Since 2020, everyone has been talking about new norms. Among many accountants and finance personnel in small and medium enterprises (SMEs) and even large companies, there were a lot of restructuring, adapting, and evolving to new working environments and behaviours. Now that we are back in the office and slowly returning to relative normalcy, what happens to these new (now rather old) norms?

So, to shed light on post-pandemic situations, we identified some newer norms all companies should be prepared for, specifically for accountants, bookkeepers and the general finance department. These even newer norms affect how we work as we transition towards digital spaces and make use of better technology.

1. Growth of Cloud-Based Accounting Software

Most SMEs in Asia have traditionally relied on desktop accounting software developed by conventional software providers, such as Microsoft. Today, many desktop-based providers have since upgraded their software to include cloud capabilities. This evolution is in-line with a growing trend of cloud computing that has since dominated workplaces.

Cloud computing is basically using an external remote network of servers to manage, store, and process your data. It eliminates the need for physical storage and servers which often takes up a lot of overhead costs for SMEs. Cloud-based accounting software makes it easier to manage financial data and communicate seamlessly among stakeholders.

Cloud-based accounting software can also synchronise information which allows them to directly connect to banks. Banking transactions will be automatically loaded into the accounting system, making your financial data accurate and updated. This, together with plenty more advantages of cloud accounting software, made it a popular choice among accountants in the new norm of hybrid and remote working.

2. Paperless Record-Keeping

Is your department still keeping and saving thermal receipts and hardcopy supplier invoices, fearful that they might fade and become invalid over time? Physical paper, which takes up space and time to organise and file, might now be a thing of the past.

In reality, accountants are now going paperless with the use of the Optical Character Recognition (OCR), Artificial Intelligence (AI) and Machine Learning (ML) capabilities. They either keep softcopy versions of their invoices and receipts without the need to print them out or input everyday miscellaneous receipts into cloud software.

Other benefits of going paperless, supported by cloud accounting software:

1. Save time and space for filing and managing documentation
2. Easier access and transfer of information across stakeholders
3. Boost security by ensuring the system or software is encrypted
4. Easy to track changes and keep records timely and accurate                                                           

3. Outsourcing to Accounting Service Providers 

According to an observation by Forbes, the pandemic has led to an increase in outsourcing, be it for IT, logistics, or accounting functions. And as businesses would find out, outsourcing has great benefits when partnered with the perfect provider. Outsourcing is thus here to stay in the newer norm.

In addition, accounting and finance operations in many businesses have frequently been seen more as cost-guzzling ventures rather than profit-making. As a result, businesses are more likely to outsource these services as part of cost-cutting initiatives, especially if the accounting service providers can provide seamless support. Apart from cost benefits, choosing outsourced service providers rather than recruiting permanent in-house workers will convert the salary fixed cost element into a variable cost of being billed according to the number of transactions per period whilst lessening employment compliance requirements.

Thus, businesses should consider outsourcing their service providers to reduce in-house overhead, contain staff turnover, and gain better clarity into manpower productivity.

4. Value-Added Accounting Services 

Businesses that outsource accounting functions no longer expect the bare minimum. They demand value-added services beyond regular data entry. Accounting treatment, employer regulatory responsibilities, and tax guidance are all examples of value-added services.

Therefore, you can expect accounting service providers to have the necessary resources and capabilities to support your department, and your business as a whole. Should you decide to outsource, look for a partner with the right business acumen who can provide strategic guidance where SMEs rarely have access to highly experienced CFO.

Accounting service providers like Ledgen, for example, possess strong analytical abilities that will help businesses understand business performance and plan accordingly.

Conclusion

How does your current accounting function work? Are you utilising the available options to improve your accounting? Do you have a lot of personnel turnover? Are you on track to satisfy your deadlines to your key stakeholders?

 To excel and deliver the desired quality of service to their clients, accountants in the newer norm will need to exhibit agility in adjusting to changes in accounting standards, tax regulations, and technology.

Our accounting specialists in Singapore, Hong Kong, and Malaysia have a wealth of experience aiding clients with setting up and maintaining a proper set of accounts that are  tailored to meet your internal management requirements. Work better and smarter in the newer norm with us today.

In Singapore, an individual must file his/her personal income tax return on 15^th (paper-filing) or 18^th April (e-filing) each year.

You should note that all gains and profits derived by an employee in respect of his employment are taxable unless they are specifically exempted under the Income Tax Act or exempted by virtue of an administrative concession granted by the Inland Revenue Authority of Singapore (“IRAS”).

Whether you are an individual income taxpayer or an employer, you may wish to take note of some common filing errors highlighted below:

Non-filing of personal income tax return

An individual should file his/her income tax return unless he receives a No-Filing Service (“NFS”) notification from the IRAS.  This is regardless of if he/she derived any income in the preceding year or if his/her employer is on the Auto Inclusion Scheme (“AIS”) for Employment Income.

If he/she does not file his income tax return by the due date, the IRAS will take enforcement actions.  In addition, the IRAS may issue a Notice of Estimated Assessment based on information provided in the past years of assessment.

Relief claims

A Singapore tax resident is entitled to personal income tax reliefs subject to meeting qualifying conditions.  As such, before e-filing his/her income tax return, he/she should ensure that he/she meets the qualifying conditions for the tax reliefs which would have been automatically pre-filled in his/her tax return (based on prior years’ information).

If an individual wishes to claim new reliefs, he/she should input the relevant claim in his/her tax return.  For example, with the arrival of a new child, an individual may include a claim in his/her tax return for qualifying child relief or handicapped child relief accordingly.

Declaration of income and employment benefits

(a)    Salary
An employee is taxable on income derived from the exercise of an employment with his/her Singapore employer.  In a situation where his/her salary is borne partly by the Singapore employer and the overseas parent company, the portion borne by the overseas parent company should be declared in the employee’s Form IR8A.  This is regardless of whether the employee’s salary is credited to a Singapore bank account or an overseas bank account.

(b)   Car benefits
Where an employer provides car benefits to an employee, he/she is taxable on the private usage of the car.  The IRAS has amended the formulae to compute the taxable value of car benefits with effect from the Year of Assessment (“YA”) 2020.  The taxable benefit is dependent on whether the car is new, second-hand, a car with renewed COE or a leased car and includes the actual running and maintenance cost of the car.

(c)    Home Leave Passage
In the past, home leave passage provided to expatriates were taxed at a concessionary rate and limited to a fixed number per year.  However, with effect from YA 2018, home leave passage provided to an expatriate employee, his spouse or his children are taxable in full.

However, where the expatriate is an employee of a company which has been granted certain tax incentives before 1 January 2004, there are specific tax rules on the taxation of such home leave passage.

(d)    Overseas Holiday Trips
Where an employer provides an overseas holiday trip to its employees, this benefit is taxable even though it is available to all staff.

(e)    Share Options and Share Awards
An employee is subject to tax on gains arising from Employee Share Options (ESOP) and other forms of Employee Share Ownership (ESOW) plans if the plans are granted to him/her while he/she is exercising employment in Singapore.  Generally, under ESOP, the gains are taxable when the employee exercises his/her share options.  As for ESOW (with no vesting period)/ESOW (with a vesting period), the employee will be taxed on the gains in the year when the shares are granted/when the shares vest with the employee.

In a situation when the foreign employee ceases employment in Singapore or a Singapore Permanent Resident leaves Singapore permanently, the “deemed exercise rule” will apply to bring the gains from ESOP and ESOW plans as “deemed income” of the employee, one month before the date of cessation of employment or the date the right or benefit is granted, whichever is the later.

(f)    Director’s fee
A director is assessable to tax on his director’s fees in the year he is entitled to receive the fee.  Generally, this is the date the fees are voted and approved at the company’s Annual General Meeting (“AGM”).

(i)     Director’s fees approved in arrears
Director’s fees approved in arrears refer to fees that are approved after the director has rendered his services to the company for the accounting year concerned.  In this case, the earliest date on which the director is entitled to the fees is the date the fees are approved at the company’s AGM.

Example

Director’s fee of SGD 10,000 for year ended 31 December 2020 is approved at the company’s AGM on 28 February 2021.  Accordingly, the director’s fee will be regarded as income for 2021 and brought to tax in the YA 2022.

(ii)   Director’s fees approved in advance

Director’s fees approved in advance refer to fees that are approved before the director renders his services to the company for the accounting year concerned, when such fees are approved at the company’s AGM.     Thus, the earliest date on which the director is entitled to the director’s fee is as and when he renders his services.

Example

A company held its AGM on 31 January 2022 to approve director’s fees of SGD 80,000 for the accounting year ending 31 December 2022.  In this instance, the director’s fee of SGD 80,000 has been approved in advance since the director has not performed his services for the company.  Accordingly, he is not entitled to the director’s fee on 31 January 2022.

Where a company pays director’s fees to a non-resident director, it must be mindful of  potential withholding tax implications.

Filing Form IR21 – Tax clearance for foreign or Singapore Permanent Resident {“SPR”) Employees

An employer must seek tax clearance from the IRAS if its employee (foreigner or SPR) ceases his employment with the company, goes on an overseas posting or leaves Singapore for more than three months.  The Form IR21 must be submitted to the IRAS at least one month from the foregoing events.  In addition, the employer must withhold all monies due to the employee from the date that it is aware of the employee’s cessation of employment or impending departure from Singapore, until a Tax Clearance Directive is issued by the IRAS.

If the employer does not file or is late in filing the Form IR21, the IRAS may impose a fine of up to S$1,000.

Please contact us if you require assistance with your/your employees’ tax filing matters.

One helpful way to ensure your organisation is on the ball with your taxes is by outsourcing it to the pros. Outsourcing tax compliance obligations has several advantages for businesses. Of course, you should do your homework before signing on the dotted line. So today, let’s explore the advantages of getting professional tax experts to help you. 

We’ll first look at some benefits of outsourcing tax preparation. Then, we’ll identify the signs that you should outsource your tax activities in hopes you will make an informed decision for your company. 

Benefits of Outsourcing Tax Compliance & Preparation 

1. Reduce Errors & Boost Compliance

   Your outsourced tax compliance team will make sure that you are following all federal, state, and local tax laws and policies. Tax professionals can also keep you up to date on any new tax or accounting standards, as well as any upcoming adjustments. Ultimately, they’ll help avoid fines and penalties as a result of delays and errors caused by incorrectly calculated taxes.

2. Strategize Tax Planning Better
   By outsourcing your tax compliance and preparation services, you will be able to calculate your tax using effective planning, strategy, and method. Outsource partners can minimise redundancies and laborious procedures with a data-centric approach, as well as increase efficiency through digitization.
3. Access to Higher Level of Expertise
   You can engage with tax and finance professionals in relevant fields when you outsource. They can supply you with a ready-to-go team that knows what to do from the get-go, with no training required. Apart from that, they are well versed in legislation and tax law which enables them to help and provide advice on matters of concern.
   
4. Minimise Future Disputes

   Outsourcing your tax preparation will ensure that your data is accurately collected, categorised, and sorted so that the outsourced team can utilise it to prepare and file local taxes for your company as needed. To perform jobs with 100% accuracy, they usually use a two-step review procedure. This will ensure accuracy and minimise disputes with the authorities. 

5. Reduce Cost & Save Time 

   According to Deloitte, businesses outsource mostly for cost-efficiency and agility. Tax outsourcing also helps you to cut your tax preparation costs, as well as saving you and your internal team’s time and energy calculating and responding to tax inquiries. Usually, the cost of building in-house tax teams is only justified when there’s enough scale in the company, especially if they’re also operating in a multi-jurisdictional region. 

6. Focus on Core Matters & Build Reputation

   By outsourcing tax compliance, you would have more room to focus on other pertinent matters that need your attention. Leave the taxes to the professionals while you work on growing and improving your business. Accurate and timely tax compliance can also be beneficial to win investors and gain their confidence that your company is capable and reliable.  

Signs You Should Start Outsourcing Tax Activities

1. You Require Innovation
   If you and/or your business are tight on time and resources to come up with better solutions and creative products for your customers, you might understand how each hour and day is valued. Outsourcing could help you re-prioritise business development so you can focus your efforts on innovation and leave the mundane task to the professionals.
2. You Maxed Out Your Capacities 

   When a team’s capacities are reaching their limits and initiatives are stalling, it may be time to outsource to keep everyone moving forward. Before making a final selection, ask your team what their specific needs are and what it would take to achieve their goal accordingly.  

   It can be hard to decide whether to outsource or keep something in-house because both have advantages and disadvantages. Examining what competitive benefits you obtain by keeping a non-core service in-house is a smart method to determine whether you should outsource it.

3. You’re Behind Deadlines 

   Are you struggling to respond to local tax authorities queries? Do you find yourself lacking the time, knowledge, and expertise to give in the details? Hence, it’s better to outsource the tax matters. You have a better chance of achieving your tax deadline and avoiding penalties and errors.

4. Your Team’s Skills & Needs Do Not Match 

   For a lot of SMEs and startups, employees have to wear different hats. As you scale and grow, these hats have to be specialised and skills become niche. Tax computation can increase in complexity as your business grows as well. Outsourcing can be considered when your team needs extra help or when long-term training on taxes is not an urgent priority.  

Conclusion 

More and more businesses have discovered the advantages of tax compliance outsourcing. In certain industries, cost reductions are so considerable that the business can prosper and grow considerably more quickly. Certain departments such as accounting and tax compliance are better to be outsourced as it requires experts in the industry to work on it to ensure errors and compliance is met.  

With a presence in Singapore, Malaysia and Hong Kong, Ledgen Group has become a preferred partner for tax compliance and preparation. Our team of tax professionals are able to assist with many forms of jurisdictions and regulations for both corporate and personal taxations. Connect with us and discover how we can help. 

In recent years, the practice of outsourcing corporate operations has grown in popularity in the business world. Technology, as well as some difficult economic times, have altered the way business executives view the world. Among the many activities a business can outsource, accounting is one of the most common ones we’ve seen, with 37% of SMEs getting their accounting  outsourced. 

Before you take the leap and outsource your accounting function, it’s critical to assess the advantages and drawbacks so you can make an informed choice about outsourcing or keeping your operations in-house. So let’s dive straight in: 

Why Choose to Outsource Accounting?  

• Reduce Payroll Headcounts 

Full-time employees are super helpful to firms, but they can be costly. Aside from the expenses of benefits and pay, internal turnover results in a loss of expertise or account-specific history. Outsourcing is a great alternative since it delivers competent teams of specialists without the additional training involved. 

• Strengthen Core Competencies

Outsourcing helps companies to concentrate on their core strengths, increasing their competitive edge while strategically focusing on what their internal resources excel at. 

When to Outsource Accounting? 

You might be ready to outsource when you have the buy-ins needed, the budget, and the paperwork required. Don’t worry too much about the time of year or the fiscal year in which you want to start. Outsourced accounting services can reconcile your tax returns regardless of when you complete implementation. 

Basically, it might be the right time to outsource if and when:

• You’re an SME or a startup that doesn’t require a full-time bookkeeper but still needs someone with more skills to handle your books. 
• You’re a company of any size that cannot find a full-time employee with the right skills. 
• You’re a growing company that wants to scale but struggles to expand the accounting department. 
• You need temporary accounting help within a short period such as the end of the year reports, maternity leaves, or other help needed. 
• You do not plan to maintain an internal finance team for your subsidiary in each local country.

Whether or not you will engage with an outsourcing service provider anytime soon, it’s still important to be aware of your options. As you examine potential outsourcing partners, start defining who among your teammates should be involved in the implementation process, which team member should get financial reporting, and how that information will be distributed. 

Depending on your needs and workflow, reports can be requested on a daily, monthly, quarterly, and annual basis. Consider the kind of reports that will meet the demands of your specific organisation when you investigate outsourcing choices. 

What to Look for In an Accounting Outsource Provider?

• Track Record 

When looking for a potential accounting outsourcing partner, consider the number of years they’ve been in service. You can also look at their past clients and read the case studies to understand how the firm has delivered clients’ needs.  

• Process & Communication

Outsourcing partners should be skilled at building and managing procedures, and they should be able to add value through a superior set of processes and effective communication. Do they have a process for their workflow which you can understand? Are they responsive, helpful and eager to assist? 

• Range of Expertise 

Of course, a professional accounting service provider should be fluent in setting up and maintaining accounts, reconciling, and other accounting skills. But what other skills and services do the firm offer? Many service providers stick to typical accounting activities like bookkeeping, while other providers are capable of handling more tasks, such as financial analysis for decision support. In the end, you’ll be better off hiring someone who can manage a wider range of vital tasks. 

• Wide Regional Coverage 

It’s wise to opt for a service provider that has a wider regional coverage in more than one major city, especially for businesses with operations and offices in multiple locations. Outsourcing with a partner who already has an established presence in all your operating locations saves up the time and cost, as well as ensuring accuracy and compliance. It is better in the long-term than having to work with multiple independent accountants across different countries. 

Conclusion 

When it comes to deciding whether or not to outsource your company’s bookkeeping, accounting, and controller activities, there is no one-size-fits-all solution. Ensure that outsourcing would provide benefits and ROI to your business. And when you’re ready to collaborate with an outsourcing partner that can help your company streamline accounting functions, connect with Ledgen Group today. 

We are a preferred accounting outsourcing partner with a presence in 3 key Asian regions; Singapore, Malaysia and Hong Kong. Our satisfied clients had seen us go above and beyond in delivering professional services and advice, helping them grow through all the complexities.  

It’s always a good thing when your company grows in size. But with the increasing hands-on deck comes a plethora of human resources needs and demands to keep the workforce satisfied. Among the many things the management team has to monitor and address, payroll is one of the very important ones. 

Payroll can get frustrating as your business grows in complexity. Keeping up with the various rules and regulations controlling payroll and operations is challenging. It leaves some HR professionals to think ‘Could it be the right move to outsource payroll?’

To help you decide further on whether or not payroll outsourcing would be a good choice for your organisation, here are some things you need to know.  

What is Payroll Outsourcing?

Payroll outsourcing entails engaging a third-party payroll agency to manage your company’s payroll. This payroll service provider makes certain that:

1. All payments are made on schedule and in accordance with your agreements with the personnel
2. The payments are done accurately and follow local legislation.
3. All payroll documentation is in order.

Payroll service providers are exclusively in charge of making payroll payments to your employees. Some individuals wrongly assume that outsourcing payroll services include HR services that assist you in hiring new employees, but this is not the case. Human resources can be outsourced to a different business, and while some organisations provide both, a payroll provider solely manages your payroll processing. 

Who Needs Payroll Outsourcing?

More and more companies today are expanding their hiring outside of their home base, thanks to remote working and better connectivity. But at the same time, business managers carry a huge responsibility of ensuring their employees are compensated right and payroll compliance ensured according to local regulations. 

Thus, payroll outsourcing can make sense to these types of businesses with small scattered teams especially if they partner up with a service provider that has multiple operation bases in other key locations.   

Payroll outsourcing can also be justified for companies that are downsizing due to changes in work and departmental priorities. The same can be said for businesses that rely on seasonal employment such as those in tourism, agriculture, and logistics.  

Lastly, payroll outsourcing can be relevant for businesses of any industry who want to focus more on managing their current talent and improving their workforce. They may outsource payroll to professionals while developing key talents to grow and expand their business according to their priority. 

Why Outsource Payroll?

Payroll processing may be difficult and time-consuming. There are a  lot of legal obligations, which could spell substantial consequences for getting things wrong. For these reasons, many business owners would rather leave it to the professionals who are kept up-to-date with the latest statutory legislation and best practices. It provides them with more time and more peace of mind. 

Furthermore, some companies find it cost-efficient to outsource payroll compared to hiring a full in-house team. Recruitment, training, and retention of internal payroll teams can be time-consuming. 

Outsourcing allows companies to meet payroll obligations to their staff in a timely manner. It also removes risks of lack of internal resources to process payroll due to resignation or urgent leaves. Your payroll information is also protected by strict data protection and confidentiality protocols.  

How does Outsourcing Payroll Services Work?

You should be aware that if you hire a third-party service provider, you will be required to disclose your employees’ information to them. Hence, you should always engage a reliable service provider with good internal controls, policies and procedures.

The payroll agency may require the following employee information:

1. Personal information
2. Pay rate
3. Job title
4. Hire date
5. Type of contract etc.

If your employees use time cards or time-tracking software (for remote workers) to log their working hours, the payroll provider may require such information as well in order to appropriately compute payments and distribute them via payroll checks or direct deposits.

Payroll service providers may also manage payroll taxes and ensure that you comply with all local tax rules, regardless of where your employees are from. Keeping this in mind, you may be required to produce special tax forms as well as other important information on your employees, such as their social security numbers or Income Tax Identification Numbers. 

What Can I Expect from a Payroll Outsourcing Service Provider?

These are some of the typical steps included by a payroll service provider:

• Setting Up & Onboarding
  Giving all relevant information to the chosen payroll firm. You must confirm the pay rate and working hours for each employee.

• Timesheet Submission
  The payroll provider will require the number of hours worked for each employee in order to enter the information into their software and compute earnings and salaries. You might need to double-check the information for them.

• Gross Pay Calculation
  If needed, the payroll provider will handle pre and post-tax deductions. These can include things like taxes, child support, employment perks, and so on.

• Net Pay Calculation
  The payroll service provider can send bank files, make deposits or send cheques to your employees, as well as make other essential payments.

• The Reporting Period
  As the business owner, you will receive payroll reports for each cycle.

What are My Options to Handle Payroll? 

A lot of organisations have already experienced considerable changes since the start of the new decade in 2020. More and more of them are outsourcing payroll for a variety of reasons and advantages. The global payroll outsourcing services market is expected to grow to almost 6% by 2025. There are now more choices for businesses to decide how they will manage their HR & payroll. 

For now, you can consider these options: 

• Outsourcing Payroll to a Professional Partner
  Payroll outsourcing is one of the most popular ways to help businesses lighten the load. One of the key advantages you would get is the extensive knowledge these HR specialists possess, while guaranteeing compliance for enterprises.

• Hiring a PEO (Professional Employer Organisation)
  A PEO provides a full-fledged HR service, typically for SMEs. Since they will handle everything in HR, including payroll and taxes, these firms normally cost more than an average payroll firm.

• Subscribing to a Payroll Software
  Utilising payroll software to manage employees and payroll may seem easy and cost-efficient. But it does require some effort on your part to ensure the accuracy and timeliness of payroll data.

• Hiring a Contract Accountant
  Hiring a contract worker could assist small firms since it requires a shorter time commitment. However, payroll should be treated as a continuous process. There should be a sustainable workflow to ensure your payroll can go on without a hitch.

Conclusion 

It generally boils down to what is most efficient and cost-effective for your company when it comes to payroll outsourcing. Before making a selection, do some research and examine your company’s needs and demands. You’ll spend less time worrying about payroll and more time doing what you do best – operating and developing your business – if you choose the appropriate supplier.

Ledgen Group is a reliable partner for payroll and HR services in Singapore, Malaysia and Hong Kong. Our team delivers excellence from small to very large enterprises with accurate, timely payroll services. We have helped clients avoid costly errors and even implemented payroll technology to support the digital transformation of work and the workforce. Connect with us and explore how we can help.