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Accountability
Keeping accounts is a crucial business management tool that helps you as a business owner and act as a legal business owner.
The way you actually keep your accounts must comply with your country´s Accounts Act and provisions on VAT, Sales Tax and other settlement.Provide information
When running a company you must keep annual accounts providing information on all financial activities in your firm.
Documentation
- Accounts must be kept on a regular basis and must be well documented with vouchers (invoices, receipts, pay slips, statements, etc.).
- Vouchers must be kept accessible for a period of years.
- You do not have to keep the accounts yourself, but you are responsible for the keeping.
As a side effect from this work, you will be able to calculate the annual tax base and currently keep track of your VAT payable.
Annual Accounts
Annual accounts and VAT settlements are two mandatory issues in your country´s
tax requirements.
Annual accounts must be kept in such a way that it is clear to the tax authority
how you have reached the profit of your firm.
Being a sole trader you have to pay income tax on your profit.
Annual accounts are basically made as follows:
Total sales of the year / turnover
- less the company’s total expenses
= The company’s profit, which is your wage.
Companies are also liable to pay tax, although the calculation differs from that
of an individually taxpayer’s.
Who is to keep the accounts?
If you can manage the various financial routines yourself then you have met most of your administrative obligations.
You yourself do not have to keep the books etc. Most companies let an accountant
do the job, others hire a freelance bookkeeper or have a consultancy take care
of it.
- Go to next
business issue: Accountancy Step by Step
Year end is approaching - Keep calm and carry on reconciling.
- Unknown accountant
