Most of the tax offenses in Estonia are due to inexperience, ignorance or inattention of entrepreneurs, but not for the purpose of tax evasion.
You have to be responsible for the company mistakes.
We collected the most common mistakes of businessmen in accounting and document management to help you to avoid the troubles.
1) The common mistake encountered by entrepreneur is non-reporting to Commercial Register in the absence of activity. With the establishment of the company the entrepreneur has an obligation to submit an Annual Report to Commercial Register annually, even if there was no commercial activity.
In Estonia you have a possibility to establish a limited liability company without the contribution of share capital. The entrepreneur contributes capital to the company’s bank account and after forgets, that share capital needs to be registered in the Commercial Register. Do not worry, if this situation was happened with you. It does not matter what period you have invested in the company’s bank account, you only have to finish the procedure in the Commercial Register.
2) Another common mistake is that entrepreneurs submit an annual report with negative own capital. According to the Commercial Law, equity or net assets of a limited liability company can not be less than half of the share capital, or less than 2500 euros. If the equity is less than the entrepreneur will be asked to take urgent measures:
• increase the equity
• filing an application for termination, merger or transformation of a company
• filing for bankruptcy application
If the losses were temporary, then it is enough to provide the another balance sheet during next calendar year, where the amount of equity meets the requirements of the law.
3) Enterprise exceed turnover of 16,000 euros per year (in 2018 is 40,000 euros per year) and the entrepreneur forget to register the company as tax-payer for turnover tax. The tax law provides the privilege for starting businessmen, allowing them to work and not receive a VAT number (KMKR number) until the turnover reaches 16,000 euros per year. This mistake could be discovered when the entrepreneur apply for the preparation of the annual report. In this case, you have to pay tax on the entire amount of turnover, which exceeded the limit established by law, as well a penalties for late payment of tax.
4) Sometimes the company executives forget to inform the Tax Department in time about the admission of a new employee or about the dismissal of the former employee. As a result, the record in the Employment Register will not be made on time. The beginning of the work should be registered not later than the employee will start to fulfil his duties. To register the delay and termination of work, the employer have ten calendar days from the day of delay or termination of work.
5) Often entrepreneurs consider the obligation to submit statistical reports as something unimportant. It is clear that statistics is an undesirable additional administrative charge for any enterprise, but this obligation to provide statistical reports is based on the Law. Late submission of reports are punishable by a penalty.
We listed only the most popular mistakes in business. But the nuances in accounting and tax accounting can not be considered, therefore, perhaps the most dangerous and costly mistake an entrepreneur can make is to save on an accountant. We advise you to entrust your accounting and tax affairs to a qualified specialist, which will allow you to save money on penalties and use your time not to deal with government agencies, but concentrate entirely on business and on the your main production operations.
