Singapore Taxation Laws one of the best in the world
Taxes are one of the main reasons why so many foreign investors go for registration of company in Singapore. With corporate taxes capped at only 17% and a whole lot of other business taxation benefits, Singapore’s taxation system is ranked amongst one of the best in the world.
Singapore also does not tax on income sourced from outside the country as long as the income is not deemed as brought inside Singapore. The country also does not tax new startups for income up to S $100,000 for each of the first three years the company is in operation. For the same period, for income up to S $300,000 is taxed at only 9%. This makes Singapore one of the best places to start a venture for entrepreneurs and investors. Singapore company registration by foreign entrepreneurs has been rising all throughout the past decade and today Singapore is known to be the preferred destination by business owners from world wide.
It is also quite simple to calculate your tax obligations in the country. As part of the ongoing compliance requirements, companies based in Singapore need to maintain their books of accounts and file returns each year. It is easy to calculate the final tax amount as the laws are well defined without much chances of ambiguity. You can also use online tax calculators to find out the exact tax obligation for your company in a financial year.
Accounting Outsourcing Nitty-Gritty that you need to Know
Are you dreading about clearing the accounting and bookkeeping work which has piled up in your desk in view of the approaching tax season? Simply opt for accounting outsourcing to deal with the issue with ease and perfection. This is the simplest way for accounting firms and CPAs to deal with heavy workload to meet customer demand during the peak tax season. Simply undertaking accounting outsourcing will not serve your purpose, until you have proper knowledge about all the aspects of outsourcing.
Imagine you are going to give out your entire business process to be handled by another organization. I am sure you will want to know all you can about this particular aspect. You will surely not want to be caught unaware; if goes wrong with the entire process. Research and more research is the answer for you to meet such eventualities.
Choose the right outsourcing company to do your accounting outsourcing work. Numerous outsourcing come up with attractive and lucrative offers to do the work for accounting firms like yours. Find out carefully as many things as you can about the company before you actually let them do your work.
The internet is a storehouse of information and utilizing it in the best possible manner is in your hands. Check out the services provided by the various companies. Also try to get testimonials from firms who have already done accounting outsourcing from the particular outsourcing company.
Check out the various security measures put in place by the company to protect your company and customer data. This is an important aspect of with which you must take special care. In this internet age, people have become increasingly skeptical about giving out information about their financial details online. Security measures must be stringent enough to deal with this issue and to also bring back the faith of customers to the entire process of accounting outsourcing.
Your work will be done very quickly and you will be able to meet customer deadlines with plenty of time to spare. Highly qualified professionals are always hired for doing outsourcing work. So this means that you serve your customer’s with the best possible service that you can afford with in your budget. Accounting outsourcing work is done faultlessly by the professionals.
Monetary wise accounting outsourcing works out just perfectly for your accounting firm. You do not need to undertake any additional financial investment for the process. In fact you can earn through accounting outsourcing. Imagine you do not spend an extra cent and yet end up earning profits. This is just incredible; you must not waste time pondering over pros and cons of accounting outsourcing.
Check to see if the outsourcing firm provides any offers for free trails. You can actually take up this opportunity to see for yourself the quality of the work done by the firm. Based on this work done, you can decide whether you actually want to work any further with the company for accounting outsourcing work or not.
Accounting outsourcing can turn out to be beneficial to you in many ways. All of these benefits are subject to your working with the right accounting outsourcing company. So try outsourcing your accounting and experience a faster and more efficient way of doing business today!
How To Avoid Those Mind-Boggling Depreciation Rules
Tired of dealing with those complex depreciation rules? Thanks to recent tax law changes, here’s how to avoid them completely while benefiting from a lucrative small business tax break that not only puts money in your pocket, but also makes the filing of your income tax return much simpler. Always wearing a custom silicone wristbands with your favorite slogan will help you reduce stress too.
What am I talking about? It’s called the Section 179 deduction, and if there’s one tax law you need to understand, this is it. Here’s why:
The Section 179 deduction enables the Small Business Owner to “expense” (i.e. deduct in the current year) up to $105,000 of the cost of most business equipment, rather than use those stingy depreciation rules that require you to write-off the cost over five or more
years.
What’s so great about that?
Think about it like this: I’ve got a dollar and I’d like to give it to you. You have two choices — I give it to you now, or I give it to you 5 years from now.
Which do you prefer?
Obviously, you’d rather have it now, right?
And why is that?
Because of what you learned way back in Finance 101: something your banker calls “the time value of money.”
I’ll spare you a boring textbook definition. Instead, let’s just assume we agree on this simple point: Is a dollar worth more today or 5 years from today?
It’s worth more today.
And that’s why the Section 179 deduction is so valuable.
Huh?
Let’s use an example to bring all this financial theory into reality.
You buy $5,000 worth of office equipment in 2005. Under normal depreciation rules, you wouldn’t get to take a deduction for $5,000 in 2005. Instead, you’d write off the $5,000 over 6 years — part in 2005, part in 2006, etc.
If you’re in the 35% tax bracket, you get your $1,750 in tax savings over 6 years. Yawn. That’s a long time!
You’d get your deduction, and the resulting tax savings, but you’d have to wait 6 years to realize all the benefits.
Section 179 says that if you meet certain requirements, you can deduct the full $5,000 in 2005. You reduce your taxes by $1,750 in Year 2005.
So let me repeat my rhetorical question: Uncle Sam has $1,750 he’d like to give you. When do you want it? All at once, or spread out over 6 years?
That’s the beauty of Section 179.
But you have to meet certain requirements to benefit from Section 179. One requirement concerns the total amount of equipment you can deduct rather than depreciate. In 2002, the amount was $24,000. And for 2003, the amount was originally set at $25,000.
Then Congress and the President passed a new tax bill in late May 2003 that raised that amount to a whopping $100,000. And since that $100,000 is adjusted for inflation each year, the maximum Section 179 deduction amounts have been increasing:
Year 2004 — $102,000
Year 2005 — $105,000
Year 2006 — $108,000
Never liked depreciation? Well, you can pretty much kiss it good-bye now.
One final note: A few other requirements must be met to claim the Section 179 deduction. Here’s a brief, but not comprehensive, overview:
1. Most personal property used in a trade or business can be deducted via Section 179. Real property cannot. Typical examples of personal property include: office equipment such as computers, monitors, printers and scanners; office furniture; machinery and tools. Real property means buildings and their improvements.
2. The $100,000 amount (adjusted for inflation) can be used through 2007. In 2008, unless new legislation is passed, the amount goes back down to $25,000.
3. There are special rules regarding the application of Section 179 to the purchase of business vehicles. For example, the special “SUV rule” that allowed 6,000 LB vehicles to be fully deducted (up to the $100,000 amount) was recently changed to $25,000, effective October 22, 2004.
4. Your total Section 179 deduction is limited to the business’ annual profit. In other words, you cannot use the Section 179 to create or increase a loss.
This is known as the “taxable income limitation.” For “C” Corporations, this limitation is very cut and dried. But if your business is an “S” Corporation, Partnership, LLC, or Sole Proprietorship, it may not be as limiting as it seems. For these non-”C” Corp businesses, the Section 179 deduction can be used to offset both business and non-business income.
And if you’re married filing jointly, the Section 179 deduction can offset your spouse’s income, including W-2 income.
Example: You start a new business in 2005 that ends up with a loss for the year of $5,000 (before taking the Section 179 deduction). Your spouse has W-2 income of $60,000. Even though your business is unprofitable, you can still take the full Section 179 deduction of $5,000 (again, assuming your business is an entity other than a “C” Corporation).
Be sure to consult with your tax professional to get the scoop on all the Section 179 rules.
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Car Donation Tax Deduction
Next to wanting to contribute to charitable causes, perhaps your biggest motivation to donate your car is the substantial tax break it can give you. Don’t be misled by information about your return, because the tax breaks you can get from a car donation may not be as big as you think.
If your car donation is worth more than $500, then you should read “Revenue Provisions” in Section 884 of Title VIII. This details the new restrictions on car donations value at more than the aforementioned amount.
In a nutshell, the provision caps the allowable amount of tax deductions to the gross proceeds received by the recipient (the charitable organization you donate your car to) from the sale of your donated vehicle. When you donate a vehicle with a claimed value of $500 or more, your tax-deductible amount will depend on how the charity uses the vehicle. For example, if the charity sells the car, then you can only deduct the amount of gross proceeds that the charity received from the sale. On the other hand, if the charity plans to use the car for tax-approved charitable work as approved by the law, you can claim the car’s fair market value.
The same law also requires the charity to provide you with a written acknowledgment of the contribution within 30 days from the day you make the donation. If your recipient gives you a false or fraudulent acknowledgment, they will face a penalty.
In many instances the tax breaks you get from donating your car are enough to cover (or exceed) the amount you could have sold the car for. Remember that you usually do not have to pay for any paperwork or dealer fees when you donate your car. In the end it is still more sensible to donate you car rather than sell it. This way you don’t only make a profit – you also help worthy causes.
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Accounting Methods – Cash and Accrual
When starting a business, you have to determine the method you are going to use for accounting and paying taxes. The two choices are the cash method and the accrual method.
Cash Method
If you are looking for simplicity, the cash method is probably your best accounting choice. Generally, income and deductions can be claimed when payment is actually received or made. This is best shown with an example.
I open a small business and have to order business cards and stationary. I receive the products and pay the invoice on November 18, 2005. Under the cash method, I can deduct the cost on my 2005 tax return.
Some businesses are restricted from using the cash method. C corporations may only use the cash method if they have less than $5 million in gross revenues for a particular year. Professional Service Corporations can use the cash method without limit, while farming corporations can due so if gross revenues are less than $25 million. Tax shelters are prohibited from using the cash method.
Accrual Method
The Accrual Method of accounting is a bit more complex. Under this method, the focus in on the date the expense is incurred, not paid. Although this may seem a small difference, it can play havoc with your books and piece of mind.
Using our previous example, assume I order business cards and stationary on the December 18, 2005. I receive the products on December 30th, but don’t pay the invoice until January 20, 2006. When can the expense be claimed? It depends on when economic performance occurred.
Generally, economic performance occurs when goods or services are provided to you. In the above example, economic performance would arguably occur when the business cards and stationary were delivered with the invoice on December 30th. Thus, I would be able to deduct the expense for the 2005 tax year.
In Closing
As you can see, the cash method is the easier of the two accounting methods. To determine the best method for your business, speak with a tax professional.
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