Unicount is the simplest way to start an Estonian company. After registering a company in five minutes or less you will probably need either an accounting service or at least annual accounts preparation at the end of each financial year. Luckily, since January 2023 Unicount has offered these services to our virtual office clients through the Client Dashboard.
Unicount accounting services are designed to match the needs of e-resident founders, provided online in multiple languages and with clear manuals for the most frequently asked questions. In this article, we explain how accounting service works.
When do I need an accounting service?
First of all, we never want you to pay for something you do not need. Monthly accounting service in Estonia is not a must if you do not have monthly tax reporting liabilities in Estonia. For example, Estonian companies have to submit monthly VAT returns only if registered for VAT in Estonia. Registration is voluntary until your turnover does not exceed 40 000 euros annually. For corporate income tax, you may as well be tax-liable in the countries where you have a permanent establishment.
This 40 000 euros is also further narrowed as it only counts if the sales were to clients within the EU. You can also have VAT or sales tax liabilities in other countries where you offer your goods or services. For example, we have clients in e-commerce who have VAT liability in France and Germany because they sell in Amazon’s French and German stores. This means registering for VAT there with local tax authorities and having a local accountant for VAT reporting.
You would also need monthly accounting service when having first employees in Estonia or monthly director’s salary. We recommend having a professional accountant submit your monthly VAT and payroll tax reports. Taxes on distributed dividends need to be reported the same way as payroll taxes by the 10th calendar day of the following month. Even though it is possible to do it yourself via the e-Tax service it is not something we really would advise you to do.
What are the important dates for monthly tax reporting?
There are two important dates for the accounting service clients. These are the deadlines for Estonian tax reports on the 10th and 20th date of each calendar month.
The 10th is the deadline for income and social tax return (TSD) and the 20th is for VAT return (KMD). Both tax returns are submitted for the transactions of the previous calendar month. This means that your company’s documents such as bank statements, sale and purchase invoices and other relevant financial information must be forwarded to the software as soon as possible but not later than the 8th date.
Accountants need to see your sales invoices, expense documents, and other source documents to do the tax accounting. Otherwise, they may not be able to submit the VAT return on time and there can be fines imposed on your company for failing to follow the official deadlines. A bank statement alone is not sufficient in Estonia as the law requires source documents for all transactions. These source documents can be electronic copies but they need to be kept safely for seven years. It is best to keep those digital copies as a backup anyway as paper documents tend to get lost.
For the income and social tax return, accountants check your business bank statement and any direct input from you about dividends and salaries paid during the previous month. Fringe benefits and share capital insertions or reductions also need to be reported with the same tax return. Subscribing to the accounting service does not mean that your accountant is liable for collecting all the source documents and tax reporting. Legally the company management board is responsible and your accountant is only helping you to stay compliant.
Annual accounts
Even if your company is not registered for VAT in Estonia, and does not have payroll or dividend payments, you still need to submit annual accounts by the 30th of June. This is the deadline for submitting the annual accounts for the previous calendar year unless your financial year does not overlap with the calendar year. All companies registered via Unicount have a standard financial year overlapping with the calendar year unless you have changed it.
It is easy to order annual accounts from your Client Dashboard. You only pay the minimum fee at the start and then we look in to see the actual scope of the work. Once the scope is established and agreed we charge the additional fees before commencing and preparing your accounts.
Some of our virtual office clients have asked if they could submit their annual accounts themselves if their companies have been dormant and no sales revenue was generated in the previous financial year. Technically it is possible via the e-Business Register. Unicount generally does not recommend it if you are not familiar with Estonian GAAP (Generally Accepted Accounting Principles) and want to record any items such as expenses, assets, or liabilities even if your company generated no sales.
If you still feel like doing it be warned that the process is not an easy one and the user experience has never been designed to please someone who is not an Estonian and already a qualified accountant. So please be patient when doing it on your own.
What software does Unicount use for the accounting service?
We are using Envoice software to automatically process all your monthly expense documents. This software also enables you to create correct sales invoices accepted in Estonia and the EU. Envoice simplifies the communication between you and the accounting team and keeps your books organized with minimum effort. After subscribing to the monthly accounting service through the Client Dashboard you will receive an invitation link from Envoice to access your account.
If your company has a special e-mail address designed to receive all the incoming purchase invoices you can set up auto-forwarding to the Envoice email address that you can find in the welcome message from your accountant. If your company doesn’t have that kind of email address yet we suggest creating it. It allows your suppliers to forward all the invoices to your software automatically.
A very convenient way to submit receipts on the go is the Envoice mobile app which works for both Android and iOS devices. So with the mobile app, there are three different options to send your company expense documents to the accounting team in time. Using the mobile app for receipts, uploading the documents manually to Envoice, and emailing invoices to the Envoice e-mail address we created for your company.
When forwarding expense documents it is good to know that Envoice only accepts invoices in PDF or picture file (JPG, PNG) formats. Only one expense document per email gets processed automatically.
Thanks for reading!
This article was written by Adam Rang, Communications Director at Unicount. You can get started with Unicount at Unicount.eu.
