Accounting and tax records
Accounting is a clear and well-run system of collection, storage, and consolidation of data on company’s obligations and its property, expressed in monetary terms. To support this system, documentary records of any current business operations should be constantly kept.
Tax record, in turn, is a system of consolidation of existing data from primary documents to calculate the tax payments in accordance with requirements of the Tax Code of Ukraine. Accounting allows making adequate conclusions about actual financial and economic results of the company, whereas the tax record is intended to verify the correctness and sufficiency of the executed tax payments.
Why company needs tax records?
There are several major reasons that justify a need for competent tax records in each company:
- Tax records data together with accounting information help find the most favorable taxation option and perform thorough control over all income and expenses of the company;
- Tax records which are carried out systematically allows obtaining the most reliable data about the accounting method of all completed business transactions for tax purposes;
- Due to such accounting method, you can easily prove at any time that the company pays taxes in time and in full.
What principles underlie tax and accounting records?
Primary documents used in the both types of records are exactly the same. However, the methods for company’s income and expenses in accounting records differ from those which are used to calculate the gross income and expenses in the tax records. Therefore, the taxable profit and accounting profit is not the same.
In accounting records all income and expenses are shown at the moment when they occurred, rather than at the time of actual crediting/debiting of funds on/from the company’s account. In other words, if a company, for example, shipped certain goods, the relevant income should immediately appear in the financial statement, even if in fact the client pays for these goods only in few days. The same rule is applicable to the advance payments: they do not appear in the financial statement, because, in fact, do not change the status of the company’s capital.
Tax records work in a bit different way. Any money credited by the clients as a payment for goods or services are considered as gross income, while the day of money receipt (in cash or by transfer) is considered as the date of such income occurrence. Any cash withdrawals from the company cashier office or non-cash transfers from its bank accounts are added to the gross expenses.
Thus, a fundamental difference between accounting and tax records lies in the understanding of the moment of income/expenses or the gross income/gross expenses occurrence.
Organization of accounting
Below you can find the main provisions of the law of Ukraine “On accounting and financial reporting”:
- Accounting should be continuous from the moment of company registration until the day of its liquidation;
- The owner(s) of the company, or its managers, or supervising authority should organize accounting process;
- The owner or manager of the company is responsible for the organization and systematic keeping of accounts. This means that if all business transactions do not appear in the record, if documentation is not stored for a long term (at least 3 years), if statements are filled in incorrectly, then the owner or manager will be penalized in accordance with the applicable law;
- The company has the right to determine the accounting option (by own accountancy service or Chief Accountant, external specialist, auditing firm, or directly by the owner or manager of the company);
Last bullet point allows businesses to hire experienced professionals for accounting, in order that all statements are perfect, facilitate growth and development of the company, and has not raised any issues from representatives of supervising authorities. Indeed, we are those professionals. Our company bears full responsibility for the interaction with the state authorities.
Advantages of accounting and tax records by Financial Chain Corporation
Our company deals with provision of similar services to businesses since 2002. Every year the number of our partners is constantly growing. Why businesses are increasingly outsourcing tax and accounting records to the third parties?
- Because it allows you saving substantial amount of money. The cost of such tasks outsourcing always turns out to be significantly lower than the cost of supporting own accountants and lawyers.
- Because it helps you saving a lot of time and effort. You can manage your company, look for new sale channels, negotiate supply of the new materials for the product diversification etc., and all boring “paper” work goes to us.
- Because it means relieving responsibility from the company. If you will be penalized for the errors in accounting or tax reports prepared by us, we pay all the fines.
Why you should contact us?
- We have ample experience in tax and accounting records, and therefore will become the perfect helping hand and advisor for you;
- Our services are synonym for reliability and security. We take the utmost care of every client to eliminate probable errors;
- We are closely following all the updates, amendments, additions to the laws and changes in legislation that are somehow related to accounting or tax records system. Working for you, we use the latest information;
- Our lawyers and accountants not only will prepare statements, but also give you useful tips on any issues, if required;
- We are capable of providing a wide range of high-quality professional services, which can be ordered as a full package or separately;
- We can help you in almost any point of the world.
Don’t waste your time, money and effort, and don’t put well-being of your company at risk – delegate full responsibility for tax and accounting records to us!