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Accounting Services in Latvia

The Latvian law requires from Latvian companies (merchants) doing of accounting and submission of certain tax returns to the State Revenue Service (the legal person at least once a year must submit an annual report).

In accounting, a company need to reflect (show) all business transactions, as well as facts and events that change the property status of the company (for example, writing off fixed assets).

A management of a company (for example, director of a limited liability company) is responsible for maintaining the accounting records and for retaining documents related to accounting. The head of the company can conclude a corresponding written contract with a specialized accounting company. In the agreement must define an accounting procedure (process), rights, duties and responsibilities of the parties.

AB ways offers accounting services for Latvian individuals and legal entities. Accounting services comply with and cover all aspects of Latvian tax and accounting legislation.

Accounting services for legal persons.

Accounting services (full charge bookkeeping and accounting services) include:
  • Preparation of accounting methodology and the start-up of accounting.
  • Preparation of source documents (invoices, cash receipts and cash expense documents)
  • Examination of source documents and and recording the documents in the accounting registers (bookkeeping of assets, liabilities, revenues and expenditures).
  • Systematization of primary documents.
  • The calculation of salaries/wages (vacation, sick payment).
  • Record-keeping of long-term intangible assets and fixed assets.
  • Maintenance of the necessary accounting registers.
  • Calculation of taxes and sending information about the amount of taxes, payment terms and details for payment (if necessary, preparation of tax payment in online bank).
  • Preparation and filing of tax returns.
  • Preparation and submission of reports to the Central Statistics Office.
  • Comparison (reconciliation) of balances with customers and suppliers.
  • Preparation of annual report.
  • Participation in possible tax audits (examinations).
  • Consultations regarding accounting and taxes. Assessment of situation and preparation of applications.
  • Preparation of internal operational reports.

Partial accounting and bookkeeping services also are possible. That is, the provision of one or several services from the list above (e.g., calculation of salaries/wages, preparation of certain reports).

Accounting services for natural persons.

If a natural person is registered with the State Revenue Service as a person - doing economic activity (self-employed person), then the person has duty to submit reports and declarations. For example, must submit a self-employed person's report, an annual declaration. In some cases, there is an obligation to submit value-added tax declaration. There is also a duty to keep a journal of income and expenses from economic activities.

For natural persons I offer following services:
  • Keeping a journal of income and expenses from economic activities.
  • Keeping a journal on accounting for value added tax.
  • Preparation of tax returns and declarations.
  • Calculation of taxes.
  • Calculating capital gains and preparing a declaration.
  • Consulting on accounting and taxation. Preparation of applications and other documents.

Exchange of information and deciding about procedure of providing of accounting services.

To choose suitable procedure to exchange information and provide accounting services, need to get information about your business (for example, type of business, number of source documents). You may also have questions related to bookkeeping and accounting. In process of analyzing the received information and preparing answers to questions, AB ways understands your business. Based on the received information AB ways determine the purpose of accounting services. In addition, AB ways can define the scheme of work (terms and procedures for the exchange of information). As well, we can agree regarding rights and obligations of the parties. We include all agreed provisions in the accounting services contract.

Procedure - scheme of providing of the accounting services is following:

  • Receiving of source documents and information about business activities of certain period.
  • The processing of documents and information and recording of transactions in accounting registers.
  • Solving of potential questions related to documents and information of the reporting period.
  • Preparation and submission of tax returns.
  • Information about tax payments or preparation of tax payments in the online bank.
  • Performing of other work related to accounting and bookkeeping.
  • Payment for accounting services.

Organizational documents of accounting.

The rules of the cabinet of Ministers contains the corresponding section, which lists the organizational documents of accounting and specifies the requirements for the content of these documents.
Organizational documents of accounting contain information (instructions) related with accounting procedures (work). Preparing these documents, must comply with the requirements of the legislation and these documents must be adapted to the requirements of the respective company (type of activity, features, specificity).
Doing accounting, an accountant must base on normative acts, as well as on accounting organizational documents.

In general a director of a company has obligation to develop and approve accounting organizational documents. A director of a company is responsible for the content of these documents.

Accounting registers and chart of accounts.

Legislation does not require any specific form for accounting registers. Also, no specific chart of accounts has been approved by the legislation. In most cases, the head of a company has the right to choose the form of accounting registers and approve own chart of accounts.
The rule of the Cabinet of ministers contains certain requirements regarding the content of chronological registers and systematic registers.
SIA AB ways for accounting uses a ledger (turnover statement).
The management of a company can receive information about all the results of the company's activity for a certain period (turnover of all bookkeeping accounts), as well as information about transactions with a certain person for the necessary period.

In most cases an accountant prepares chart of accounts. Content of a chart of accounts depends on the type of activity of a company, a company's transactions, the requirements of the management for internal management reporting.
For example, if an enterprise has transactions with persons registered in Latvia and VAT taxable persons, registered in other European Union countries, then it is reasonably to use different income accounts for each group of persons.
For the company's management it may be necessary in more detail to separate certain expenditures. For example, a company rents premises for office. The received invoice contains a payment for rent, as well as various other expenditures related to the use of premises. If the management of the company wants to know how much must pay for rent, electricity, water supply, etc. in the relevant month, then for each type of expenditure it is possible to create a separate account.
The separation (detailing) of bookkeeping accounts should be such that from the data (values) of the accounts, it is possible to compile a balance sheet and a profit or loss statement.

Preparation, checking and registration of primary documents.

If a company provides services or sells goods, then the company to confirm (prove) that these transactions were made. The document confirming the transaction is, first of all, a tax invoice. It is useful that a company also has a contract, and in the case of services, an act on the performed work.
If money is paid from the company's cash department or money is deposited in the cash department, then it is necessary to prepare a cash expense order or a cash receipt.

If the company buys goods or receives services from other persons, then from the sellers and service providers need to obtain the relevant documents confirming transactions (checks, receipts, invoices).

All these documents must meet certain requirements (they must include information about participants in the transaction, about the transaction itself, etc.). For example, if the check received from the seller does not contain certain details, then the accountant does not have the right to use such a check as a source document.

After checking documents, the documents must be registered in the accounting registers (must make accounting records). After registration, the documents are systematized (grouped according to certain requirements) and placed in folders-registrars. For example, can organize (sort) on the following groups of documents:
  • Cash expenses (checks, receipts).
  • Invoices (payable by bank transfer) received from sellers and service providers.
  • Tax invoices for sold goods and provided services.
  • Bank statements.
  • Cash income and expense orders.
  • Documents related to employees (working time tables and payroll calculations).

Preparation and submission of tax reports to the SRS.

After registration of documents, the accountant has information (data) for preparing tax reports. For example, by summing the recorde (registered) tax invoices, I can calculate the value added tax.

Based on the data of the accounting registers (books), I prepare VAT declarations. Based on the salary calculation data, I prepare the employer's reports.
Preparation and submission of tax reports requires access to electronic declaration system.

Consulting on accounting and tax questions.

Sometimes, before the planned transaction, it is useful to study the requirements of legislation. Profit from the transaction may depend on the conditions of legislation. For example:
  • The company plans to pay to non-resident for management and consulting services. In this case, additional costs may arise, because a payer may be obligation to withhold corporate income tax.
  • The company plans to pay to the seller or service provider, but the beneficiary's bank account is in the country or territory with low taxes or the country / territory without taxes. And in this case there is a duty to withhold corporate income tax.
  • The company plans to make the transaction in cash. Must take into account that the legislation establishes restrictions on the use of cash.
  • In relation with the application of the value-added tax, it is important to correctly determine the place of the transaction. Because that from the place of the transaction depends the VAT rate, that is, the total price for goods or services.
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