Story Of How CBO Saved Many Very Successful Business Owners Having Neglected Their “BackOffice” And Ended Up On The Other Side Of The Laws
My corporate service firm – Corporate BackOffice or CBO in short – encountered many business owner clients who had started their business ventures, and after having proven the Concept of their Business Models, they would start to embark on an expansionary path via organic means by setting up few more new companies, and also via inorganic means by selling franchises leveraging on their good brandnames and proven Operation SOPs.
However, many times, CBO had to “save” these business owners from having stepped over to the other side of the Laws!
It all started because these Business Owners did not believe in keeping proper Accounts to be maintained.
Many did not believe in having proper Transaction trails. Transaction Documents were read, and then discarded along the way because they do not want to see paper lying around. They did not even bother to store digital images of these documents !
They were unaware that IRAS requires proper document trails to be stored for up to 5 years. This would be clear Violation number 1!
Funds were being moved between companies without documentary trails.
IRAS implemented Transfer Pricing Documentation Rule starting from 1.1.2019. This will have significant impact on their groups of companies. Not having set up proper Transfer Pricing Documentation will be Violation number 2!
Their companies are so successful that one after another, whose cumulative revenue over 4 calendar quarters had exceeded SGD 1 million without them knowing ( because no proper Accounts were maintained all this while ), that they had missed due dates for registering these companies for GST. There will be huge Penalties for not registering their companies for GST as per GST Act. This is clear violation number 3!
Being Director of their own companies, they were unaware of the SINGAPORE Companies Act. They did not appoint qualified Company Secretaries. They appointed themselves as the Company Secretaries of every company they had set up.
As a result, there were mounting non-compliance to ACRA’s requirement. Some of the violations can be criminal offense in nature, and many offenses can carry Jail terms in addition to fines. This is Violation number 4!
Unknown to them, funds were also moved from the company to themselves for personal uses, which clearly violated ACRA’s strict requirement against moving funds to a Director of a company. This is clear Violation number 5!
Annual Form C-S Tax filings to Iras need to be accompanied with signed financial statements by the Director of the company which endorses that proper Accounts have been maintained, Tax Computation Schedules to Support all Claims, and proper volunteering of removing invalid claims which are disallowed by the Singapore Income Tax Act.
Clearly, their past Tax submissions were based on their own estimations and guesstimates, and this is clear Violation number 6!
After knowing these 6 Violations, my firm – Corporate BackOffice or CBO in short – sprang Into action immediately from Day 1 we onboarded these clients.
CBO worked tiredlessly to conduct a comprehensive Due Diligence on their Corporate Secretarial matters to list out all the non-compliance. CBO would hope to “protect” these innocent business owners from ending up in jail for non-Compliance to ACRA regulations.
CBO team would work to sort out the accounting mess accumulated over the years, and back tracking many transactions from the Bank Statements, in an effort to understand the Money Flows, before redoing the Accounts in proper manner for these errant business owners.
After setting the Accounts straight, CBO would then register for GST for their companies which had crossed the compulsory S$1 mil mark, and explained to IRAS in a manner to ask for leniency.
These exercises were very costly to these business owners, and very time consuming to CBO too. CBO did not really earn much from these engagements as many time we had to work overtime to complete other regular clients work as a result.
Had these errant business owners do the above right from the beginning, unnecessary time and money could be saved.
“Do Things Right” in addition to “Doing the Right Things”!
“Doing the Right Thing” in business would make you successful. However, if you never “Do Things Right”, you may end up on the other side of the laws which will put you back to where you have started, may be worse, you would never see a return ever back into Business!
If you need help, feel free to contact us at :
(M) +65 90880669
www.corporatebackoffice.com.sg
