A common misconception among new entrepreneurs in Singapore is that if a business is “small” or “exempt,” it doesn’t need to maintain formal accounts. In 2026, the regulatory stance from the Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Singapore (IRAS) is clearer than ever: Accounting is not just an option; it is a legal requirement for every registered company.
While your small business may be exempt from audits or filing full financial statements in some cases, the duty to maintain proper accounting records remains absolute. At Hallmark Corporate Services, we help small business owners understand where they stand in the 2026 compliance landscape.
The Legal Mandate: Section 199 of the Companies Act
Under Section 199 of the Singapore Companies Act, every company must keep accounting and other records that sufficiently explain the transactions and financial position of the company.
- The Scope: This applies to all companies, including Exempt Private Companies (EPCs) and even Dormant Companies.
- Retention Period: You are legally required to keep these records (invoices, receipts, bank statements, and vouchers) for at least 5 years.
- The Penalty: Failure to maintain these records can lead to fines of up to S$5,000 or even imprisonment for directors.
Accounting vs. Auditing: Knowing the Difference
Many small businesses confuse “accounting” with “auditing.” While accounting is mandatory for all, auditing is not. In 2026, your company is exempt from audit if it meets the “Small Company” criteria (meeting at least 2 of 3):
- Total annual revenue ≤ S$10 million.
- Total gross assets ≤ S$10 million.
- Total number of employees ≤ 50.
Even if you are audit-exempt, you must still prepare a set of financial statements that comply with Singapore Financial Reporting Standards (SFRS).
Compliance Requirements at a Glance (2026)
| Requirement | Mandatory for Small Businesses? | Why? |
| Bookkeeping | YES | Required by Section 199 of the Companies Act. |
| Financial Statements | YES | To present at the AGM or for Annual Return filing. |
| Tax Computation | YES | Required for filing Form C-S/C with IRAS. |
| Audit | NO | If you meet the “Small Company” criteria. |
| XBRL Filing | OPTIONAL/SIMPLIFIED | Solvent EPCs are generally exempt from full XBRL. |
IRAS Requirements for Small Businesses
The tax authorities in Singapore (IRAS) require accounting records to substantiate your tax returns.
- Form C-S / C-S (Lite): Even if your revenue is below S$200,000 (qualifying for the “Lite” version), you must still have prepared financial statements and a tax computation ready in case IRAS conducts a 2026 compliance review.
- GST Obligations: If your taxable turnover exceeds S$1 million, accounting becomes even more stringent, requiring quarterly reconciliations and digital record-keeping via InvoiceNow-compatible software.
SFRS for Small Entities: A Simplified Approach
To reduce the burden on small firms, the Accounting Standards Committee (ASC) provides the SFRS for Small Entities. This framework simplifies reporting by:
- Removing complex requirements for financial instruments and share-based payments.
- Reducing the volume of “Notes to the Financial Statements” required.
- Focus on the needs of primary users like lenders and shareholders rather than public markets.
Don’t Risk “Manual Record” Pitfalls
In 2026, “shoebox accounting”—where receipts are tossed into a box for the end of the year—is a significant business risk. With the April 2026 Companies Act amendments increasing director penalty limits to S$20,000 for certain offenses, ensuring your accounts are accurate and SFRS-compliant is the best insurance policy you can buy.At Hallmark Corporate Services, we specialize in Small Business Accounting. We provide cloud-based bookkeeping that ensures you are always audit-ready, tax-compliant, and focused on growth. Are your 2026 accounts up to statutory standards? Would you like a review of your small business bookkeeping to ensure you’re meeting ACRA and IRAS mandates today?