Do Singapore Companies Really Need Annual Audits? Here’s Why They Matter and How They Affect Your Business

Recently, many people setting up companies in Singapore have been asking the same question Does our company really need to go through annual filing? Some believe it's just a formality-a waste of time and money. Others think it’s an optional administrative step. But in reality, annual filing plays a crucial role in running a business in Singapore and is far more than mere paperwork.

Let’s start with the bottom line Yes, every privately held company Private Limited Company registered in Singapore must complete its annual return and, where applicable, undergo an audit. This isn’t a suggestion-it’s a legal requirement enforced by the Accounting and Corporate Regulatory Authority ACRA, and it cannot be ignored.

Under ACRA rules, every company must submit annual financial statements, hold an Annual General Meeting AGM, and file an Annual Return with ACRA each year. This entire process is what most people refer to as “annual review” or “year-end compliance.” Although commonly called “annual audit,” it actually involves several steps-preparing financial reports, holding shareholder meetings, coordinating tax filings-and together they form a full suite of compliance procedures.

You might wonder My company is small and doesn’t generate much revenue. Can I skip this? The answer is no. Regardless of size, profit status, or activity level-even if your company is dormant-you are still legally required to fulfill these obligations. Dormant companies simply need to file specific dormant company returns instead.

So why does Singapore place such strong emphasis on annual compliance?

There’s good reason behind it. One key factor that makes Singapore one of the world’s most attractive business hubs is its transparent, efficient, and trustworthy environment. The annual filing system helps maintain that trust.

First, it enhances corporate transparency. By regularly disclosing financial information, stakeholders-including investors, partners, banks, and even the public-can gain a clearer picture of a company’s actual operations. That builds confidence in doing business. Imagine you’re considering working with a company that has never shared any financial data-wouldn’t you hesitate?

Second, annual filing gives businesses a chance to take stock. Many small and medium enterprises are so focused on day-to-day operations that they rarely step back to assess their financial health. The annual process forces them to organize records, review assets, check tax positions, and spot potential issues early. For example, some companies only realize during preparation that an outstanding receivable hasn’t been collected for years, or that certain expenses are unusually high-insights that could significantly impact future decisions.

And failing to comply? That comes at a cost. ACRA imposes penalties for late submissions, and in severe cases, non-compliant companies may be struck off the register entirely. In 2025, media outlets reported lists of hundreds of Singaporean companies forcibly removed due to prolonged non-compliance-including once-active SMEs. Once deregistered, not only does it damage the owner’s reputation, but it can also affect their ability to set up new ventures down the line.

The good news is that Singapore has been streamlining the process to make compliance easier. Through the BizFile+ platform, most documents can now be filed online, reducing paperwork and eliminating trips to government offices. Eligible small companies can also benefit from simplified financial reporting requirements, lightening the load.

Still, there’s a common problem many startups and foreign entrepreneurs don’t fully understand local compliance rules-and end up making costly mistakes. For instance, some assume that as long as they file taxes i.e., submit income tax returns to IRAS, they’ve covered all bases. But filing taxes and submitting an Annual Return to ACRA are two separate responsibilities managed by different agencies. Both are mandatory.

Another widespread misconception? That hiring an accountant automatically completes the annual filing. Not quite. While accountants prepare financial statements, other steps-like convening the AGM, approving directors’ reports, and officially submitting the Annual Return-must be carried out or authorized by company management. The AGM, though often symbolic, must be formally held and minuted; otherwise, the entire annual filing process remains incomplete.

So how should companies approach annual compliance?

Here are three practical tips

1. Plan ahead.

Most Singapore companies must hold their AGM within six months of their incorporation anniversary and file the Annual Return within seven months. Start preparing at least three months in advance to avoid last-minute stress.

2. Work with reliable professionals.

If you don’t have in-house finance staff, consider engaging a licensed local accounting firm or corporate services provider. Just make sure to verify their credentials-don’t fall prey to unqualified agents offering cheap deals.

3. Build solid financial habits.

Keep accurate books throughout the year and retain original receipts and records. When annual filing season arrives, you’ll save time, reduce errors, and avoid scrambling at the deadline.

Annual compliance isn’t a burden-it’s protection. It shows respect for the law and demonstrates responsibility toward your own business. A compliant company earns greater trust from clients, investors, and partners, giving it a real edge in competitive markets.

As global economic conditions improve, entrepreneurial activity in Singapore is picking up again. More international businesses and individuals are choosing to establish companies here than ever before. In this context, understanding and taking seriously foundational compliance tasks like annual filing has never been more important.

After all, true business wisdom isn’t just about making money-it’s also about knowing how to play by the rules.