Keeping accurate financial records is essential for any business owner. It is a fundamental requirement for tax purposes and can also help you to track your business’s progress and make informed decisions about its future. You must keep track of all your income and expenses, source documents, accounting records, schedules, and bank transactions for at least 5 years from the Year of Assessment (YA). This will allow you to prepare your tax returns accurately and on time, and it will also give you a clear picture of your business’s financial situation.
There are several different ways to keep financial records, but the most important thing is to choose a system that works for you and your business. You should also make sure that you keep your records up-to-date and that you back them up regularly.
Good bookkeeping practices allow businesses to:
● Make better business decisions.
● Be aware of their financial situation.
● Reduce the time and effort required to file corporate income tax returns.
Table of Contents
- 1. Duration of Required Record Keeping
- 2. What if my company is struck off?
- 3. What if my company is wound up?
- 4. Consequences of Non-Compliance with Record-Keeping Requirements
- 5. I’m Interested in Info-Tech!
Duration of Required Record Keeping
Your company must retain your bookkeeping records for at least 5 years from the relevant YA.
Example 1: Companies with Dec financial year-end
|Financial Year||To Keep Records Till|
|2019||1 Jan 2018 to 31 Dec 2018||31 Dec 2023|
|2023||1 Jan 2022 to 31 Dec 2022||31 Dec 2023|
Example 2: Companies with non-Dec financial year-end
|Financial Year||To Keep Records Till|
|2019||1 Oct 2017 to 30 Sep 2018||31 Dec 2023|
|2023||1 Oct 2021 to 30 Sep 2022||31 Dec 2023|
What if my company is struck off?
If your company is struck off and dissolved, an officer of the company immediately before its dissolution is responsible for keeping all records and documents for at least five years from the date of dissolution. This includes things like financial statements, minutes of meetings, and contracts. The records must be kept in a safe place and be accessible to the public. If the records are not kept, the officer could be fined or even imprisoned.
What if my company is wound up?
When a business is being wound up, the liquidator must ensure that all the company’s books and papers are kept for at least 5 years from the date of dissolution. This is to protect the interests of creditors and other stakeholders. The books and papers may be needed in the event of a dispute or claim against the company. They may also be needed for tax purposes. The liquidator must keep the books and papers in a safe place and make them available to anyone who has a legitimate reason to see them.
Consequences of Non-Compliance with Record-Keeping Requirements
Failure to comply with record-keeping requirements is a crime under the Income Tax Act 1947 and Goods and Services Tax Act 1993. IRAS may take the following actions:
● Estimate revenue earned based on their best judgment.
● Disallow expense claims, capital allowances, or GST input tax claims (where applicable); and/or
● Impose penalties of up to $5,000, and imprisonment for up to 6 months in default of payment.
*Please note that these are just some of the possible actions that IRAS may take. The actual actions taken will depend on the specific circumstances of each case.
Ensure Proper Bookkeeping with Info-Tech
Naturally, companies are encouraged to use accounting software for proper bookkeeping. This software enables businesses to handle their day-to-day company operations and transactions digitally while also meeting their tax compliance needs.
Info-Tech’s accounting software is equipped with the necessary functions to ease a business in tracking stocks, creating quotations, invoices, and orders with ready-made templates, and calculating mandatory contributions such as taxes. Our accounting software can also connect with local banks and be integrated into our payroll software too.
If you’re in need of accounting software or would like to try our free trial, you can send an email to email@example.com or contact us at +65 6297 3398.