Closing the Financial Year: Steps for a Smooth Transition

29 November 2025

Editor: ET

Learn the essential steps for a smooth financial year-end closing in Singapore. From reconciliation to tax filing and ACRA compliance, this guide helps businesses transition confidently.

Closing the financial year is a critical process for every Singapore business, regardless of size or industry. It ensures that your financial statements are accurate, compliance requirements are met, and the company is prepared for the new fiscal period ahead. With proper planning and support from qualified corporate service providers such as Expede.com.sg, businesses can achieve a smooth and stress-free financial year-end. This guide breaks down the key steps Singapore companies must take to complete their year-end closing efficiently and confidently.

Further Reading: Leveraging Singapore’s Tax Policies for Long-Term Business Growth

Understanding the Importance of Year-End Closing

The financial year-end closing process helps businesses review their financial performance and establish a clear picture of the company’s position. For Singapore companies, this process is essential because it directly impacts tax filing, statutory reporting to ACRA, and strategic planning. Without a structured year-end approach, companies may face compliance risks, inaccurate reporting, or even financial penalties.

Step 1: Review and Reconcile All Financial Records

Accurate bookkeeping is the foundation of a smooth year-end close. Companies should begin by reconciling all financial accounts, including bank statements, cash on hand, accounts payable, and accounts receivable. Reconciliation ensures there are no discrepancies between the company’s internal records and external financial statements. In Singapore, proper record-keeping is also required under the Companies Act, and businesses must retain financial records for at least five years.

Step 2: Verify Outstanding Invoices and Payments

Outstanding payments can distort the accuracy of your financial reports. Businesses should review unpaid customer invoices and ensure that reminders have been issued where necessary. Likewise, companies must confirm that all supplier payments are recorded correctly. Addressing overdue transactions early simplifies the closing process and prevents errors in tax computation.

Step 3: Assess Inventory Levels and Conduct a Stock Take

For businesses dealing with goods, conducting a physical stock take is crucial. It helps determine actual inventory levels and identify stock discrepancies, such as damage, shrinkage, or outdated items. Inventory valuation affects the cost of goods sold (COGS), which directly impacts corporate tax calculations. Many Singapore businesses also adopt digital inventory systems to streamline this process and reduce manual errors.

Step 4: Review Business Expenses and Claimable Deductions

Year-end closing is the perfect time to review all business expenses and ensure proper classification. Singapore’s tax regulations allow deductions for expenses “wholly and exclusively incurred in the production of income.” This includes employee wages, rental expenses, utilities, professional fees, and certain marketing costs. Understanding which expenses are deductible helps businesses reduce taxable income and optimise tax savings. Corporate service providers like Expede.com.sg often assist businesses in identifying eligible deductions to avoid overpaying taxes.

Step 5: Update Depreciation and Capital Allowances

Companies must update depreciation for fixed assets or claim capital allowances where applicable. Singapore’s tax framework offers generous capital allowance schemes that help businesses write off the cost of qualifying fixed assets. These claims must be calculated accurately to ensure compliance with IRAS requirements. Incorrect claims may lead to audits, penalties, or the need to revise previously submitted statements.

Step 6: Prepare Financial Statements

All Singapore companies are required to maintain proper financial statements, which typically include the Statement of Financial Position, Statement of Comprehensive Income, Cash Flow Statement, and Notes to Financial Statements. Depending on your company type, these statements may need to comply with the Singapore Financial Reporting Standards (SFRS). Well-prepared financial statements not only support compliance but also provide valuable insights for management decisions and investor communication.

Step 7: Conduct a Financial Review Meeting

Before finalising the close, schedule a year-end financial review with your accounting team, management, or corporate secretary. This meeting should highlight key financial trends, variances from budget, and areas that require attention in the coming year. For growing SMEs, such reviews support better planning in budgeting, cash flow management, and tax optimisation strategies.

Step 8: Finalise Tax Computation and File Corporate Tax

Singapore companies must file their Estimated Chargeable Income (ECI) within three months from the end of their financial year and submit their annual Corporate Income Tax Return (Form C-S, C-S Lite, or C) by 30 November each year. Proper tax computation ensures your business meets IRAS compliance standards while maximising tax reliefs and exemptions. Engaging professionals can significantly reduce errors and ensure deadlines are met without stress.

Step 9: Submit Annual Returns to ACRA

After completing your financial statements, companies must prepare and file their Annual Return with ACRA. The Annual Return includes essential information such as company officers' details, share structure, and financial statements. Compliance with ACRA requirements is mandatory for maintaining your company’s good standing. Many businesses rely on corporate secretaries to prepare and file these submissions accurately and on time.

Further Reading: The Impact of Accurate Financial Reporting on Business Reputation

Step 10: Set Goals and Create a Financial Strategy for the New Year

Once the financial year is officially closed, take the opportunity to set new business targets, review cost structures, and plan for future investments. A forward-looking financial strategy allows companies to improve operational efficiency and strengthen their financial resilience. Whether it’s expanding into new markets, adopting digital tools, or revising pricing strategies, year-end insights can guide meaningful decisions.