee’s CPF account every month, provided that their employees are earning more than $50 a month. To do so, you will need to register your company with the CPF Board.
Your employee is eligible for CPF contributions if they are:
- Singapore citizens or Permanent Residents,
- Working in Singapore under a Contract of Service, and
- Employed on a permanent, part-time or casual basis.
Head over to the CPF website to find out more about your CPF obligations as an employer.
Get business license
Not all companies require business licenses. However, if your company falls under the following categories, you will need to apply for a license.
Industries that need licenses:
- Travel agencies
- Employment agencies
- Financial services
- Educational institutes
- Companies importing or exporting goods
Next 12 months and annually:
File Estimated Chargeable Income (ECI) with IRAS
Your ECI, otherwise known as estimated taxable income, is your company’s taxable income after deducting all tax-allowable expenses. Your ECI form will also require you to state your company revenue.
If your declared income is less than the ECI and results in a lower tax payable, you will be refunded the amount. On the other hand, you have a month to pay what is due if your declared income is more than what was stated in the ECI.
If you need more help, check out our detailed guide on how to file your requirements with IRAS and ACRA. Or you can contact us and we’ll help you get it all sorted.
Hold your AGMs
An AGM is a mandatory meeting where you present your company’s financial statement to your shareholders. This should be held no more than 6 months after your company’s latest FYE.
The financial statement that you provide should include:
- The company’s profit and loss, sales, expenses and profit
- Balance Sheet outlining assets, liabilities and equity
- Any changes in equity
- Cash flow statement
- Notes to financial statement
As long as you find a solution to exchange documents, you will not need to physically have an AGM.
Registering for GST is only compulsory if:
- Your company’s taxable turnover for the past 4 quarters is more than $1M and the company is not certain that its turnover will not exceed $1M in the next 12 months.
- The company can reasonably expect its taxable turnover to exceed $1M in the next 12 months.
The turnover will be from both your business and any income derived from your trade, profession, or vocation for sole proprietors.
For partnerships, turnovers are computed based on the combined turnover of all partnerships with the same composition of partners.
Even if your company turnover is below $1M, you can still register for GST voluntarily. For such companies, you are advised to conduct some cost-benefit analysis before making your decision.
For more information about GST Registration, head to the IRAS website.
File Annual Returns with ACRA
You will need to submit your Annual Return to ACRA, which include:
- Your company name and type
- Registered company address
- An updated list of officers
- Registered charges and any changes
- Any changes in shares structure and capital
- Financial statements in XBRL format in a full or simplified version.
You have to file your Annual Return with ACRA no more than 7 months after your latest FYE and AGM. if you file your Annual Return late, you will have to pay either $300 or $600 depending on the number of times your company has breached the Act.
File Annual Tax Returns with IRAS
Your company will have to file either Form C-S or Form C to IRAS depending on your company’s annual revenue.
If your company’s annual revenue is less than $5M and you don’t claim investment allowance, group relief, capital allowance or losses, foreign tax credit, or have any tax deducted at source in the current Assessment Year, you will file Form C-S.
On the other hand, you will file Form C if your company’s annual revenue is less than $5M.
You can submit these forms on the myTax portal.
Remember to file these forms no later than November 30th after your FYE. For online submissions, you have until December 15th after your FYE.
It can be overwhelming to do everything alone – so make sure to reach out to someone for help! At Margin Wheeler, we take care of all your accounting services for you and make sure that you’re compliant with all governmental requirements in Singapore. With all your paperwork and administration handed to us, you’ll have peace of mind to focus on what you do best.