Cryptocurrencies and related transactions, including exchanges and payments in cryptocurrencies, are becoming increasingly popular. Five years ago, cryptocurrencies were only talked about in a few and narrow circles in Estonia, but now they are on the agenda almost everywhere.

In this article, Anna Šendik, partner and chief accountant atKidnes OÜ, who specialises in cryptocurrencies, shares her tips on how the initial document should be drawn up when paying bills in cryptocurrencies.

How to prepare an invoice paid in cryptocurrency?

The primary document in accounting plays a key role in recording an economic transaction. Although cryptocurrencies are digital assets, they must be recorded in the same way as traditional assets. What does this mean?

It means that the amount of the transaction must be recorded in both the cryptocurrency and the national currency. If a company pays an invoice in cryptocurrency or receives a payment in cryptocurrency, it is important to account for such a transaction in both currencies to ensure accurate financial reporting and to comply with tax laws.

Let’s say a company receives an invoice from a supplier for services rendered or goods delivered in a cryptocurrency, such as bitcoins(BTC). In order to record the transaction correctly, it is necessary to state

1. cryptocurrency amount – the actual amount the customer has to pay in BTC, for example 1 BTC.
2. Conversion to national currency – at the time of the transaction, the exchange rate of the cryptocurrency against the national currency (e.g. the euro) must be fixed in order to calculate the cost of the transaction in the national currency. Let’s assume that the exchange rate of BTC against the euro on 17.10.2024 is 1 BTC = 62 185 EUR. Therefore, the cost of the transaction in national currency is 62 185 EUR.

Cryptocurrency transactions are accounted for in the same way as normal economic transactions. Let’s review the steps of the process.

1. Recognition of the liability (recording the invoice) – once the invoice is issued, it is recorded in the books at the exchange rate at the time of the transaction. In our example, this is 1 BTC = 62 185 EUR, so the liability is 62 185 EUR in national currency. In the accounting entries, the company’s liability to the supplier is recorded at EUR 62 185.
2. Invoice payment in cryptocurrency – Due to the volatility of cryptocurrencies, an exchange rate mismatch may occur when paying an invoice. For example, if a company pays an invoice one week later because of a change in the exchange rate and by that time the BTC exchange rate has risen to EUR 63 420, the invoice payment is recorded in national currency as EUR 63 420. The exchange difference is EUR 1 235 and is recognised as a foreign exchange loss.

A mismatch occurs if the cryptocurrency exchange rate changes between the time of invoicing and the actual payment. Such a change in the exchange rate will result in either a loss or a gain, depending on the direction of the change.

Example of the recognition of an exchange difference

Suppose a company receives an invoice for 1 BTC (at an exchange rate of EUR 62 185) but pays it a week later when the exchange rate has risen to EUR 63 420.

1. First entry (invoice registration):

• Debit: 62 185 EUR (cost of goods or services).
• Credits: 62 185 EUR (obligation to supplier).

2. Recording of the transaction at the moment of payment (in case of exchange rate change):

• Debit: EUR 63 420 (liability to supplier).
• Credits: 1 BTC (company’s crypto wallet).

3. Recognition of exchange rate difference:

• Debit: 1 235 EUR (exchange rate difference loss).

The payment of invoices in cryptocurrencies and their recording in the accounts requires particular attention to be paid to exchange rate fluctuations, as they may affect the financial results of the company. The accurate use of the exchange rate at the time of the transaction and the timely accounting for exchange differences will help the company to reduce risks and avoid unexpected financial losses.

The specialists at Kidnes OÜ will share their advice on cryptocurrency accounting. Ask for more information here.

Article taken from rmp.geenius.ee.

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Reporting plays a key role in businesses of all sizes, providing financial transparency and enabling informed decision making. For accountants, reporting is an important part of their professional life.

Importance of reporting

Reporting is a systematized data on the financial condition of the organization for a certain period of time. It includes financial statements, tax returns, cash flow statements and other documents. This data is necessary for both internal management of the company and external stakeholders such as investors, creditors, government agencies and auditors.

Peculiarities of reporting

Filing statements is a complex process that requires organization, accuracy and attention to detail. Some key aspects include:

Data Preparation: Accountants must gather and organize a variety of company financial data, including balance sheet, income statement, tax data, and others.

Transparency Policy: Transparency in reporting is a key accounting principle. Underreporting or overreporting can have serious consequences.

Use of Software: Many modern accounting software programs allow automating the reporting process, minimizing errors and simplifying data analysis.

Continuous Knowledge Update: The field of accounting and taxation is constantly changing. Accountants must keep up with changes in legislation and reporting standards.

Reporting is not just a formality, but a key tool for effective management and maintaining a company’s financial stability. Accountants play an invaluable role in this process, ensuring the accuracy, reliability and timeliness of financial information. Compliance with reporting deadlines is not only a legal requirement, but also a strategic necessity for successful business development.

Reporting includes various types of reports that provide a complete picture of a company’s financial activities:

Business Year Report: This report provides a comprehensive overview of the company’s financial performance for a specific period, usually 12 months. In most cases, the business year coincides with the calendar year (January 1 to December 31), however, it may vary according to the company’s articles of association. The report contains detailed data on income, expenses, assets and liabilities of the company. According to the reporting procedure, this report must be submitted within 6 months from the end of the business year. It is submitted to the Commercial Register.

KMD and TSD declarations are an important part of a company’s tax returns. Filing these returns on time avoids penalties and unpleasant consequences. It is submitted to the Tax and Customs Board.

KMD declaration reflects turnover tax and requires accurate calculation of tax liabilities, it is filed once a month, the deadline for filing the declaration and paying the tax is set for the 20th day of the following month.

TSD declaration is related to income and social taxes, mandatory funded pension and unemployment insurance payments, filed once a month, the deadline for filing and payment of taxes is set for the 10th day of the month following the month of payment.

Gambling Tax Declaration: Organizers of gambling games are obliged to submit a gambling tax declaration and pay the relevant tax no later than the 15th day of the calendar month following the taxation period.

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In today’s reality, where technological change dictates new rules of the game, one profession remains unwavering in its importance and relevance – that of the accounting profession. Despite the rapid development of technology and automation of many areas of activity, the role of the accountant remains undoubtedly important and an integral part of the successful functioning of enterprises and organizations. Let’s understand why the accounting profession is still at the center of attention in the business world.

Many may wonder why, despite all the innovations, accounting remains in demand and remains an integral part of the business world.

The accounting profession is far from being a boring routine job. It requires analytical thinking, technological literacy, knowledge of taxes and legislation. Accountants play the role of financial advisors, analysts and strategic partners to businesses. All of these factors make the accounting profession incredibly in-demand and promising for those seeking a successful career in finance and business.

1. Financial responsibility and control

The accountant has a key role in ensuring the financial responsibility of the business. He or she ensures that financial records are kept accurately and on time to avoid errors and financial losses. The accountant also controls expenses, budgeting and tax obligations, ensuring compliance with legislation and minimizing risks.

2. Strategic decision making

The modern accountant is not just about numbers and spreadsheets, but also an analyst who can extract valuable information from financial data. These analytical skills enable the accountant to provide business leaders with information to make strategic decisions. By relying on the analysis of the financial condition of the company, management can determine the best areas of development and resource planning.

3. Tax Compliance

One of the most complex aspects of running a business is taxation. Accountants deal with tax calculations, tax return preparation and tax compliance. Due to constant changes in tax rules, a competent accountant becomes an indispensable expert in minimizing tax liabilities and avoiding penalties.

4. 4 Responsibility for financial reporting

Financial reporting is the hallmark of any organization. The accountant is responsible for the preparation and accuracy of financial statements, which play a role in transparency and information sharing between the organization and its stakeholders for decision making. Reliable financial reporting helps to establish trust with investors, banks and partners.

5. Adapting to change

The field of accounting is constantly evolving and changing due to new legislation, technological innovations and market demands. Accountants must be willing to learn and self-improve in order to keep up with changes and stay relevant in their field.

In this article, we have looked at just a few aspects of why accountants remain sought-after professionals. Their ability to ensure financial stability, analyze data, comply with tax laws, and create reliable financial statements makes them indispensable team members for any business. Times change, but the accountant’s role as the guardian of financial discipline and sustainability remains relevant and necessary.

Сообщение Why Accounting is a Demanded Profession: Key Aspects of Significance and Relevance появились сначала на Kidnes.

Choosing an accountant is an important step for a successful business. Optimal accounting and financial reporting play a key role in strategic decision making and financial sustainability of a company. When it comes to choosing an accountant, there are a number of critical factors to consider.

Professional knowledge and experience: Having extensive professional knowledge and experience in accounting is fundamental. An accountant should have a thorough understanding of accounting standards, tax laws and financial processes.

Relevance of knowledge: Accounting is a field subject to constant change. An accountant is always on the lookout for legislative updates and changes in accounting standards to ensure that finances are accurate and up-to-date.

Reliability and accuracy: An accountant must be a reliable and responsible professional who ensures accurate accounting, minimizes errors and prevents potential financial problems.

Communication skills: An accountant is able to communicate effectively with clients, auditors, authorities and others. Good communication clarifies details, resolves issues and prevents misunderstandings.

Adaptability: The business environment is subject to change. An accountant is able to adapt to new situations, different business models and client characteristics.

Technology literacy: Modern accounting systems and programs play an important role in effective accounting. An accountant must be familiar with technology tools and be willing to use them to automate and optimize accounting processes.

Business Compatibility: An accountant strives to understand the client’s business needs and provide customized solutions that support their financial goals.

Professionalism: A quality accountant adheres strictly to ethical standards. He or she provides accurate and timely financial reporting, is accountable for his or her actions, and maintains confidentiality.

Ultimately, the most sought after accountant is not just a number on the balance sheet, but is someone who is willing to continually learn, adapt and provide quality solutions in a changing business environment. It provides not just reports, but valuable analytical data to help you make meaningful decisions.

It is a reliable partner who will accompany you throughout the development of your enterprise, contributing to the financial health and sustainability of your business.

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Estonia can be an attractive place to launch and grow your business in a variety of industries. The choice of business depends on personal interests, professional skills and available resources. The business selection strategy should be based on analyzing market trends, understanding the competitive environment and customer needs. Of course, successful entrepreneurship requires careful business planning and risk assessment.

It is necessary to take into account that there is support for business startups and new entrepreneurs in Estonia. There are business incubators, which can provide not only space for work, but also valuable advice from experienced experts. The state authorities are also ready to assist in the establishment and development of your business by providing information on taxes, licensing and other important aspects.

Regardless of the chosen field, it is important to have a plan of action, assess your strengths and willingness to take risks. Strategic orientation and support from experts will enable you to realize a successful and promising business in Estonia.

Here are some ideas that can be a starting point for your entrepreneurial journey:

IT: Estonia is known for its digital society, so the IT sector offers many opportunities. Software development, website development, mobile applications and other IT services can be successful areas.

E-commerce: Online stores, platforms for selling goods and services, and electronic payment systems are in demand in Estonia and abroad.

Tourism and hospitality: The country attracts tourists with its beautiful nature, architecture and cultural events. Opening a hotel, restaurant, travel agency or excursion services can be promising.

Education: Courses and trainings in different areas are always in demand. You can set up a training center, provide online courses or organize master classes.

Environmental Services: The pursuit of sustainability and ecology makes environmental and green services relevant. It may be worth considering setting up a company to recycle waste, sell eco-friendly products, etc.

Health and Beauty: Medical services, fitness centers, spas and beauty treatments are always in demand.

Manufacturing and Manufactory: You can start manufacturing goods such as food products, furniture, textiles and other goods.

Farming and agriculture: Estonia has fertile soils, so farming and growing vegetables, fruits, grains and livestock can be successful areas.

Creative services: Design, photography, art, music – all of these can be in demand both domestically and on the world market.

Services: Services ranging from cleaning and repair to pet care can be successful.

Regardless of the field in which you decide to start a business in Estonia, it is necessary to prepare for a serious and thoughtful entrepreneurial step.

The foundation of a successful business is a well-planned strategy. It is not only the definition of goals and ways to achieve them, but also the ability to adapt to changes in the environment. Risks and uncertainties are an integral part of entrepreneurship and your ability to manage them will determine your success.

Entrepreneurship requires responsibility to customers, partners and employees. You will conduct business by influencing the economic environment and social aspects. Every step of your entrepreneurial journey, from idea to realization, will involve careful planning, working out the details, and constant self-improvement. But in the end, your entrepreneurial endeavor can become not only a source of income, but also an engine of innovation, growth and contribution to the economic development of Estonia.

Сообщение What kind of business to open in Estonia: Perspectives and Recommendations появились сначала на Kidnes.

In today’s world, where business processes are becoming increasingly complex and dynamic, effective bookkeeping is critical to the success of businesses. Accurate record keeping and analysis of financial data not only ensures compliance with legal requirements, but also helps companies make informed strategic decisions.

Every company, regardless of size and line of business, strives to optimize its operations and manage resources. After all, it is effective accounting of expenses and revenues, human resources management and planning of financial flows that allow to predict the future more accurately and minimize risks.

An accounting program simplifies the tasks of accountants. In this context, the choice of accounting software becomes a strategic decision. Software that meets the company’s needs and integrates into its business processes contributes to effective financial management and ensures the relevance and reliability of reporting.

When choosing a program, it is crucial to consider the specifics of your business. Flexible customizations tailored to individual needs will ensure the best results. It’s also important to focus on the ease of use and reliability of the solution to ensure smooth operation and minimize potential errors.

Ultimately, choosing an accounting software is not just an investment in technology, but a strategic step towards business success in a rapidly changing world.

Features such as ease of implementation, customization for your company, support for the necessary languages, and networking capabilities make choosing a program even more strategic. The right software solution simplifies accounting operations, optimizes accounting processes and ensures reliable data storage.

Modern accounting programs offer extensive functionality, data integration, ease of use and compliance with legislation.

A list of some popular accounting programs that can be used in Estonia:

Merit Tarkvara – is a cloud-based software designed for income and expense accounting, payroll calculation, tax planning and reporting. Various versions of the program are provided, including free and paid options.

SimplBooks – is an online accounting program. Flexible multi-lingual accounting platform, ability to work with the program in several languages including English, Russian, Finnish and Estonian. Free trial period.

SmartAccounts – is an online accounting platform. The program provides tools to record income and expenses, generate invoices and manage financial transactions. Free trial period.

e-arveldaja – accounting program for small businesses. Designed to work with clients, create invoices, calculate payroll, generate and submit reports. It can be used by businesses themselves or by authorized persons (e.g. accountants) and is free for the first year.

Directo –software for accounting, payroll, human resources, sales, warehousing and logistics, project management, manufacturing and business process management.

1C: Accounting – accounting software with extensive capabilities for accounting, financial analysis and reporting. It can be used in organizations engaged in any form of commercial activity. The interfaces are in Russian and Estonian.

ERPLY Books – the program provides a wide range of tools to help you effectively manage your finances, keep accounting records and analyze business processes.

Joosep5 – provides a full range of functions for financial, accounting, production and warehouse management. The program provides flexible options for configuring access for different users. The program includes functionality for sending payments to the bank and importing bank statements. It is suitable for both manufacturing and trading companies, as well as for companies providing services.

Banqup – is an online service for electronic invoicing and accounting. Invoices can be created and sent, received and paid, and archived. There is digitization of checks and invoices.

Standard Books – Accounting and financial management program. Helps you keep track of income and expenses, create reports and manage customers and suppliers. Suitable for both sole traders and small to medium sized companies.

Eeva – provides solutions for various business areas, automatically generates all necessary reports and appendices for the annual report and can be directly sent to the commercial register, built-in support for Russian, Estonian, English, Finnish, German, Latvian, Lithuanian languages.

Briox – is an accounting software specifically designed for micro-entrepreneurs. This program provides the tools necessary for efficient bookkeeping and financial management in small businesses. A variety of features for tax accounting, payroll calculations, financial transaction management and reporting to meet local legal requirements.

Tresoor – is a software solution designed for small and medium-sized businesses. The platform provides tools for both accountants and managers to manage finances and business processes. It has functions for working with tax reporting.

Profit – is an accounting program with functions of income and expense accounting, payroll, financial analysis, report generation, and multi-user support. Offers cloud and on-premises versions suitable for a variety of commercial and non-commercial activities.

Most programs provide a free trial period, allowing users to choose the right solution for their needs.

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In today’s business world, small businesses face many challenges and complexities. One of these complexities is ensuring effective accounting and bookkeeping. It can be difficult for a small business owner to have their own accountant or accounting department due to limited resources and limited budget. In such cases, outsourcing accounting becomes a great solution.

Accounting outsourcing is the process of transferring accounting functions and responsibilities to an outside company or professionals who specialize in providing accounting services. This allows small entrepreneurs to focus on their core business while professionals take the responsibility of keeping accurate and timely records.

One of the main benefits of outsourcing bookkeeping for small businesses is cost reduction. Hiring a full-fledged accounting staff can be an overwhelming task for a small business. The cost of paying for salaries, taxes, training and support for accountants can seriously hit a company’s financial resources. Outsourcing allows you to save money, because the entrepreneur pays only for the actual work and services performed.

In addition, outsourcing accounting gives small businesses the opportunity to get quality accounting services. Outsourced accounting companies specialize in their work and have experience in keeping records for various businesses. This allows them to have in-depth knowledge and skills in the field of accounting. Because of this, small entrepreneurs can be assured of the accuracy and reliability of their financial data.

Another benefit of outsourcing bookkeeping is the ability to focus on the core business of the company. Accounting management requires time, resources, and attention that can distract an entrepreneur from growing their business. Outsourcing these responsibilities to professionals allows the entrepreneur to fully focus on key aspects of their business such as product development, customer acquisition, and improving customer service.

However, when choosing an outsourcing company and cooperating with it, it is important to consider some risks. First of all, you need to scrutinize the company’s reputation and experience to make sure they are professional and reliable. It is also important to ensure clarity and transparency in the relationship with the outsourcing company, including defining responsibilities, deadlines and confidentiality of financial data.

In conclusion, accounting outsourcing is an important tool for small businesses. It allows you to reduce costs, improve the quality of accounting services and focus on your company’s core business. The right choice of an outsourcing company and effective interaction with it will help small entrepreneurs achieve success and growth of their business.

Сообщение The importance of outsourcing accounting for small businesses появились сначала на Kidnes.

Accounting reports play an important role in management decision making in an organisation. It represents systematised information about the financial condition and performance of an enterprise, which serves as a basis for analysis and evaluation of its activities.

First of all, accounting reports allow to get a general picture of the financial position of the company. It includes the balance sheet, which reflects the assets, liabilities and equity of the company at a certain point in time, as well as the income statement, which shows the financial results of activity for a certain period of time. Analysing these reports allows you to determine the overall financial stability of the company, its solvency, degree of indebtedness, etc.

Further, accounting reports provide information about the profitability of the company. The analysis of profit and loss indicators makes it possible to assess the efficiency of the use of resources and the activities of the organisation as a whole. For example, with the help of data on profits and costs, it is possible to determine in which areas of activity the company makes the most profit, and where changes should be made to improve efficiency.

In addition, accounting reports allow you to analyse financial indicators related to liquidity, assets, working capital and other aspects of the company’s activities. This allows problem areas to be identified and action to be taken to improve them.

In order to make management decisions based on accounting statements, it is necessary to be able to interpret and analyse the data correctly. Accounting indicators should be compared with certain standards and norms, as well as compared with the results of previous periods and with the data of competitors. Such analyses help to identify trends, anomalies and problematic issues, which helps in making informed decisions.

In general, accounting statements are an important tool for managing an enterprise. It provides information about the financial condition, profitability and efficiency of the company, which helps in making informed and strategic decisions. Analysis of accounting statements data allows you to identify problem areas, determine the efficiency of resource use and develop measures to improve the financial performance of the organisation.

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“Tax Accounting Basics: Important Aspects for Business”

Tax accounting basics: important aspects for business

Tax accounting is an integral part of the financial operations of any business. In this article, we will look at the basics of tax accounting and the important aspects that businesses should consider. We will discuss topics such as calculating tax liabilities, accounting for tax credits and allowances, and correctly completing tax returns. By gaining an understanding of the basic principles of taxation, you will be able to ensure tax compliance and optimise the tax burden of your business.

1. Calculating Tax Liabilities:
   Calculating tax liability is the process of determining the amount of tax that a business must pay to the government under current tax laws. For a correct calculation, it is necessary to take into account the different tax rates, the specifics of taxation in the industry, as well as the availability of tax deductions and discounts.
2. Accounting for tax discounts and rebates:
   Tax discounts and rebates help to reduce the tax burden of a business. They may be granted based on certain criteria such as investment in certain areas, use of environmentally friendly technologies or employment of local residents. In order to utilise tax rebates and incentives, proper record keeping and documentation must be provided when filing tax returns.
3. 3Proper completion of tax returns:
   Tax returns are the official document in which a business provides information about its financial activities for tax purposes. Improper completion of tax returns can result in penalties and additional tax liabilities. When completing tax returns, it is important to carefully follow the requirements of tax laws, record all income and expenses, and correctly categorise transactions according to tax rules.
4. Tax Compliance:
   Tax compliance is an important aspect for a business. Violation of tax rules can lead to negative consequences such as fines, paying additional taxes or even criminal liability. Businesses need to keep abreast of changes in tax laws and adapt their operations in a timely manner to meet the new requirements.

In conclusion, understanding the basics of tax accounting and tax compliance are integral elements of any business’ successful financial strategy. Calculation of tax liabilities, accounting for tax discounts and allowances, as well as correct completion of tax reporting will help minimise the tax burden and avoid trouble from the tax authorities.

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How to prepare for an audit: practical tips for companies

The audit of financial statements is an important process for any company. It allows you to assess the accuracy and reliability of the financial information provided by the company, as well as to ensure compliance with legislation and standards. In this article we will explain how to properly prepare for the audit of a company to facilitate the audit process and ensure successful completion of the audit.

1. Maintain neat financial records:
   For a successful audit, you need to have a system in place to record and store financial information. Make sure that all financial documents including invoices, expense invoices, tax returns and other financial records are neatly and systematically organized. Remember that auditors will be examining these documents closely, so it is important to have access to up-to-date and accurate information.
2. Verify the accuracy of the financial information:
   Before the audit, it is recommended that you conduct a self-check of the company’s financial data. Make sure that all entries are correctly recorded in the accounting system and are true. Check the accuracy of calculations, balance sheets and income statements. If any discrepancies or errors are found, correct them before meeting with the auditors.
3. Prepare the necessary documents:
   Gather any necessary documents that the auditors may request during the audit. This may include prior period financial statements, tax returns, books of accounts, bank statements and other documents related to the company’s financial activities. Make sure these documents are available and organized so that auditors can access them quickly.
4. Follow legislation and standards:
   Familiarize yourself with the legislation and standards your company must comply with. Make sure that the financial records comply with the requirements set in your country or region. This could be tax regulations, accounting standards or other regulatory documents. Prepare all necessary reports and documents to ensure compliance with legislation.
5. Ensure management support:
   Involve the company’s management in the audit preparation process. Explain to them the importance of the audit and provide them with information on procedures and expectations. Request their support and cooperation during the audit. Management should be prepared to answer the auditors’ questions and provide additional documents or explanations if required.

In conclusion, audit preparation is an important step for a company to ensure the accuracy and reliability of its financial statements. Accurate and organized financial records, data validation, preparation of required documents and compliance with the law will help a company successfully pass an audit. Follow these practical tips and consult professional advisors or accountants to ensure that your preparations are done correctly and efficiently before the audit.

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