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?

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.

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.

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.