Basic accounting requirements in Estonia
In Estonia the person obliged to keep accounting records should:
keep accounting and financial records and document all their transactions;
record all business transactions in the registers of accounting;
prepare and submit annual and other financial statements in the manner, under this Law and other legal acts.
Accounting is an integral part of doing business i Estonia.
Every operating Estonian company must maintain accounting records. Regardless of whether a company registered in Estonia has a violent activity or does not work at all, members of the board of companies are obliged to either independently keep the accounting of the enterprise either to hire an accountant or to conclude a contract with a company offering accounting services.
Internal accounting rules should include:
- the procedure for documenting and describing business transactions;
- circulation and preservation of original documents;
- maintaining an estonia accountant register;
- showing expenditure and income in the profit statement;
- audit of assets and liabilities;
- the method of presenting the accounting principles and information of the person obliged to keep the accounting records;
- how to prepare reports;
- the use of software in accounting, as well as circumstances related to the introduction of internal auditing techniques.
Estonian companies can choose between two types of income and loss schemes.
- In scheme 1 of the Business Income Statement, business expenses are broken down by the nature of the. Such scheme is often used by small companies, which do not need to divide costs by function.
- In scheme 2 of the income statement, transaction costs are divided by function. Scheme 2 is usually more difficult to implement because all business expenses require a decision on which business function they are related to. Certain costs should be apportioned among different functions. The Scheme 2 profit report provides a better overview of the cost of various company functions, while the allocation of costs by function is subjective.