Companies should consider outsourcing their annual compliance work. Here's why.
Corporate tax filing can often be a time-consuming and complicated process. But with the help of corporate services providers, businesses can be relieved of the annual compliance work and instead, focus on growing their business
Corporate tax filing is a legal and financial obligation that all businesses in Singapore need to fulfil. Singapore corporate tax rate is a flat 17%, which can be further reduced with various government grants and incentives.
Proper documentation is essential for businesses in Singapore to file corporate tax returns on time, as well as enjoy the benefits of tax incentives that are applicable to them. For 2018, the deadline for corporate tax filing is Nov 30 (for physical submissions) and Dec 15 (for e-Filing).
Putting together tax-related documentation can be a time-consuming task – or a monumental challenge for resource-strapped or time-strapped businesses. Outsourcing corporate tax filing can help ensure that busy executives fulfil compliance requirements and, at the same time, stay focused on growing the business. Here’s how tax outsourcing can help businesses in Singapore:
Simplifies data collectionThe end of a financial year is often peak season for in-house accounting and finance executives, who usually need to compile all financial data for the year and plan budgets for the next year, on top of filing corporate tax paperwork before the stipulated tax deadlines.
During this busy season, it may not be realistic or feasible for these departments to collect all the data that is necessary to cover all bases and enable maximum Singapore tax savings. They may just be able to compile the essentials before closing the books.
When businesses in Singapore outsource tax preparation to an external accounting firm, the firm will do the hard work of data compilation, organisation and sorting throughout the financial year. This frees up in-house finance departments to find the data necessary for paperwork submissions.
Ensures compliance to tax lawsAs a growing business-friendly regime, Singapore’s tax laws are always evolving to meet industry trends and national objectives. Just this year alone, eight tax adjustments applicable to businesses in Singapore were announced in the Singapore Budget, not including sector-specific tax adjustments
Keeping up with new Singapore tax legislation can be challenging for in-house accounting and finance executives, who have to stay abreast of these changes on top of other financial duties and obligations to their parent companies.
Given their specific specialisation in accounting and tax services, outsourced accounting firms can be relied on for updated knowledge about corporate tax adjustments that affect businesses. Outsourced accounting firms with a large client base will also have expertise about how new tax directives impact clients from different industries, and advice next steps accordingly.
This frees in-house financers to focus on developing strategies based on the in-depth insight provided by the outsourced accounting firms, and not have to worry about non-compliance or missing out on tax-saving incentives.
(Find out more about tax-saving incentives that businesses in Singapore can enjoy.)
Secure sensitive tax dataFinancial data security is important for corporate tax returns to be filed correctly. It is necessary for sensitive company data to be both accessible and secure at the same time – which may be a tough balance for businesses in Singapore.
During peak season, accountants may have to access data on the move to meet tight deadlines. However, personal devices and unsecured networks (such as public WiFi connections) render these data vulnerable to hacks, breaches and theft.
Recently, in November, the U.S Healthcare website was hacked, exposing the income and tax data of over 75,000 patients utilising medicare and MedicAid services. Closer to home, the SingHealth hack in July 2018 resulted in the leak of 1.5 million patients' personal information.
Outsourced accounting firms that deal with large amounts of tax and financial data in their databases usually invest in enterprise-level data security and protection systems to ensure that client data is secure. To maintain these enterprise-level protections, they will also be obligated to update their clients on the latest data privacy and security issues.
An outsourced provider offers a safer environment for businesses in Singapore to maintain control over their sensitive financial data, while mitigating the risk of the data being compromised and exposed to security concerns via unknown devices and networks.
Maintain data accuracyAttention to detail is a crucial element of corporate tax filing. Accountants preparing paperwork not only need to make sure that all figures are correct – they will also need to possess in-depth knowledge of tax laws to address various situations that can crop up throughout the duration of the financial year.
Such thoroughness may not be internally achievable or feasible for many businesses in Singapore that may have in-house accountants juggling bookkeeping with other administrative and finance tasks.
External accounting firms and corporate services providers are able to offer dedicated filing services for their clients, which helps reduce errors or omissions. Outsourcing to a firm that oversees filing deadlines for multiple clients also guarantees that documents are submitted on time, helping businesses in Singapore to avoid legal consequences and penalties.
Allows business to focus on core offeringsValue creation is core to the success of any business – especially in a competitive market like Singapore, where industry players strive to not only excel locally but also expand regionally. Corporate tax filing can be a time-consuming process that takes away time that can be used on providing higher-value services and activities.
This is especially crucial for small businesses and businesses in their first five years, where business development and high-value creation are necessary for the business to survive and establish itself.
Outsourcing corporate tax filing to an external accounting firm helps to speed up the process of finding necessary documentation, which in turn quickens the turnaround time for submission. The outsourcing of corporate tax filing also increases productivity and profitability - by freeing account and finance executives to focus on activities such as client servicing and value creation.