Most entrepreneurs are aware that they should keep consistent and up-to-date documents relating to their business finance. But what other documents should you keep and when it’s finally okay to discard them?
The Income Tax Acts (Also see Corporate Taxation in Singapore) require you as the business owner to keep records that support items relating to business income, credit or deduction on your on your tax return files. You should keep such documents until the limitations for that tax return runs out as specified by the IRAS.
The period of limitations is the time frame the IRAS, or you can revisit a tax return that you filed. Sometimes, you may find that you forgot to include important data in your tax files. Note that you are allowed to amend your tax return files on condition that you have the right documents to validate your amendments and that all amendments are done within the period of limitation.
CPF and payroll records
All CPF and payroll records should be preserved for not less than 5 years after the last quarter of filing. Note that the CPF records should include detailed data regarding each employee including their name, CPF number, wages, and more. You should also keep all the records of past tax returns you filed and the tax forms that your employees filled when you hired them.
If your company owns equipment or property, you should preserve all documents relating to that property or equipment for as long as it exists. Keep in mind that such records support any amortization, depreciation, and depletion deductions or the loss or profits you are likely to incur when disposing of the property.
Other records unrelated to tax
You should keep other business records even if you did not use them in filing your tax returns. They might be helpful in some situations. For example, an insurance company might require some business records when preparing a certain policy. Besides, some potential lenders could request for some business records to help them make investment decisions. This implies that it is important to preserve every business record even if it is not related to tax.
Every business record is important and should be kept safely. You should also backup your files to ensure that even if data disaster strikes, you will not lose every business record. After all, bookkeeping (Also see our bookkeeping or accounting service) isn’t just about recording transaction only: it extends to ensuring all business books are accurate, consistent, and safe.