Much Ado About ACRA Annual Returns For A Startup
Startups usually have a bunch of tech and business people who are usually clueless about accounting, and even if they do, the rules and regulations involving the Accounting and Corporate Regulatory Authority Singapore (ACRA) might baffle them.
Here, co-founder of local company Bloomerang, the team behind bloomerHang® – completely biodegradable and recyclable cardboard clothing hangers with advertising on them – Wong Joon Ian talks about his experiences trying to file his annual returns and provides a case study for other startups. (You can also check out our interview with him.)
Joon Ian writes…
A few months ago we got a bunch of letters and e-mails from the government and our corporate secretary telling us it was time to get our accounts in order and submit our annual returns for the year. After a mad dash for our old receipts and phone calls to friends with accounting degrees, we thought it was all over.
But a coffee last night with another start-up-running pal revealed something shocking: We didn’t need to submit our accounts at all! At least, that’s what our friend told me.
When the issue first came up last year, we got conflicting answers to our questions from our corporate secretary, ACRA and online. So I started re-investigating the matter today.
Do we have to file our annual returns?
The first page I hit at the ACRA site was this, which seems to state very clearly that we had to file our annual return and accounts:
All locally incorporated companies are required to hold their Annual General Meeting (AGM) and file their annual returns under S175, S197 and S201 of the Companies Act.
At the AGM, directors shall present a true and fair view of the company’s accounts to their shareholders.
But…how about being an EPC?
What is an Exempt Private Company (EPC)?
An Exempt Private Company (EPC) is defined as a company which has not more than 20 shareholders and its shares are not held by another company under Section 4(1) of the Companies Act. They can also be those that the Minister has gazetted to be known as EPC.
Then, the money graf:
Is an EPC required to file Annual Return?
An EPC is required to file Annual Return via BizFile.
If the company is solvent, which we are, then we also have to complete a solvency declaration via BizFile.
What about audited accounts?
We had a small scare when our secretarial firm told us we needed to get an audit done last year. It turned out to be a mistake, but we did look into the matter. We found out then that we were exempt from audit because we didn’t make more than $5 million lin revenue ast year — which kind of made us wish we qualified for an audit.
That $5 million figure is an important threshold because it means we are clasified as a ’small exempt private company’, which in turn means that we do not have to attach our accounts to our annual return (see ACRA’s Filing Requirements for the complete chart).
At the end of the day…
So in summary, we didn’t need an audit, didn’t have to attach our accounts, but did have to file our annual return to ACRA. In our case we did compile our accounts even though we didn’t have to attach them to the ACRA filing, and it was a very useful exercise for us. It gave us a snapshot of the company’s financial health (could be better!) and put in place a framework for recording our transactions efficiently in future.
But all that’s just about ACRA. We still have the tax authority, IRAS, to take care of. We’ll address that question in another post!
Editor’s Note: This article was originally published here.