A corporate service provider is a company which offers a few types of outsourced corporate services. Its main aim is to provide business support services, i.e. non-core business activities, to other companies.
Corporate service providers fall under the umbrella of the Business Process Outsourcing (BPO) industry. BPO has a wider scope whereas corporate services are limited to the administrative and accounting aspects of a business operation.
The following are the most common scope of services offered by a corporate service provider.
Corporate secretarial services
Every business entity requires the expertise and knowledge of a corporate secretary or company secretary at some point of its operation. A corporate secretary ensures that the company complies with all the relevant rules and regulations stipulated by the local government where the firm is situated.
According to the Singapore Companies Act, all companies incorporated in Singapore must appoint a company secretary within 6 months from its incorporation date.
New companies may find all the legal compliance matters challenging. Furthermore, hiring a company secretary may not be cost effective for small firms, as the role for this employee will be on a needs basis only.
That is why it makes financially sound sense to outsource this need to a corporate service provider. Unless, of course, a business entity consists of a large group of firms which needs this service on a very regular basis.
A corporate service provider usually has a corporate secretarial services division with a team of dedicated corporate secretaries. It also has the capacity to offer legal and tax-related advisory in relation to incorporation matters.
Scope of work by corporate secretaries include:
- Incorporation of a private limited company with Accounting and Corporate Regulatory Authority (ACRA)
- Provision of registered office and correspondence address for receiving notices and communications
- Provision of a named Company Secretary
- Maintaining and updating the Company’s statutory registers and records
- Lodgment or filing of any applications, notices and/or returns with ACRA
- Drafting of Director’s and Shareholder’s resolutions
- Preparation of documents to convene and hold AGM
- Filing of Annual Return with ACRA
- Sending reminders on the filing deadlines
- Assisting with bank account opening and making arrangements for a bank officer to meet clients
- Striking off the company’s name from the register
The fee for this service may vary. Some corporate service providers have a flexible fee structure to suit clients’ needs. Intime Corporate, for example, can offer the service on a retainer fee or an ad-hoc assignment basis.
Intime is also capable of helping clients set up offshore companies in various jurisdictions. For example, British Virgin Islands, Hong Kong, Marshall Islands and Labuan.
Related read: What are Corporate Secretarial Services?
Traditionally, payroll is handled by the Human Resources and/or Accounts departments of a firm.
Scope of services include:
- Maintain payroll file for each employee
- Computation of salary, overtime, commission, bonus, CPF and other deductions
- Salary disbursement to employees via bank transfer
- Preparation and distribution of itemised payslips
- First time CPF online account and GIRO set-up
- Monthly CPF e-Submission
- Perform special bonus runs
- Administration of leave and other staff benefits
- Preparation of Form IR8A and relevance appendices for all employees, and submission to IRAS electronically via Auto-Inclusion Scheme (AIS)
- Preparation of Form IR21 (tax clearance for leaving foreign employees), and submission to IRAS electronically
- Track employee salary increments and other variables linked to salary changes
- Ensure payroll policies and practices comply with the client company’s payroll policies and Ministry of Manpower (MOM) requirements
- Protect the confidentiality of employee personal data
- Maintenance and management of allowances, deductions, arrears, savings and loans for employees
- Provide payroll data back-up
Related read: Payroll Services – Why Outsource in Singapore
Companies traditionally have an in-house accounts department to handle bookkeeping and accounting works. However, many new businesses now rely on outsourcing to third party accounting professionals.
The scope of work includes:
- Data entry
- Bank and other account reconciliation
- Listing of Accounts Receivables and Accounts Payables
- Review of management accounts prepared by in-house accountants
- Liaising with auditors and clearing audit queries
- Preparation of consolidated accounts
- Preparation of detailed Fixed Assets listing
- Preparation of audit schedules and statements
- Preparation of Trial Balance, Profit and Loss Statement and Balance Sheet
- Conversion of Unaudited and Audited Financial Statements in full XBRL format
A corporate service provider can be engaged on a permanent, ad-hoc or periodic basis to meet a client’s specific objectives. The fee is cost-effective especially for smaller firms which may not have the capital for having many employees.
Related read: How Can Outsourcing Accounting Aid Your Company in 2020
Part of tax compliance involves proper documentation and timely submission in order for businesses to enjoy the benefits of tax incentives that are applicable to them. The bigger a company is, and the better the business is, the more tax-related documentation needs to be done.
The scope of work includes:
- Preparation of tax computation
- Filing of corporate and individual income tax returns with IRAS
- Advisory on Withholding tax matters
- E-filing of Withholding tax form
- Filing objection to IRAS tax assessment
- Assisting with IRAS queries on tax issues
- Corporate tax advisory and planning
- Applying for GST registration/deregistration
- Preparation of GST computation
- Submission of monthly/quarterly GST to IRAS
- Preparation of draft tax computation based on management accounts for the purpose of filing the Estimated Chargeable Income
Documentation can be a time-consuming task or a monumental challenge for companies that are resource-strapped or time-strapped. That is why it makes sense to outsource this task to a corporate tax service provider.
Related read: 6 Reasons Companies Should Use Corporate Tax Services
Business process outsourcing
BPO is the contracting of non-primary business activities and functions to a third-party provider. As mentioned earlier, corporate services is a subset of BPO.
BPO includes other areas of outsourced services such as:
- data mining
- data analytics
- legal services
- vertical-specific processes
- digital services such as social media marketing
- Information Technology Enabled Services (ITES)
- customer service
- call center operations
- customer relationship management (CRM) function
The Singaporean BPO Services market is big and growing due to popular demand. In 2017, it had total revenues of USD829.7 million, representing a compound annual growth rate (CAGR) of 6.2% between 2013 and 2017.
Why engage a corporate service provider
1. Free from the stress of compliance deadlines
If these deadlines are missed, penalties might be incurred. These are the additional expenses that many companies do not want, and which some cannot afford. An appointed company secretary at a corporate service provider will handle all compliance issues to ensure there are no missed deadlines.
2. Reduced manpower costs
Outsourcing negates the cost of salaries for in-house employees of entire departments. This cost saving is particularly crucial for startups with low capital and for firms which are facing financial constraints.
3. Increased data security
Cybersecurity is a serious matter in today’s world. Corporate service providers handle a large amount of sensitive data belonging to clients. They often have investments to ensure better security from cyber theft. Cybersecurity does not come cheap, especially if a company does not have funds to invest in this type of cost.
4. No down time
A corporate service provider has a pool of staff for the same tasks as multiple departments of a business entity. It doesn’t need to worry about someone calling in sick and causing downtime to a support service.
5. Competitive advantage
With non-core activities outsourced, an organization can focus more of its resources on business operations, marketing and expansion activities.
6. Higher quality and better performance
Because it is the core business of a corporate service provider, it is able to focus on providing corporate services with greater accuracy, efficiency and speed.
For a more cohesive and seamless experience, organisations should employ a corporate service provider with the full suite of non-core business solutions – corporate secretarial services, accounting, tax and payroll. This type of corporation will be able to offer a more competitive rate.
Disclaimer: The information contained in this blog is for general information purposes only and is not intended as legal advice. While we endeavour to provide information that is as up-to-date as possible, Intime Accounting makes no warranties or representations of any kind, express or implied about the completeness, accuracy, reliability, suitability or availability with respect to the content on the blog for any purpose. Readers are encouraged to obtain formal, independent advice before making any decisions.