How to Set Up a Chart of Accounts for a Singapore SME

Every transaction your business records lands in an account: a bank account, a sales account, a rent expense account, and so on. The full list of these accounts is your chart of accounts. Getting the chart of accounts right for an SME is one of the least glamorous jobs in running a business, but it decides how useful your profit and loss statement, balance sheet and GST returns will be for years to come. If you are new to keeping the books, start with our guide to bookkeeping for small businesses in Singapore.

This guide shows how to structure a sensible chart of accounts for a Singapore small or medium business, including GST accounts, and how to apply it in common cloud tools such as Xero or QuickBooks. It is general information, not accounting or tax advice. Your accountant should review your final chart, and GST rules should be checked with the Inland Revenue Authority of Singapore (IRAS).

The Five Building Blocks

Every chart of accounts is built on five account types. Assets and liabilities and equity appear on the balance sheet; income and expenses appear on the profit and loss statement.

• Assets: what the business owns or is owed. Bank accounts, cash, accounts receivable (money customers owe you), deposits, inventory and equipment.
• Liabilities: what the business owes. Accounts payable (money you owe suppliers), loans, accrued expenses, GST payable to IRAS and amounts owed to directors.
• Equity: the owners’ stake. Share capital, retained earnings and, for sole proprietors, owner’s drawings.
• Income (revenue): money earned from sales and other sources, such as service income, product sales, interest and government grants.
• Expenses: costs of running the business, from cost of sales to rent, salaries, CPF contributions, software and bank charges.

Most systems also split expenses into cost of sales (direct costs of what you sell) and operating expenses (overheads), so you can see gross profit separately.

A Numbering Structure That Scales

Numbering accounts by type keeps the chart tidy and leaves room to grow. A common approach is to give each type its own range.

Account type	Suggested code range	Example accounts
Assets	100 to 199	Business current account, petty cash, accounts receivable, rental deposit, computer equipment
Liabilities	200 to 299	Accounts payable, GST control, CPF payable, bank loan, amount due to director
Equity	300 to 399	Share capital, retained earnings, owner’s drawings
Income	400 to 499	Service revenue, product sales, interest income, grant income
Cost of sales	500 to 599	Purchases, subcontractor costs, freight inwards, merchant fees on sales
Operating expenses	600 to 799	Rent, salaries, CPF employer contributions, marketing, software subscriptions, bank charges

Leave gaps between codes (for example 410, 420, 430 rather than 401, 402, 403) so you can insert accounts later without renumbering. Xero and QuickBooks both let you set your own codes, and both ship with a default chart you can edit rather than build from scratch.

Setting Up GST Accounts Correctly

If your business is registered for Goods and Services Tax (GST), the GST you charge customers is not your income, and the GST you pay suppliers is not your expense. Both need to sit on the balance sheet. The GST rate is currently 9%, but rates and rules can change, so confirm the current position on the IRAS website.

There are two common set-ups:

1. A single GST control account. Output tax (GST on your sales) is credited to it and input tax (GST on your purchases that you are allowed to claim) is debited to it. The balance is what you owe IRAS, or what IRAS owes you, for the period. Xero uses this approach by default with its GST account.
2. Separate output and input tax accounts. Some accountants prefer an “Output tax” liability account and an “Input tax” asset account, cleared to a “GST payable” account when the GST return is filed. This makes reconciliation easier for businesses with many transactions.

Either way, the real work is done by tax rates (tax codes) in your software. Each income or expense line gets a tax rate such as standard-rated, zero-rated, exempt or out of scope, and the software posts the GST amount to the GST account automatically. Map these carefully, because your GST F5 return (the regular GST return filed with IRAS) is generated from them. Things to check:

• Expenses where input tax is generally not claimable (IRAS lists categories such as certain club subscriptions and private car expenses) should use a tax rate that does not claim GST.
• Overseas digital services and imported goods may need specific tax codes. Ask your accountant how these apply to you.
• If you are not GST-registered, do not create GST accounts at all; just record costs including any GST you paid.

Applying It in Xero or QuickBooks

The broad steps are similar in both tools:

1. Start from the Singapore default chart. Choose Singapore as your country when setting up the organisation, so the default accounts and tax rates suit local rules.
2. Delete or archive what you will never use. A shorter chart is easier for staff to code correctly.
3. Rename accounts in plain language. “Software subscriptions” is clearer than “General expenses 2”.
4. Add the accounts specific to your business. A café might add “Food purchases” and “Packaging” under cost of sales; an agency might add “Freelancer fees”.
5. Set default tax rates on each account. This speeds up data entry and cuts GST errors.
6. Enter opening balances if you are moving from another system or spreadsheet, using figures your accountant confirms.
7. Connect bank feeds and create bank rules that code recurring transactions to the right accounts.

If your business has subsidiaries, keep account codes consistent across entities. That makes consolidation much easier, which our guide on how to set up a holding company in Singapore touches on.

Singapore-Specific Accounts Worth Adding

A few accounts come up again and again for local SMEs:

• CPF payable and CPF employer contributions, so you can track amounts owed to the CPF Board separately from salaries.
• Skills Development Levy (SDL) and, if you hire foreign workers, foreign worker levy expense accounts.
• Government grant income, kept separate so grants are visible and easy to report.
• Amount due to or from director, for expenses paid personally or loans to the company.
• Income tax payable, for corporate tax provisions your accountant posts at year end.
• Annual filing and corporate secretarial fees, often grouped under professional fees.

Check the treatment of grants, levies and director balances with your accountant, since how they are recorded can affect tax.

Common Mistakes to Avoid

• Creating a new account for every supplier. Use contacts for suppliers and keep accounts for categories.
• Mixing personal and business spending. Use a separate business bank account, and post any personal items to drawings or the director’s account.
• Using “Miscellaneous” as a catch-all. If it grows, split it into proper categories.
• Changing the chart mid-year without telling your accountant, which makes year-on-year comparisons harder.
• Letting the GST account drift. Reconcile it to each GST return so errors are found early.

A clean chart of accounts makes month-end faster, keeps GST returns accurate and gives you numbers you can actually make decisions with. Spend an afternoon setting it up properly, have your accountant review it, and revisit it once a year as your business changes.

Further reading: How to Set Up a Procurement Process for a Small Business