Partnerships
If you're starting your company with someone else, a partnership may be the best choice. A partnership provides many benefits - you can combine resources and experience with another, secure private funding, and more. Just keep in mind that in partnership responsibilities and liability are split equally between each member. Nevertheless, certain types of partnerships will allow you to set the roles, responsibilities, and liability of each member.
A partnership does require that you register your business with your country and establish an official business name. After that, you'll be asked to get a business license, along with any other documentation that your country office can help you with. You'll also require to register your company with the IRS for tax purposes. Although this may seem like a complex process, there are lots of advantages to a partnership, so if you're looking to have a co-owner, don't be scared to go and try it - many online businesses are established using partnerships. Having someone to assist share the work of starting a new business is clearly worth the additional paperwork.
Limited Partnership
A limited partnership, or LP, is an off-shoot variant of a common partnership. While it may not be as common, it's a great bet for companies who are seeing to raise money from investors who aren't involved in working the day-to-day aspects of your operations. With a limited partnership, there are two positions of partners which are The General Partner and the Limited Partner. The general partner is usually included in daily business decisions and has individual liability for the company. There's also a limited partner who is not liable for debts and doesn't participate in regular business management of the company. Just like a common partnership, if you enter a limited partnership deal, you'll need to register your company with the state, found a business name, and tell the IRS of your new business.
Monday, July 27, 2020
Monday, July 13, 2020
Decisions when choosing a business type
Debt and Liability
Most of the small businesses and startups accept the personal liability associated with a sole proprietorship or partnership as a significant risk of doing business. If you're in a high-risk industry, such as selling CBD or firearms online, or simply want to keep your business and personal circumstances private, you can limit personal liability by filing for a more formal company structure. The downside is that this commonly takes more paperwork, costs more to register, and may have greater reporting or maintenance demands than simpler business models.
Filing taxes
You have two choices when it gets to filing your business taxes. You can record business profits/expenses on your tax returns, or you can hold your business file taxes separately as its entity. Most of the small business owners prefer the simplicity of filing taxes on their returns, but filing business taxes separately can help you keep your private and company finances separate.
Partners or Investors
If you're starting your business with a partner or private investor, you won't be able to create a sole proprietorship. You can pick between a partnership, a limited partnership, or an LLC.
Hiring employees
Some of the easiest business types like sole proprietorships can make it hard to hire workers down the road. While it's likely to change your business type to grow with your company, if you already have workers or plan to hire them, it may be better to future-proof by a more formal business structure like an LLC or corporation.
Are you beginning your company for-profit or non-profit cause? If you're just concerned with helping others and aren't going for profit, establishing a nonprofit can grant you tax-exempt status—although there's a lot of paperwork needed.
Will your business be held and operated democratically by its members with no particular owner? Known as a "Co-op", this type of company is very rare.
Monday, June 29, 2020
The most popular business types
If you're starting up your own company, you'll need to make a business plan to help you better outline your goals before doing to one of the business types below.
Business types
- Sole Proprietorship is the easiest type of business. Sole proprietorships are held and operated by a single person and are easy to set up.
- Partnership: A company held by two or more people who share responsibilities and earnings.
- Limited Partnership is a business partnership, often between business directors and investors.
- The corporation is a type of fully-independent company with shareholders. One of the most difficult business models.
- Limited Liability Company (LLC) is a mix of a partnership and a corporation, created to make it easier to begin small businesses. One of the most popular company types for startups.
- Nonprofit Organization is a type of company that uses its profits for charitable goals. Tax-exempt, but must match particular rules.
- Cooperative (Co-op) is a business controlled and operated for the benefit of the members of the company that use its services.
Picking the best kind of business
A startup's selection of business structure can have long-lasting effects on the way the company is run and works, including how it files taxes and whether it can hire workers.
Monday, June 22, 2020
Taxes in Lithuania
The Republic of Lithuania has a business-friendly tax policy and the tax system is aligned with EU legislation. The Lithuanian tax system has changed dramatically since 1990 to support foreign investment and the development of the labour market.
Taxes and other dues shall be charged to the budget on the order of the Supreme Council; however, regional and city councils deal with tax issues separately. In Lithuania, the basic principles of tax payment and their regulation are governed by the Law on Tax Administration, which defines the rights and obligations of the tax administrator and the taxpayer, as well as the procedure of tax calculation and the amounts to be collected.
Corporate income tax
Corporate income taxpayers are businesses that carry on business and are also taxed by non-profit organizations that make a profit from their commercial activities.
Personal income tax
The gradual reduction of personal income tax was started in 2006. Nowadays, every natural person is obliged to pay a personal income tax of 15% if he is employed or self-employed.
Real Estate tax
The real estate tax in Lithuania ranges from 0.3% to 3%. Private real estate is generally taxed at 1% of the value of the property above € 220,000. This threshold is raised to € 286,000 for families with three or more minor children (under 18 years) or children with disabilities requiring special care
Value Added Tax (VAT)
VAT is not calculated and paid to persons whose income from the sale of goods and provision of services (excluding long-term investment) is of public interest, such as food, postal services, etc.
Land tax
In Lithuania, land tax covers only land taxes, and the rules for calculating and paying this tax are set by city and district councils. Land subject to land tax is privately owned, with an annual rate ranging from 0.01% to 4% of the value of the land.
Taxes and other dues shall be charged to the budget on the order of the Supreme Council; however, regional and city councils deal with tax issues separately. In Lithuania, the basic principles of tax payment and their regulation are governed by the Law on Tax Administration, which defines the rights and obligations of the tax administrator and the taxpayer, as well as the procedure of tax calculation and the amounts to be collected.
Corporate income tax
Corporate income taxpayers are businesses that carry on business and are also taxed by non-profit organizations that make a profit from their commercial activities.
Personal income tax
The gradual reduction of personal income tax was started in 2006. Nowadays, every natural person is obliged to pay a personal income tax of 15% if he is employed or self-employed.
Real Estate tax
The real estate tax in Lithuania ranges from 0.3% to 3%. Private real estate is generally taxed at 1% of the value of the property above € 220,000. This threshold is raised to € 286,000 for families with three or more minor children (under 18 years) or children with disabilities requiring special care
Value Added Tax (VAT)
VAT is not calculated and paid to persons whose income from the sale of goods and provision of services (excluding long-term investment) is of public interest, such as food, postal services, etc.
Land tax
In Lithuania, land tax covers only land taxes, and the rules for calculating and paying this tax are set by city and district councils. Land subject to land tax is privately owned, with an annual rate ranging from 0.01% to 4% of the value of the land.
Monday, June 8, 2020
Taxes in Estonia
The Baltic Sea Region is the fastest growing business region in Europe. Trade flows between countries in the region have steadily increased every year. The Estonian tax system is considered to be one of the most liberal tax systems in the world. Estonia implemented a comprehensive tax reform in 2000 to create the simplest, most understandable and convenient tax system possible. The main advantage of Estonia is the low tax system, which can be described as a simple system with no hidden surprises and was designed to promote entrepreneurship and increase profits.
Corporate income tax
As a result of the reforms, the main benefit for entrepreneurs was the exemption from corporation tax on reinvested profits. Thus, Estonian companies are subject to income tax only on distributed profits, ie dividends. The corporation tax (tax on distributed profits) is 21% of the gross dividend.
Value Added Tax (VAT)
VAT payers are businesses whose taxable supply (excluding imports) does not exceed EUR 16 000 per the calendar year. The tax is levied on transactions in goods and services in Estonia and on imports of goods. The tax rate is 20% of the taxable amount.
Personal income tax
The tax rate for 2010 is 21% of taxable income, and residents are required to pay tax on their income earned both inside and outside Estonia. Taxable income includes income from employment (salary, wages, bonuses and other benefits), business income, interest, royalties, rent, capital gains, maintenance benefits, pensions, scholarships.
Social tax
This tax is levied to provide state pension and health insurance. It is paid by legal persons, natural persons and non-residents with regular income. The tax rate is 33% of the taxable amount. The tax must be calculated every month and the amount due must be paid no later than the tenth day of each month.
Land tax
The tax rate is between 0.1% and 2.5% of the taxable amount. The tax on land restricted to economic activities is set by the Estonian Government at 25%, 50% or 75% of the tax rate. Land tax is paid three times a year, through April 15, July 15, and October 15.
Corporate income tax
As a result of the reforms, the main benefit for entrepreneurs was the exemption from corporation tax on reinvested profits. Thus, Estonian companies are subject to income tax only on distributed profits, ie dividends. The corporation tax (tax on distributed profits) is 21% of the gross dividend.
Value Added Tax (VAT)
VAT payers are businesses whose taxable supply (excluding imports) does not exceed EUR 16 000 per the calendar year. The tax is levied on transactions in goods and services in Estonia and on imports of goods. The tax rate is 20% of the taxable amount.
Personal income tax
The tax rate for 2010 is 21% of taxable income, and residents are required to pay tax on their income earned both inside and outside Estonia. Taxable income includes income from employment (salary, wages, bonuses and other benefits), business income, interest, royalties, rent, capital gains, maintenance benefits, pensions, scholarships.
Social tax
This tax is levied to provide state pension and health insurance. It is paid by legal persons, natural persons and non-residents with regular income. The tax rate is 33% of the taxable amount. The tax must be calculated every month and the amount due must be paid no later than the tenth day of each month.
Land tax
The tax rate is between 0.1% and 2.5% of the taxable amount. The tax on land restricted to economic activities is set by the Estonian Government at 25%, 50% or 75% of the tax rate. Land tax is paid three times a year, through April 15, July 15, and October 15.
Monday, May 11, 2020
Latvia market overview
In 2010, Latvia’s economic growth exceeded the most positive forecasts. The ability of the Latvian businesses to cut their costs and faster-than-expected improvement in foreign markets helped the growth of exports and promoted industry as the main driving force of the Latvian economy.
The residential market has started to slowly recover as well. Consequently, in the 3rd quarter of 2010, the GDP increase was seen also in year-on-year terms - for the first time after a decline lasting more than two years.
There is a huge demand for credit support outside the banks’ traditional area of activity, e. g. in the sector of new businesses. As the market gains power, the banks are granting more actively.
On 12 October 2011, the Bank of Latvia received its annual discussion on economic growth. Achievements and Prospects in the Baltic States.
The part I Economic progress in Europe and their suggestions for the Baltic States: academic and policy perspective was dedicated to the analysis of the introduction of the euro — the recently completed changeover to the individual EU currency in Estonia and the planned changeover in Latvia.
The part II Latvia's exports: potential, challenges and likely prospects involved presentations by representatives of a business, an industrial association, a bank and a public institution serving exports which enabled us to judge of the long-term sustainability of the obvious export increase achieved to date.
There are 26 existing credit companies in Latvia.
As of 1 January, Latvia uses the euro as its remaining legal tender.
Introduction of the euro
Completing the time of equal circulation of lats and euro, i. e. the first two weeks of the year, the changeover to the euro in money and in return systems has become place easily and without delays or other incidents.
As of 15 January, the euro is the single official tender in Latvia, yet the change of cash lats is lasting and is taking place as thought and stated:
in 302 post offices, often in the countryside — until the end of March,
in investment banks — until the end of June,
at money offices of the Bank of Latvia in Liepāja, Daugavpils, and Riga — for an unlimited time.
The residential market has started to slowly recover as well. Consequently, in the 3rd quarter of 2010, the GDP increase was seen also in year-on-year terms - for the first time after a decline lasting more than two years.
There is a huge demand for credit support outside the banks’ traditional area of activity, e. g. in the sector of new businesses. As the market gains power, the banks are granting more actively.
On 12 October 2011, the Bank of Latvia received its annual discussion on economic growth. Achievements and Prospects in the Baltic States.
The part I Economic progress in Europe and their suggestions for the Baltic States: academic and policy perspective was dedicated to the analysis of the introduction of the euro — the recently completed changeover to the individual EU currency in Estonia and the planned changeover in Latvia.
The part II Latvia's exports: potential, challenges and likely prospects involved presentations by representatives of a business, an industrial association, a bank and a public institution serving exports which enabled us to judge of the long-term sustainability of the obvious export increase achieved to date.
There are 26 existing credit companies in Latvia.
As of 1 January, Latvia uses the euro as its remaining legal tender.
Introduction of the euro
Completing the time of equal circulation of lats and euro, i. e. the first two weeks of the year, the changeover to the euro in money and in return systems has become place easily and without delays or other incidents.
As of 15 January, the euro is the single official tender in Latvia, yet the change of cash lats is lasting and is taking place as thought and stated:
in 302 post offices, often in the countryside — until the end of March,
in investment banks — until the end of June,
at money offices of the Bank of Latvia in Liepāja, Daugavpils, and Riga — for an unlimited time.
Monday, April 6, 2020
Holding company structure in Latvia
From 1 January 2013, dividends will not be taxed, thus Latvia will introduce and recognize a corporate structure. The exemption applies to residents and non-residents as well as to natural and legal persons not established in low-tax countries and territories. It is expected to facilitate business through Latvian companies and to limit offshore transactions.
Amendments to the Corporate Income Law provide that, as of January 1, 2013, dividend income arising from a transfer of shares is not taxable, for both resident and non-resident. However, these rules do not apply to countries and territories included in the offshore list.
As far as taxes are concerned, not all offshore areas are included in the list of low tax and free tax zones and territories for tax purposes. The list is set out in Cabinet of Ministers Regulations No. 276 adopted on 26 June 2001. Sixty-four countries and territories have recently updated regulations.
It is common practice in Europe to maintain a holding system. The new events will help Latvia to attract investors and promote the business environment.
Concerning holding companies, the frequency of dividend distribution, the holding period and the number of shares may play an important role. Latvian law does not impose any obstacles in this regard. The Latvian Corporate Income Tax Act does not expressis verbis require either the term of holding or the number of shares. Thus, Latvian law offers advantages over jurisdictions such as Cyprus, Germany or Malta.
Another advantage is the lack of special requirements for foreign entrepreneurs. For example, there are no barriers or restrictions for foreigners to be a director or to become a shareholder, ie citizenship or residence is not relevant. There are also no special requirements for using a Latvian bank account, and foreign bank accounts are allowed.
By the Latvian Company Law, dividends are paid annually based on a resolution of the shareholders.
Amendments to the Corporate Income Law provide that, as of January 1, 2013, dividend income arising from a transfer of shares is not taxable, for both resident and non-resident. However, these rules do not apply to countries and territories included in the offshore list.
As far as taxes are concerned, not all offshore areas are included in the list of low tax and free tax zones and territories for tax purposes. The list is set out in Cabinet of Ministers Regulations No. 276 adopted on 26 June 2001. Sixty-four countries and territories have recently updated regulations.
It is common practice in Europe to maintain a holding system. The new events will help Latvia to attract investors and promote the business environment.
Concerning holding companies, the frequency of dividend distribution, the holding period and the number of shares may play an important role. Latvian law does not impose any obstacles in this regard. The Latvian Corporate Income Tax Act does not expressis verbis require either the term of holding or the number of shares. Thus, Latvian law offers advantages over jurisdictions such as Cyprus, Germany or Malta.
Another advantage is the lack of special requirements for foreign entrepreneurs. For example, there are no barriers or restrictions for foreigners to be a director or to become a shareholder, ie citizenship or residence is not relevant. There are also no special requirements for using a Latvian bank account, and foreign bank accounts are allowed.
By the Latvian Company Law, dividends are paid annually based on a resolution of the shareholders.
Wednesday, April 1, 2020
Taxes in Estonia
The Baltic Sea Region is the fastest growing business region in Europe. Trade flows between countries in the region have steadily increased every year. The Estonian tax system is considered to be one of the most liberal tax systems in the world. Estonia implemented a comprehensive tax reform in 2000 to create the simplest, most understandable and convenient tax system possible. The main advantage of Estonia is the low tax system, which can be described as a simple system with no hidden surprises and was designed to promote entrepreneurship and increase profits.
Corporate income tax
As a result of the reforms, the main benefit for entrepreneurs was the exemption from corporation tax on reinvested profits. Thus, Estonian companies are subject to income tax only on distributed profits, ie dividends. The corporation tax (tax on distributed profits) is 21% of the gross dividend.
Value Added Tax (VAT)
VAT payers are businesses whose taxable supply (excluding imports) does not exceed EUR 16 000 per the calendar year. The tax is levied on transactions in goods and services in Estonia and on imports of goods. The tax rate is 20% of the taxable amount.
Personal income tax
The tax rate for 2010 is 21% of taxable income, and residents are required to pay tax on their income earned both inside and outside Estonia. Taxable income includes income from employment (salary, wages, bonuses and other benefits), business income, interest, royalties, rent, capital gains, maintenance benefits, pensions, scholarships.
Social tax
This tax is levied to provide state pension and health insurance. It is paid by legal persons, natural persons and non-residents with regular income. The tax rate is 33% of the taxable amount. The tax must be calculated every month and the amount due must be paid no later than the tenth day of each month.
Land tax
The tax rate is between 0.1% and 2.5% of the taxable amount. The tax on land restricted to economic activities is set by the Estonian Government at 25%, 50% or 75% of the tax rate. Land tax is paid three times a year, through April 15, July 15, and October 15.
Corporate income tax
As a result of the reforms, the main benefit for entrepreneurs was the exemption from corporation tax on reinvested profits. Thus, Estonian companies are subject to income tax only on distributed profits, ie dividends. The corporation tax (tax on distributed profits) is 21% of the gross dividend.
Value Added Tax (VAT)
VAT payers are businesses whose taxable supply (excluding imports) does not exceed EUR 16 000 per the calendar year. The tax is levied on transactions in goods and services in Estonia and on imports of goods. The tax rate is 20% of the taxable amount.
Personal income tax
The tax rate for 2010 is 21% of taxable income, and residents are required to pay tax on their income earned both inside and outside Estonia. Taxable income includes income from employment (salary, wages, bonuses and other benefits), business income, interest, royalties, rent, capital gains, maintenance benefits, pensions, scholarships.
Social tax
This tax is levied to provide state pension and health insurance. It is paid by legal persons, natural persons and non-residents with regular income. The tax rate is 33% of the taxable amount. The tax must be calculated every month and the amount due must be paid no later than the tenth day of each month.
Land tax
The tax rate is between 0.1% and 2.5% of the taxable amount. The tax on land restricted to economic activities is set by the Estonian Government at 25%, 50% or 75% of the tax rate. Land tax is paid three times a year, through April 15, July 15, and October 15.
Monday, February 3, 2020
The Latvian Tax System
The Latvian tax system is influenced by both Latvian legislation and the requirements set by the European Union. This can be described as average, with each taxpayer contributing an average of 30% of their income to the budget. Also, the diverse system of tax rates, tax incentives and incentives in Latvia allows every taxpayer to choose the optimal sector for their industry and asset management. The lowest effective tax rate in the European Union is in The Republic of Latvia. There are several commercial business areas with individual tax privileges - payments below 80% to 100%: for example, Liepaja and Rezekne have special economic zones and tax breaks can be granted by the Freeport of Riga and Ventspils.
The tax principles are governed by the law on taxes and duties. Taxes are administered by the State Revenue Service (SRS) and are classified as direct and indirect taxes. Indirect taxes are taxes that are not directly deducted from income and are levied on goods and services. Direct taxes, on the other hand, are taxes levied on all taxable income of individuals and companies.
You will can contact SRS only via EDS
The Saeima of the Republic of Latvia supported amendments to the Law on Taxes and Duties, which says that from 2021 taxpayers will be able to submit applications to the State Revenue Service (SRS) only in the Electronic Declaration System (EDS).
It is planned that any application containing a request, complaint, question or proposal within the competence of the SRS, as well as the annual declaration of income will have to be submitted only electronically.
In order to enable non-EDS users to acquire skills in working with the electronic system, as well as to enable the SRS to carry out educational activities and to inform the public about filling in and submitting the annual income declaration electronically, changes are planned from 1 January 2021.
In order to use EDS, a person will need to register as a user of an electronic declaration system. This can be done online by authentication with an online bank, electronic ID card or secure electronic signature. You can also become an EDS user by submitting a personal application to the SRS and verifying your identity. The SRS will register the applicant as an EDS user and will be assigned a username and password.
Amendments to the law are intended to speed up the flow of information and reduce the administrative burden for both taxpayers and tax administrations. Currently, the SRS provides taxpayers with more than 220 different types of services in the field of tax administration and customs. SRS data show that last year almost 95 thousand documents were received from natural and legal persons, but in the first seven months of this year, more than 50 thousand documents were received in paper form, according to the annotation of amendments.
Similarly, SRS statistics show that approximately 18 percent of annual income statements are submitted on paper each year, and their proper processing in the SRS in 2017 cost more than two million euros.
Do you like e-changes?
Monday, November 25, 2019
Benefits of “In-depth Cooperation Programme” in Latvia
You already read about “In-depth Cooperation Programme” in Latvia.
We want to go deeper and tell you about the benefits of three levels in accordance with activity.These levels are Bronze, Silver and Gold.
All levels get:
Program’s Participant identification mark from State Revenue Service;
A non-excise prize chosen by a Program’s Participant that is awarded to a winner of a check lottery by a Member of the “In-depth Cooperation Programme;
Service department will be eligible to submit system modified version of a Program’s Participant with a tax risk management system for compliance check no later than six months after receiving the previous compliance check opinion;
After evaluating the technical documentation of the program’s changes and establishing that the program’s changes are significant, the SRS will determine the deadline for submitting the cash system version of the program for inspection.
Silver and Gold levels can get only:
Response to written request - within 10 working days;
Answer to telephone and electronic question in Electronic declaration system - within 7 working days;
The SRS shall refund the overpaid value added tax within 10 working days;
Advantages of the application of the general rate of excise duty;
Gold level brings even more benefits:
SRS provides individual State Revenue Service consultant - contact person;
On the initiative of taxpayers, the State Revenue Service organizes an external seminar with the taxpayer, assessing the availability of resources and the complexity of the issue;
Program’s Participant may be invited to attend meetings of the Advisory Board of the State Revenue Service;
If employees of company from Gold-level have no identified risks are users of the Electronic Declaration System, submit their annual income tax return to the Electronic Declaration System, then they can receive personal income tax refunds within one month (rather than three months).
Are the benefits seem impressive for you?
Saturday, November 23, 2019
When is Registration of VAT payers necessary for a person From Latvia?
VAT is one of the most important aspects of the company and every business needs to track it. There are some obligations When it is necessary to register as VAT payers in Latvia which any business should know.
When is it necessary for a person From Latvia?
If the company carries out transactions subject to value-added tax (VAT), the company must be registered in a VAT register.
If the amount of taxable transactions over the previous 12 months has exceeded EUR 40 000, and
the taxable person is required to register for VAT, then
by the 15th of the following month, an application must be submitted to the State Revenue Service (SRS).
Provides services to a person from another Member State of the European Union (EU) who has a VAT number or is carrying out an economic activity. The legislation provides for exemptions for certain types of services (eg educational services, freight transport services, real estate services).
Services are received from a VAT payer or economic operator in another EU Member State (exceptions are provided for certain types of services).
Receives services from a person who is not engaged in economic activities in Latvia (exceptions are also provided for certain services).
Purchases are made within the EU and the sum of the purchases (excluding VAT) per the calendar year is € 10,000 or more. There is also an exception and no obligation to register if, after one such purchase (€ 10,000 or more), goods worth more than € 10,000 are not expected to be purchased in the EU in the following calendar year. In this case, VAT of more than € 10,000 has to be calculated and paid into the state budget.
Exception:
If the taxable person has sold intangible assets or fixed assets once in the previous 12 months and such sales have resulted in more than EUR 40 000 for the relevant period, the taxable person shall be entitled not to be registered in the VAT register.
Also, you have the right not to register in the VAT register if, after one transaction, the registration threshold is exceeded and the taxpayer does not intend to carry out other taxable transactions over the next 12 months.
Friday, November 15, 2019
The form of business to register in Latvia
Before starting a business, you have to decide which form of business would be most suitable for you from a legal and economic point of view. The decision-making process must take into account various factors, such as the size of the start-up capital, how much your company will have customers and employees, the cost of the service offered, or what the monthly turnover, cost and profit will be.
There is a possibility to register different forms of business in Latvia:
- a legal person can be a joint stock company (AS),
- a limited liability company (SIA),
- a general partnership, a limited partnership,
- a cooperative company,
- an individual (family) enterprise,
- a farmer or a fisherman's farm. In turn, a natural person can be an individual merchant.
Similarly, a natural person may pursue his economic activity as a self-employed person.
When starting a business, the most appropriate way to do business could be to become a self-employed, sole proprietor, or start a SIA.
In order for your business to be legal, it must be registered with the Register of Enterprises (UR) and / or the State Revenue Service (SRS) For example, a self-employed person registers his or her economic activities in the SRS, while the individual merchant and the SIA are registered in the UR and SRS.
The type of economic activity you have chosen and the planned turnover will depend on the form of economic activity registration, as well as the types, amount and procedure of administration of taxes to be paid to the state. We draw attention to the fact that all who do business of any kind are bound by the requirements of the Law on Accounting. Businesses must be accountable to the competent person for accounting matters.
You can make a choice by your own or use service of Baltic Legal.
Thursday, November 14, 2019
Biggest Challenges Facing the Accounting
Every business faces a lot of challenges every day and accounting is one of them. It is one of the most important aspects of any company so businesses should avoid any of mistakes by doing accounting and follow their cash flow.
Accounting involves the process of analyzing, summarizing and recording of financial transactions of a business. This can be very difficult by itself, but there are other common financial obstacles that small business owners have to overcome.
What are the accounting obstacles?
Cash Flow
For small business owners, it is difficult to provide funds to cover running costs and keep the business alive. In order to stay on top of cash flow, carefully analyze your invoices and be cautious in following customer payments.
Unforeseen expenses
Even lower expenditures, such as a one-time government tax on all businesses in a certain region or increases in commodity prices, can lead to significant changes in the bottom line. Optimize your existing credit to manage your short-term expenses, but also monitor your long-term profitability to make sure your total liquidity is not jeopardized by changes in costs.
Taxes
Every business has to contend with paying taxes, but with the help of deductions, you can cut your bill and get on Tax Day. If your small business is home-based, home office deductions are important to make a profit.
Managing payroll
It may be difficult for a small business owner to take on the role of HR or payroll expert. If you have no knowledge of HMRC RTI, you do not know what tax code to add to your recruits. How will you pay employees in the long run? All these problems and many more can come your way.
Keeping on top of expenses
Keeping track of your revenue and recurring expenses can be extremely difficult. However, it is very important for small businesses to keep track of expenses in order to process and stay in the market.
Analyzing your finances
The best financial decision can best be made in three stages: interpretation, analysis and consulting. Regardless of the reports you use, the number generation is only the first step. What do these numbers actually mean? More importantly, how do you improve them? You need to interpret and analyze these numbers to arrive at the best tips and decisions.
Avoiding accounting mistakes
An incredibly important task for small businesses is choosing the right accountant. An experienced accountant or CPA can help your business avoid all of the accounting mistakes mentioned above. As a good accountant you will be able to advise you on all of the above issues as well as many other issues on how to grow your business in this busy market.
Hiring an internal accountant can be expensive, but it is important to get a qualified professional at an early stage. If you are a small business owner or a beginner facing these or other accounting problems, outsourcing financial and accounting needs can be a realistic and affordable way to address these issues faster and get back to focusing on what you do best.
Bookkeeping in Latvia
Every business must do bookkeeping and there are no exceptions. The accounts must show all the economic transactions of the company as well as any facts or events leading to a change in the state of the assets of the company.
The accounting records shall be kept in a double-entry system. In the simple entry system, accounting may be organized in accordance with the procedures specified by the Cabinet of the ministry:
sole proprietorships, sole proprietorships, farmers' and fishermen's farms whose turnover (income) is not economically viable and does not exceed EUR 300 000 in the accounting year, other natural persons performing economic activities;
associations, foundations, trade unions and religious organizations whose turnover (revenue) for the current and the accounting year does not exceed EUR 40 000.
Accounting should enable a third party, who is qualified in accounting, to obtain a true and fair view of the financial position of the enterprise at the balance sheet date, its results, its cash flows for a specified period and to determine and track the start of each economic transaction.
The information provided by the accounting officer shall be true, comparable, timely, relevant, comprehensible and complete. Accounting ensures the separation of income and expenses from the accounting period.
The company manager is responsible for keeping the data and for storing any documents that confirm the business, originals, copies of data.
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