Entrepreneurial consultations: company formation, an address and contact person services, accounting, VAT number, etc. specifically in Estonia, in EU.

FAQ Category: Accounting

How to authorize an accountant?

Annual reports are submitted in the e-environment of the business register.

If you have an Estonian ID, Mobile ID, or e-residency, the right of representation can be granted with the following steps:

  1. Log in to the Business Registry
  2. From the upper bar choose ,,Annual report”
  3. From the bar below choose „Defining persons entering data“
  4. Press the button below „Add new person for entering data“
  5. Fill in the field „Personal identification code of the person entering data”
  6. Select the company you want to add the person entering the data
  7. Click: “The person entering data is authorized to submit the report”
  8. Push the „Save“ button below

Now your accountant can enter your annual report data and submit it.

It should also be noted that the submitted report must also be digitally confirmed by a board member.

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Debitors managment procedure

Standard Procedure for Non-Payment of Services:

The established protocol for addressing non-payment of services typically involves several steps to ensure a fair resolution. These steps are as follows:

  1. Reminder Letter: A formal communication is sent to the debtor, notifying them of the outstanding payment and requesting immediate settlement. The letter serves as an initial reminder and allows the debtor an opportunity to rectify the situation promptly.
  2. Repeated Reminder Letter: In the event that the debtor fails to respond or settle the outstanding amount after the initial reminder, a subsequent reminder letter is sent as a follow-up measure. This letter reiterates the urgency of payment and emphasizes the potential consequences of continued non-compliance.
  3. SMS Reminder: In addition to written communication, a text message reminder is commonly employed as a supplementary means of notification. This method aims to further prompt the debtor to take immediate action in resolving the unpaid balance.
  4. Register of Debtors: If the debtor remains unresponsive or persistent in non-payment, their details may be recorded in a register of debtors. This record serves as a reference for future actions and ensures transparency within the process.
  5. Court Proceedings: Should the previous steps prove ineffective, legal action may be pursued through court proceedings. This involves initiating a formal lawsuit against the debtor, presenting the case before a judge or magistrate, and seeking a legal judgment in favor of the owed amount.
  6. Bailiff or Debt Collection Company: If necessary, following a court judgment, the services of a bailiff or a reputable debt collection company may be enlisted. These professionals are authorized to take further action to recover the owed funds, which may include seizing assets, enforcing payment plans, or implementing other legal measures.

It is important to note that throughout this process, initial transaction costs incurred as a result of pursuing the outstanding payment will be included. Additionally, as the proceedings progress, state fees and bailiff costs, which are associated with legal action and the involvement of authorized officials, will be added to the outstanding balance.

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What is a company’s annual report?

An annual report is the company’s financial statement of the past financial year.

All legal entities need to submit an annual report in Estonia – which of course includes companies owned by e-residents. Under the Commercial Code (see § 60), it’s mandatory to submit the report even if the company doesn’t have any activities during the financial year. It must be prepared in Estonian and in the official currency (EUR).

The deadline is six months after the financial year is over. Usually at late last day of June. But it is always wise to do it early.

The annual report can be submitted remotely if you have an Estonian e-residency card, Estonian ID card, Estonian Mobile ID or Smart ID. In other cases, the services of a public notary must be used.

All, but micro-enterprises must also include the management report. Larger companies must submit a cash flow statement and a statement of changes in equity. In certain cases, an auditor’s evaluation is mandatory.

Keep in mind that anyone can access the management reports. Therefore, consider carefully what the report contains.

Please take a closer look at our respective service:

Basic annual report

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Do I have to pay taxes for employees outside Estonia?

No, you don’t.

If the company has employees who are not tax residents of Estonia and work outside Estonia, the salary payments to these foreign employees are not taxed in Estonia, and we do not file tax returns for these employees.

Foreign employees must declare their income on behalf of an Estonian company in the country in which they are taxable.

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Do I have to do accounting?

Yes, it’s mandatory. When operating a business in Estonia, it is essential to comply with local accounting and legal standards to ensure that your company is adhering to the best practices in accounting.

Keeping your books in order is crucial to providing financial transparency to your creditors and business partners and ensuring the accurate calculation of taxes.

There are three main accounting policies that you must follow in Estonia:

  1. The Accounting Act of the Republic of Estonia – this law outlines the requirements for accounting practices, including bookkeeping, accounting documentation, and financial reporting.
  2. Estonia’s Good Accounting Practices – these guidelines provide recommendations for accounting standards and practices, including financial statement preparation, accounting documentation, and audit procedures.
  3. The guidelines issued by the Accounting Board of the Republic of Estonia – this is an advisory board that issues guidance on accounting practices and standards, including the interpretation of accounting regulations and the development of new accounting principles.

By adhering to these accounting policies, you can ensure that your company’s financial information is accurate and transparent.

Moreover, accounting is the basis for preparing the annual report. Submission of the annual report is mandatory, if not submitted, the state imposes a fine, and in some cases also forced termination.

Check out our corresponding service:

Starter accounting

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