August 24, 2011 meelis Blog: what is accounting obligation?

In Estonia, all legal entities, self-employed persons, branch offices of foreign companies, Estonian Republic and local authorities as official legal entities are subjects to accounting obligation.

Private persons, who do not sell goods or services on behalf of themselves and are not registered as self-employed persons, do not have accounting obligation.

The general framework for book-keeping in the company has been established in § 4 of Act fo Accounting:

• all transactions must be documented;

• documented transactions must be reflected in General Ledger, from where chronological statements account-by-account could be extracted;

• information about entity’s financial status, result of activities and cash flow must be available from the book-keeping;

• Annual Report must be submitted every year;

• book-keeping documents must be archived for required time period.

Arranging the book-keeping of the company is the obligation of the Board.

To meet this obligation, the Board has several options: 1) to hire a book-keeper or create relevant department inside the company; 2) to do the book-keeping himself/herself or 3) to use professional accounting service.