How to Do Bookkeeping in Estonia: A Step by Step Guide
Keeping track of your company’s finances can seem like an impossible task. However, bookkeeping is an essential aspect of running any business. If you file your taxes as a sole proprietor or partnership, you are also required to keep records on a regular basis in order to meet government accounting standards. Keeping organized financial records will not only help you see the big picture when it comes to your business finances but also save you time and stress in the long run. Here is everything you need to know about bookkeeping in Estonia as a small business owner.
What is bookkeeping?
Bookkeeping is the practice of tracking and recording financial transactions in order to create an accurate financial record. You will use this record to track and manage your company’s finances by classifying, summarizing, and analyzing your company’s financial information. Bookkeeping also provides an audit trail so that you can demonstrate an ability to report on your use of company funds.
Who does bookkeeping in Estonia?
You may be wondering whether you need to hire a professional bookkeeper for your company. While it’s possible to do your own bookkeeping, most business owners end up hiring someone to do it for them. The amount and type of bookkeeping you do will depend on your business size and needs. You may be considering outsourcing your bookkeeping to an outside company. While many small businesses use accounting or bookkeeping services, some choose to keep the work in-house, especially if they are just getting started and don’t have a large volume of transactions to record. When deciding whether to hire an outside service or do your own accounting, you should take into account your experience level, the amount of transactions you have each month, and the complexity of your business.
Bookkeeping requirements for small businesses in Estonia
As a small business owner, you are required to keep records of your business’s financial activities. These records are known as bookkeeping and must be kept for a certain amount of time. In Estonia, if you keep your records in English, the bookkeeping period is 5 years. If you keep your records in Estonian, the bookkeeping period is 6 years. If you are audited by the government, you are required to provide these records as proof of your business’s financial activities.
How to do the basics of bookkeeping in Estonia
Before you begin, you need to understand the difference between cash accounting and accrual accounting. Cash accounting is when you keep track of your business’s revenue and expenses in real-time. Accrual accounting is when you record revenue and expenses when they are due, even if they have not yet been received or paid. When you understand which accounting method is best for your business, you are ready to get started with the basics of bookkeeping.
How to track income and expenses for your business
There are many different ways to record your income and expenses for your business. You can use a spreadsheet, digital bookkeeping software, or even good old-fashioned pen and paper. No matter what method you choose, you need to be consistent and organized so that you can easily track everything. A few tips for recording income and expenses include:
How to track your company’s assets
Assets are anything that has value and can be converted into cash. This can include cash, stocks, computers, or real estate. Although you may not think of these items as assets, they are an important part of business accounting. If you fail to account for these items, it could result in overstating your company’s income and understating your expenses. There are a few tips you can use to track your assets:
Bookkeeping is an important aspect of running any business. It is essential for accounting purposes, tax purposes, financial reporting, and more. As a small business owner, you are required to keep records on a regular basis in order to meet government accounting standards. Keeping organized financial records will not only help you see the big picture when it comes to your business finances but also save you time and stress in the long run.