A Guide for New Companies in Filing Their Business Taxes
Filling out tax forms is often complicated and confusing. New business owners need to have some facts and figures up their sleeves regarding the tax filing process. It is also vital for them to understand and come to terms with their corporate tax filing obligations.
Taxes are parts and parcels of any business. You are required by law to complete your tax forms each year and pay the taxes you owe. There are obligations to fulfil and deadlines to catch, and you don’t want to tangle with tax authorities and risk fines, penalties—or worse.
Filing Business Taxes in Singapore
Suppose you’re a start-up business owner who isn’t sure how to go about filing your company’s tax— in that case, it will be a comfort to learn that IRAS, Singapore’s taxation authority, makes it relatively easy for taxpayers to stay on top of their taxes. But it would also be helpful if you knew some of the brass tacks.
New business owners will usually receive a tailored timeline that will tell them when to file their first tax return. The year in which income is taxed is called the Year of Assessment. Another thing you should note is that income is assessable on a preceding financial year basis.
Preparing a tax computation
There are two corporate tax returns to be filed each year, the Estimated Chargeable Income and the Corporate Income Tax Return, also called Form C. The former estimates the firm’s taxable income after deducting tax-deductible expenses for a year of assessment– but companies need not file an ECI if they meet some criteria, which is if their revenue is S$5 million or less. This also applies if ECI is of Nil Value.
For a business to file a Corporate Income Tax Return, it must be incorporated in Singapore. Different forms depend on a company’s revenue bracket, Form C-S, Form C-S (Lite), and Form C. Firms with a revenue of $5M and below are eligible to file a simplified Corporate Income Tax Return. Companies with lower revenues usually have a more straightforward tax filing process. Companies in the higher bracket have a fuller set of documents to prepare, like financial statements, detailed profit and loss statements, tax computation, and others.
About the Notice of Assessment
IRAS estimates a company’s income and issues a Notice of Assessment. If a company doesn’t agree with the assessment, they can always file an objection, as long as this is done within two months from the date of the NOA. From the date of the NOA, firms must pay any tax payable within one month. A business failing to pay its tax return can be fined, if not summoned, to court.
Another reminder is that the company must keep taxation documents and business records, and accounts for at least five years; there may be penalties or enforcement actions if they fail to keep proper records. It is crucial to make truthful and accurate declarations when filing tax returns. Even if they have accountants, tax planners, or tax agents working under them, the owners are ultimately responsible for all statements made.
Staying on top of your taxes is important because it lets you keep on top of your financial situation and minimises the taxes you legally owe. Taxes must also be factored in with business decisions, and business owners need to understand tax terms and rates.
There are important antecedents to note before you can file your corporate tax returns, such as that your company must be incorporated in Singapore, so check with your company incorporation services provider if you are all cleared for this step.
If not, you can get in touch with OneStop Professional Services, which provides a wide range of professional services and business solutions, with a team of certified advisors that offer business owners sound advice regarding legal requirements, statutory regulations, and company registration. OneStop Professional offers company incorporation and corporate finance, audit, taxation, secretarial, nominee director, and other financial outsourcing services.