The Pitfalls of Outsourcing Preparation of Accounts and Tax Filings to Freelance Accountants

It was reported by IRAS recently that a roasted meat wholesaler was convicted in Court for failing to declare sales income amounting to $3.5 million in its income tax returns and also understating GST output tax totaling more than $220,000 in its GST returns. Accordingly, the company director was fined $42,000 and sentenced to 6 weeks in jail. In addition, he has to pay a total of $355,000 in penalties and taxes.

One interesting fact, in this case, was that the company employed a part-time bookkeeper to prepare their accounts and tax filing for submission to IRAS. This is rather not uncommon as we frequently hear many businesses prefer to use them as the fees quoted are much lower as compared to those charged by accounting firms. However, we need to step back and think whether is it worth the trouble by saving a little on fees when you will not know that one day you will end up like the roasted meat wholesaler.

Therefore, we hope business owners will start to realize that the low fees quoted by freelance accountants are not sustainable and do more harm than good. You need to do your homework and ask questions before deciding to appoint the right one. This is because it is important to get the right accountancy and tax advice, from the right accounting firm at the right price, for your business. It is therefore, important for every business to hire a certified pubic accountant (CPA) who can help you with the accurate tax computation and tax filing. 

You may also think the amount of any fees is important, but what really matters the most is that you get good value for money. You need to be able to get the help and advice you want, without being made to have more help than you want, and you should only have to pay a fair rate for the right services; so you need to be as wary of those charging too little as those you think might charge too much!

Thus, before you decide, always get a quote first; any reputable firm will be happy to give you an idea of fees, upfront, and let them stand up to comparison. In this way you will be able to find someone you are happy to deal with, who has the right set-up and resources and has fees you feel are right for you. This is because more often than not, getting the right advice can lead to tax savings that can make the fees more than worthwhile. In the end, it will save you more than it will cost you to hire the right accountant.


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ACRA Cancels Registration of Filing Agent and Qualified Individual for AML/CFT Breaches

The Accounting and Corporate Regulatory Authority (ACRA) had cancelled the registrations of filing agent (RFA) and qualified individual (RQI) on 18 January 2024. The registrations were cancelled in view of breaches of anti-money laundering and countering the financing of terrorism (AML/CFT) controls under the ACRA (Filing Agents and Qualified Individuals) Regulations 2015 (the “ACRA Regulations”).

Some of the basic AMT/CFT controls that a RFA and RQI are required to exercise are as follows:

(a) perform additional customer due diligence measures when a customer is not physically present during onboarding;

(b) inquiring if there exists any beneficial owner in relation to some of its customers; and

(c) perform risk assessments i

RQIs and RFAs provide corporate secretarial services for business entities, such as helping customers to incorporate companies, file annual returns and fulfil other filing requirements under the Companies Act 1967 or other Acts under ACRA’s purview. RQIs and RFAs are required to perform customer due diligence measures in accordance with the ACRA Regulations, and conduct their business in such a manner as to guard against the facilitation of money laundering and the financing of terrorism. RQIs and RFAs must also satisfy statutory requirements such as being fit and proper persons, to be registered or continue to be registered.

RQIs and RFAs who breach their statutory obligations may be subject to enforcement actions, such as financial penalties of up to $10,000 or $25,000 per breach respectively or have their registrations with ACRA suspended or cancelled.

Therefore, RQIs and RFAs play an important role in helping to detect and combat illicit activities.

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