Should You Hire an Auditor When Starting a Company in Singapore? A Clear Guide!

In the vibrant entrepreneurial landscape of Southeast Asia, Singapore has always stood out as a top student-with a robust legal system, transparent business environment, and generous tax incentives-drawing entrepreneurs from around the globe. In recent years, an increasing number of Chinese entrepreneurs, cross-border e-commerce practitioners, and even freelancers have turned their attention to Singapore, registering companies here to leverage its international platform for overseas expansion.

But here’s the question once your company is registered, do you immediately need to hire an auditor? Many people wonder “I’m just getting started-the books are simple, only a few transactions a year. Is it really necessary to spend thousands of Singapore dollars on an auditor?” This issue deserves careful clarification.

Let’s start with the conclusion Not all Singaporean companies are required to undergo audits. The key lies in whether your company qualifies as an Exempt Private Company (EPC) and meets certain financial thresholds.

According to regulations set by the Accounting and Corporate Regulatory Authority (ACRA), a company can be exempt from mandatory audit if it satisfies the following conditions

1. It has no more than 20 shareholders;

2. All shareholders are individuals (not corporations or other legal entities);

3. Annual revenue does not exceed SGD 100 million.

Companies meeting these criteria qualify as Exempt Private Companies (EPCs) and may legally file simplified financial statements without undergoing an audit. In other words, if you're running a small startup with individual shareholders and limited operations, you can legitimately skip the audit process-at least for now-and save a significant amount of money.

However, this does not mean you can operate without proper accounting practices. A common misconception is that “no audit needed” equals “no need to keep books.” This is a serious misunderstanding. Regardless of audit requirements, every company must legally maintain complete accounting records and file annual financial statements and tax returns on time.

The Inland Revenue Authority of Singapore (IRAS) enforces compliance strictly. Even if your company isn’t audited, any (random inspection) revealing irregularities could result in fines, damage to director credit ratings, or even revocation of company registration. Therefore, even when an audit isn't mandatory, professional accounting services remain essential.

You may choose to manage bookkeeping yourself, but a safer approach is to engage a local accounting firm or use reliable accounting software to ensure every income and expense entry is clear and traceable.

So, when do you actually need an audit?

First scenario Your company has raised external funding. For example, if you’ve brought in venture capital-even with fewer than 20 shareholders-if one shareholder is a corporate entity such as a VC fund-your company no longer qualifies as an EPC, and an audit becomes mandatory.

Second scenario You plan to raise funds, go public, or apply for a bank loan. Financial institutions or potential investors will require audited financial statements to assess your company’s financial health. A clean, credible audit report significantly enhances your business credibility.

Third scenario Your company grows rapidly, and annual revenue approaches or exceeds SGD 100 million. While this figure may seem distant, for fast-growing tech startups or cross-border e-commerce businesses, it's entirely achievable. Once this threshold is crossed, auditing becomes compulsory.

Another often-overlooked case involves subsidiaries within a group structure. If your Singapore company is part of a multinational group, even if small in size, it may still fall under audit requirements due to the parent company’s consolidated reporting obligations.

It’s also worth noting a growing trend as economic ties between China and Singapore deepen, more Chinese enterprises are establishing regional headquarters or holding platforms in Singapore. These companies often have complex structures involving cross-border capital flows and transfer pricing issues. Even if they technically qualify for audit exemption, most opt for voluntary audits as a prudent compliance measure.

Meanwhile, the Singapore government continues strengthening corporate transparency regulations. For instance, starting in 2025, the Beneficial Ownership Register (UBO Register) will require companies to disclose information about ultimate controlling persons, further limiting opportunities for shell company misuse.

In this context, sound financial management and independent audits have become a kind of “safeguard”-helping companies avoid risks while building trust with partners.

Then comes another practical question if you decide to proceed with an audit, how should you choose an auditor?

Consider these three factors professional qualifications, industry experience, and service pricing.

Auditors in Singapore must hold the CPA (Certified Public Accountant) qualification and be registered with the Institute of Singapore Chartered Accountants (ISCA). You can verify their status via the ISCA official website. Prioritize firms familiar with your industry-such as e-commerce, fintech, or trading-as they better understand your business model and can offer tailored advice.

Regarding cost, audit fees for small companies typically range from SGD 3,000 to 8,000, depending on operational complexity. Avoid choosing solely based on low prices-cheap services may lead to substandard work. At the same time, don’t blindly pursue the “Big Four” firms; for startups, boutique local firms often provide more flexible service and smoother communication.

One final reminder auditing is not merely a legal formality-it’s a valuable process that helps clarify your company’s financial position, uncover hidden risks, and improve management efficiency. A thorough audit might reveal issues like duplicate payments, idle assets, or overpaid taxes-problems whose resolution could save money in the long run.

Therefore, the decision to hire an auditor shouldn’t be based solely on “can I save money?” but rather on “is it worth it?” While cost-saving is important during the early stages of entrepreneurship, compliance boundaries must never be compromised. When it comes to essential expenditures, not a single dollar should be spared.

Setting up a company in Singapore? One critical question you must ask Do I really need an auditor? Here’s a deep dive into what you need to know.