Accounting — Helpful Tips to Save Your Time and Money

A Complete Guide on Correct Back-Office Management in Estonia

Accounting: Basics

Accounting is the core of a company's financial management reflecting all points of the company's economic performance under certain unified parameters. It provides founders with a pile of constant data and may positively affect the decision-making process in the case of the holistic approach. Together with that, bookkeeping is a required operation by a government. It's needed to ensure that businesses fulfill their obligations and to collect the country's economic metrics for more relevant financial management. In Estonia there is one other significant requirement: all companies must file an accounting report on their activities to tax reporting agencies once a year and once a month if a company obtains a VAT number.

However, accounting requirements differ from one business to another. For instance, public companies must perform a recurrent independent audit apart from common accounting. Such measures are required to provide investors with trustworthy data.

The Difference Between Accounting, Tax Reporting, and Management Accounting

Actually, all these metrics are almost the same but they show slightly different points of view. Let's observe these diverse perspectives:
  • standards for accounting process (these metrics report the same transaction differently)
  • taxation (these metrics show whether a certain operation requires a tax payment, reporting, and at which rate)
  • business interest (taking into account different points, you'll better determine how exactly certain operations affect business growth)

How You Can Ease Up Accounting for Your Company

Don't spend your precious time on accounting, just delegate this process to a professional. Bookkeeping doesn't worth it, really. While your accountant will take care of this time-consuming and monotonous task, you'll be able to focus on your business.
a Helpful Tip
Don't spend your precious time on accounting. While your accountant will take care of this time-consuming and monotonous task, you'll be able to focus on your business.

Accounting Requirements in Estonia

Basic accounting rules and processes in Estonia are regulated by The Accounting Act. Accounting for taxes is regulated by other laws and acts.

In practice, there are two different approaches to accounting: yearly reporting (for companies without a VAT number and companies that don't have paid employees) and monthly reporting (companies that obtain VAT ID and pay salaries to their employees). Let's take a look at both of them.

Yearly Reports (Included in the Standard Subscription)
According to the Accounting Act, an accounting entity must prepare an annual report for the fiscal year at the end of each financial year (January, 1 — December, 31). The annual report should be filed at the Commercial Register within six months after the end of the financial year and consists of the annual accounts and the management report.

Monthly Reports (Included in the Pro Subscription)
The accounting process is a bit different for companies that obtain a VAT number. The taxable period is one calendar month, and VAT returns must be submitted to the tax authority (even for the months when there could be nothing to declare) by the 20th day of the month following the taxable period.
The report typically includes the following documents:
  • Management report;
  • Balance sheet;
  • Income statement;
  • Cash flow statement;
  • Statement of changes in equity;
  • Notes to the annual accounts.
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What's Included in Enty's Subscriptions

Documents and Reports
Enty's basic subscriptions include the following types of documents for accounting reports:
  • processing of sales and purchase invoices, agreements, acts;
  • preparation of Credit and Debit reports, and Annual reports;
  • the Pro subscription also includes tax declarations.
❗️Please notice that Payroll documents, Bank statements, and any additional reports are not included in the packages.

However, you can purchase them separately:
  • Payroll, TSD declaration: €10/person
  • Out-of-box report: starting from €10
  • Declaration change: €6/pcs

Consultation With an Accountant
We think that all accounting matters should be discussed with professionals. That is why all basic subscriptions include one-hour consultation with an accountant.

After purchasing a subscription, you will be able to pick a time slot for your consultation and address all your questions. We advise you to prepare all your questions and send them via email to an accountant before the call to save time and help the accountant be as exact as possible. This will also save you time.

You are also able to purchase additional consultations for €45/hour.

How Accounting Works on Enty

After you have purchased an accounting subscription with Enty and have consulted with an accountant on your case, you can start uploading the documents for the report. To do that, choose the needed document or drag and drop it as shown on the GIF below.

Please make sure to upload the documents not later than on the 10th day of the month following the reporting period.
As soon as you've uploaded the document, you can identify which type it is and leave your comments. This will help us have a better understanding of a document.

After that, the accountant prepares the report based on your documents. If there will be any additional questions to complete the report, they will contact you to get clarification.

As soon as the questions are clarified, the report is ready to be downloaded and can be filed to the authorities.

How to File the Report With e-Residency

If you already have your e-Residency card or one of the digital IDs issued in the Baltics, the process will be done easily by our team.

To do this, first, you will need to grant access to your Private Client's page on the Tax and Customs website. We have prepared a separate guide on the process, in order to avoid confusion, you can check it out here.

How to File the Report Without e-Residency

If you don't have an e-Residency card, our team will also file the report for you. However, the process might be a bit more complicated in this case.

To file a report, a client will need to grant access to the Private Client's page on the Tax and Customs website. However, in this case, it is done through the provision of Power of Attorney to an accountant.

To do that:
1) a client needs to fill in the power of attorney to grant access rights to a representative of a legal entity (find the template here);
2) Send the photo of your passport, power of attorney, and your photo holding the aforementioned documents next to your face to the accountant via email.

And that's it, you won't need to do anything else. We will file the report for you and will notify you as soon as everything is done.

Important Information for Companies With VAT Number

As we have identified above, the monthly package also includes tax declarations that companies with a VAT number are obliged to file on the monthly basis.

In this case, it is especially important to provide documents on time, so we can guarantee the timely submission of the VAT declaration by the 20th of every month.

After our team processes all documents, bank statements, and files a VAT return, the accountant will send you reports by email, which consists of VAT declaration, profit and loss statement for the reporting period, accounts payable and receivable reports as of the end of the reporting month. We also advise providing access to your Private Client's page as soon as possible.

And that's it! That's how our accounting service works, feel free to address your questions to our team if you require any assistance. If you haven't purchased an accounting package yet, we recommend making this now :)
But if you don't want to use our great solution (we really can't realize why), below you will be able to find the information about how you can find an accountant yourself.

How to Find the Right Accountant for Your Company

Well, you might be a bit confused by the words: "Find the right accountant". Let's go over the most important things while evaluating one.

Check the qualification
Firstly, a qualified accountant is supposed to show reliable experience in the professional area and have a specified list of services with clear prices. But most significantly, an accountant's approach to reporting and document exchange must fully suit you. The process will be at its best, if you will find a personal connection.

Not only bookkeeping but taxes too
An accountant is likely to be your helper on the matter of taxation and finances, too. That's why it is vitally important for an accountant to be experienced in the legal field of the country where your company performs — despite EU countries tend to unify the accountancy standards, each country still has its own rules and regulations.
Get a sneak-peek on this screenshot and learn how the profile of a good
accountant and a conversation should look like
The initial steps
To evaluate your new accountant's performance, we advise keeping an eye on how they work during the initial stages. Primarily, a competent bookkeeper is supposed to request information about your business and the company's other data to estimate future reporting paragraphs. They can also ask to provide them with previous reports to go through the full financial history of your company. After that, an accountant explores each primary document, reviews previous relations with counterparties, requests a bank statement, and so on. Then you'd rather reach an agreement with the way and certain date of documents exchange.

Based on this comprehensive information, your bookkeeper creates an accounting entry (a special type of transactions reflection), adds new transactions' data, explores invoices, and prepares a future report. All of that whilst you just stay focused on what matters most and keep an eye on your accounting only once in a while.

However, both of you should create certain rules to have the most productive workflow: when you must download documents, how you're supposed to get notifications about the absence of any document, etc. These simple frameworks will help you avoid mistakes.

But, the best way is to use Enty and we will take care of everything!
Invoicing automation is equally essential — it will allow you to streamline your busy workflow. But let's talk about it in the next section.
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