YEAR – END Compliance – a Lot easier with proper planning
You’ve made it through the first year of business. Kudos! Now, ensure that all your year-end compliance is up to date. We list 5 important compliance processes to prepare for:
Close your accounting books to see how your business translates in terms of numbers.
Why is this important?
There is a legal requirement for the company to circulate the financial statements to the shareholders and informing them about how the initial investment (Share capital) has been utilised. It’s important to ensure that the books are closed prior to the 1st year anniversary of the Company – for corporate tax planning.
What documents will you need to close the books?
The historic records of all the income received, and expenses during the year should be recorded with relevant copies of receipts and invoices. To briefly list the documents that will help with accounting records, you will need to ensure you have:
(i) Company’s bank statements reflecting the income and expenses
(ii) Expenses Receipts
2. Dividend declaration?
Once you have finalised the accounting numbers for the financial year of the Company, when your business is making profits, you may consider a dividend pay-out. But its important to consult your accountants and company secretary who will advise you on the maximum allowed limit for this.
The initial years of a business are the toughest – it takes time to get the flight going. This may mean, your company is expecting a few corporate changes (appointing new Directors/ Resignation of existing Directors; incoming and outgoing shareholders etc). As part of the year end compliance, the Company is legally required to file notification of the changes that has occurred in the Company in the last year. Hence, it’s important to keep track and ensure appropriate record keeping for these changes.
4. Annual General Meeting (AGM) and related Annual return (AR) filing
The Companies Act (Chapter 50), governs the holding of the Annual General meeting for Singapore Companies. One of the requirement is for the company to ideally hold an Annual General meeting within 6 months from the close of the financial year of the Company. This simply means that the once the Financial Statements are finalised, they need to be circulated (brought to the attention of the shareholders).
The annual return is the yearly declaration that needs to be filed with the Registrar (ACRA – in Singapore). It contains the details of all the corporate changes (if any – eg: change in directors/ incoming or outgoing shareholders etc) apart from the copy of the financial statements that needs to be filed as well.
You may consult your accountant and company secretary to guide you in complying with these up-to-date requirements and to meet the necessary deadlines (without incurring any late filing fee).
5. Tax filing
Every company requires to file the corporate tax with their respective Inland Revenue Authority. This compliance is met once the financial statement is finalised, signed, circulated to shareholders by filling out the appropriate tax forms and submitting the form online/ offline as per the instructions given by the relevant tax authority.
Apart from the highs and lows of a start-up journey and the abundance experience the first year business anniversary brings, its important to see how the numbers translate – so you can prepare yourself better and aim for the biggest.
Closing the books of accounts is the first step to getting to comply with the year-end compliance.
From our experience, the delay in closing the books usually has a ripple effect causing delays in related year end processes like – holding AGM and subsequent AR filing, sometimes it may lead to delayed filing and added late filing fees.
Always consult your accountants and company secretary to help meet the year end compliance and aim to get a good standing certificate after completion.