Preparing Statement of Accounts

Self-employed, sole-proprietors and partners have to prepare statement of accounts. IRAS provides guides and samples to help business owners learn more about preparing Statement of Accounts.

Requirement to Prepare Statement of Accounts

Under the law, business owners have to prepare statement of accounts so that their business income and expenses can be readily determined.

The information will also be useful for you to know whether your business is making a profit or a loss. In addition, you will be able to report your income in the tax return easily during tax filing period if you have prepared your statement of accounts at the end of your accounting year.

Guides and Working Sheets

If you need help in preparing the statements of accounts, please refer to the sample Profit & Loss Account (33KB) and Balance Sheet (50.4KB).

You can also refer to the page on Essential Information for Self-Employed by Profession/Trade or engage an accounting professional to assist you in your tax filing

 

    Pointers on Preparing Statement of Accounts and 4-Line Statement

    Description:

    Pointers:
    Statement of Accounts

    Statement of accounts comprises the Profit and Loss account and Balance Sheet.

    You have to prepare the statement of accounts at the end of each accounting year.
    If your business earns a revenue of $500,000 or more, you have to submit via myTax Mail (Email Us) or post the certified Statement of Accounts of your business at the same time when you file your tax return. 

    "Certified" means signed by the sole-proprietor of the business, indicating that the accounts are true and correct.

    Assets in the Balance Sheet

    You must maintain a fixed assets schedule to record details of the assets used in your business.

     

    If your revenue is $500,000 or more and you are claiming capital allowances on your business asset, please submit a fixed asset schedule showing full details of the assets acquired and disposed of in the year.

    The details required are:

    1. A description of the asset
    2. Cost of the asset;
    3. Whether paid in cash or on hire-purchase terms;
    4. Date of purchase;
    5. Date of sale

    Grouping of Certain Expense

    Certain expenses may have been grouped together and presented as one item. For example, you may have grouped the staff salary, Central Provident Fund (CPF), Foreign Worker’s Levy (FWL) and Skill Development Levy (SDL) as one expense item in your Profit & Loss Account.

    It is not correct to group different expenses as one item in the Profit & Loss Account. Please state each item separately.

    Expense Items Subject to Statutory Rates

    Certain expense items such as employer’s CPF contributions, FWL and SDL are subjected to statutory rates.

    Such claims cannot exceed the statutory contribution rates.

     Amounts exceeding the statutory contribution rates are not allowable as deductions.

    If excess employer's CPF, FWL and SDL contributions have been included in the Profit & Loss Account, please add back the amount to the net accounting profit/loss to arrive at the Adjusted Profit/Loss.

    For prevailing CPF contribution rates, please refer to the CPF website.
    For prevailing FWL contribution rates, please refer to MOM website.
    For prevailing SDL contribution rates, please refer to WDA website
    Expense Classified as "General" in the Profit/Loss Account
    Aside from "General", expenses may also be classified as "Operating", "Miscellaneous" and "Others".
    If expenses are classified under "General", "Operating", "Miscellaneous" or "Others" in the Profit and Loss Account, please give a breakdown of the expenses with a detailed description of the amount applicable to each item.

    Please note that private and capital expenses should not be included as they are not allowable business expenses.

    If disallowable expenses have been included in the Profit & Loss Account, please add back the amount to the net accounting profit/loss to arrive at the Adjusted Profit/Loss.

    For details on the allowable and disallowable business expenses, please refer to Business Expenses.

    Expenses that are Not Deductible
    Private and domestic expenses and capital expenses should not be deducted for income tax purposes.

    Please do not include private and domestic expenses and capital expenses in the Profit & Loss Account. For details on the allowable and disallowable expenses, please refer to Business Expenses.

    If disallowable expenses have been included in the Profit & Loss Account, please add back the amount to the net accounting profit/loss to arrive at the Adjusted Profit/Loss. 

     

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