Your Cheat Sheet to Accounting Jargon
5 minute read
Overwhelmed by acronyms? We’re here to give you a quick cheat sheet on common terms used by accountants when they talk about compliance, and what it means in plain English.
ACRA – Accounting and Corporate Regulatory Authority
This is the main body that handles compliance matters for all Singapore companies.
AGM – Annual General Meeting
A meeting of all the shareholders and directors. This is a requirement of every Singapore company, unless it has passed a resolution dispensing with them. Each company must submit their financial statements as part of their AGM. Here are some general guidelines that apply to these meetings:
The annual return is submitted to ACRA and acts as a record of activity for the company in the past year. It must contain the following information:
Audited financial statements
After you have prepared the financial statements, if your Singapore company meets any two of the following three conditions, you will need to be audited:
Also, if your Singapore company is part of a group, the company will be audited according to the financial standing of the entire group – not just the individual company.
ECI – Estimate of Chargeable Income
An ECI is the estimation of taxable income of company. Every company has to file this unless your company’s annual revenue less than $5 million, and if ECI is nil for the year of assessment.
IRAS – Inland Revenue Authority of Singapore
This is the government body that looks after tax compliance for companies in Singapore.
XBRL is a type of reporting language for financial statements. Often with the help of an accountant, you will prepare your financial statements and then use a tool (such as BizFinx, provided by ACRA) to convert your data into XBRL format that is suitable to submit.
Take note: If your company has a corporate shareholder, you would need to stay compliant with your XBRL filing.
This is your Income Declaration form that all companies need to submit to IRAS. Many smaller companies will not use this form and instead use Form C-S (below).
This is a simplified version of Form C that can be filled as an alternate to Form C. You are qualified to fill out this form under the following conditions:
GST – Goods and Services Tax
This is known as VAT (Value-Added Tax) in other countries.
If you have registered for GST, you will need to file your GST return. All figures must be reported in SGD (IRAS provides guidelines on how to file if you have transactions in foreign currency).
Even if you do not have any transaction during that quarter, you will still need to file a nil return (ie, fill in ‘0’ for all of the boxes).
CPF – Central Provident Fund
This is a mandatory benefit fund provided to Singaporeans and Singaporean Permanent Residents. If you employ a Singaporean or Singaporean Permanent Resident and they have a monthly wage above $50, you need to make a compulsory CPF contribution. Rates vary depending on the employee’s income and age.
FWL – Foreign Worker Levy
As an employer, you do not have to pay Central Provident Fund (CPF) contributions for your foreign workers. However, you must pay a monthly levy for Work Permit and S Pass holders via General Interbank Recurring Order (GIRO).
SDL – Skills Development Levy
The SDL is another compulsory cost for any employer that hires full-time, part-time, temporary, casual, or foreign employees. The funds collected are used to support workforce upgrading programmes and to provide training grants to a company when it sends its employees for training.
Employers required to contribute up to first $4,500 of each employee’s total monthly wages at a levy rate of 0.25% or a minimum of $2 (for total wages of $800 or less), whichever is higher. You can pay SDL with your employees’ monthly CPF contribution or pay the SDL directly to SkillsFuture Singapore Agency.
If you are looking for high quality accounting services in Singapore for your company, we at Sleek would be more happy to help you get started!