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Company owners must fully grasp what are the requirements of company incorporation in Singapore first before getting ahead with the procedure. Moreover, they must also know what strategies work best when complying with the corresponding requirements.
One vital facet of a company is the financial year-end. Every company must determine its financial year-end at the time of company incorporation. Find out what things should be kept in mind when doing so by reading this guide.
The financial year-end determines the taxation period of a company. It is necessary to choose a financial year-end as it would be of great help in corporate tax exemptions and impact tax obligations.
When deciding for your company’s financial year-end, consider the following factors:
It is always best to set the financial year-end on the last day of the 11th month of company incorporation. The benefits of this strategy are:
Every country has its own accounting year-end policy. During this period, a company is obliged to file tax return, carry out annual general meeting (AGM), and file annual return.
The accounting year period of India is April to March, while the accounting year period of Switzerland is January to December.
However, there is no fixed accounting year-end for a Singapore Company. Each company in Singapore can determine their own accounting year in Singapore.
In compliance with the Singapore Companies Act:
The flexible accounting periods of Singapore is brought about by the noteworthy contribution of foreign businesses to the country. A foreign company operating in Singapore must be able to determine its accounting year and conform to that of its parent company, hence the need for a flexible accounting period.
Company owners must regularly abide by their company’s accounting year.
The first accounting year of a company incorporated on September 5, 2020 will be from September 5, 2020 to August 31, 2021. Then, it will be from September 1, 2021 to August 31, 2022 in the years to come. The company will continue to have this kind of accounting year.
Apparently, the first accounting year of this company is a bit shorter than 12 months and ending a month before its incorporation month. A corporate service provider (CSP) would usually adopt this custom if its client company has no preference on its accounting year.
The first accounting year of a company incorporated on March 25, 2020 will be from March 25, 2020 to February 28, 2021. Later on, the accounting year of this company will always end on February 28 or 29 on a given year.
The accounting year of a subsidiary company should be in accordance with its parent company to avoid any conflicts or inconsistencies between them, during consolidation of results.
The reason behind Singapore’s accounting year policy is that the country’s tax exemptions are achievable for the first three accounting years only. If the first accounting year of your company lasts beyond 12 months, then the third accounting year will be excluded from the three-year period and it will not qualify for the exemption.
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