Companies are required to keep proper records and accounts of business transactions. Your company must maintain proper records of its financial transactions and retain the source documents, accounting records and schedules, bank statements and any other records of transactions connected with your business.
Using an accounting software helps businesses improve record keeping and comply with tax obligations. Businesses can also use the information captured in the software to ensure that operations are effective and efficient.
Duration for Records and Accounts Keeping
For accounting records and supporting documents relating to Year of Assessment (YA) 2008 and subsequent YAs, your company must retain the records for a period of five years from the relevant YA. Failure to do so may result in:
Expenses claimed being disallowed; or/and
Penalties
Where a company has been struck off and dissolved, a person who was an officer of the company immediately before the company was dissolved must ensure that all books and papers of the company are retained for a period of at least five years after the date on which the company was dissolved.
Where a company is being wound up, the liquidator of the company must ensure that all the books and papers of the company are retained for a period of at least five years (instead of two years previously) from the date of dissolution of the company.
Types of records
The types of records businesses need to keep include:
a) Source documents that substantiate all business transactions e.g. receipts, invoices, vouchers, other relevant documents issued or received from customers / suppliers, bank statements;
b) Accounting ledgers, schedules and journals documenting a business’ assets and liabilities, income and expenses, profits and losses; and
c) Any other written evidence of transactions connected with your business.
For GST registered company: https://www.iras.gov.sg/irashome/uploadedFiles/IRASHome/e-Tax_Guides/etaxguide_Record%20Keeping%20Guide%20for%20GST-registered%20%20Businesses_Revised%20Jan17.pdf
For Non-GST registered company: https://www.iras.gov.sg/irashome/uploadedFiles/IRASHome/e-Tax_Guides/etaxguide_Record%20Keeping%20Guide%20for%20Non%20GST-registered%20Businesses_Revised%20Jan17.pdf
How to keep your records? It can be Manual and/or electronic records
Implications of non-compliance
It is important to follow the requirements set out in this e-Tax Guide. Failure to comply may constitute an offence under Section 67 of the Income Tax Act (read with Section 94 of the Income Tax Act) and / or under Section 46(6) of the GST Act, which could result in:
a) IRAS exercising its best judgement to estimate revenue earned;
b) Expense claims, capital allowances or GST input tax claims being disallowed; and / or
c) Penalties being imposed.
Under the Income Tax Act, a maximum fine of $1,000 may be imposed (in default of payment, a jail term of up to six months may be imposed).
Under the GST Act, a maximum fine of $5,000 and / or a jail term of up to six months may be imposed. In the case of a subsequent conviction, offenders may be fined a maximum of $10,000 and / or jailed for a maximum of three years.
For more detail, please refer to: https://www.iras.gov.sg/irashome/Businesses/Companies/Learning-the-basics-of-Corporate-Income-Tax/Business-Records-That-Companies-Must-Keep/
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