A guest post by Marketplace member InCorpora on the top 10 questions to ask yourself when looking for the perfect accounting solution for your Estonian business
This post about finding an accounting solution for your business was written by InCorpora, a full-service firm providing tailor-made corporate, accounting, back-office, and banking support services to e-resident company owners. Contact InCorpora via their website.
After setting up your Estonian company, one of the most important tasks is finding the perfect accountant. It’s wise to hire an experienced accounting firm to manage your books and taxes in Estonia. But the process of picking the right one requires preparation and know-how. With so many service providers in the e-Residency Marketplace and beyond, it may seem a difficult process. But it doesn’t have to be. With this article, we aim to help you to meet this challenge by sharing our top tips.
Note that accounting is not a licensed activity in Estonia, which means that anyone can advertise and provide the service. So, make sure you do your due diligence and run background checks on all candidates to ensure reliability. Also, decide on whether to sign up with a firm with numerous accountants on the payroll or hire an individual accountant.
Since we get numerous requests every week for accounting services, we have developed a thorough understanding on this hot topic. For various reasons, we are also handling transfers of customers from other accounting firms and service providers. Here’s what you need to know and consider when hiring an accounting firm for your Estonian company.
1. What do you need from your accountant or accounting firm day-to-day?
The human factor in accounting is a major one. The best way to assess compatibility is by meeting candidates in-person (physically or online) and getting to know how they communicate, operate and work. Prepare your questions and concerns to see if they match your business, financial goals, and vision. Since you are entrusting this firm with your finances, you must ensure that you like them. Life is too short to do business with people you don't like.
2. Does the accounting firm have compatible communication channels and hours of work?
The days of using just phone calls and email for efficient communication are gone. If you use WhatsApp or Viber, make sure there is a match. If you have an urgent question, when may you expect the answer? In case you are a high-tech savvy millennial, and your accountant is from the boomer generation, does she have experience in communicating with millennials? Make sure she speaks your language literally and metaphorically. You want to have some match in communication channels to feel comfortable. Does she answer your urgent questions on Sundays when you do your best work? Some of those requirements may sound weird, yet if you have a customer in Dubai or Singapore working different hours or weekends, this is a real situation to cope with.
3. Do you need an accountant with definitive knowledge or experience in a given industry or a specific business?
Perhaps there are special accounting practices for your business type or sector. Or maybe you need an accountant who can navigate tricky industry-specific tax rules or accounting standards with ease.
For example, if you’re planning to use your Estonian company for holding investment portfolios and asset management, you’ll need an accountant with the requisite experience. She should be fluent in international tax, know how to take advantage of foreign participation exemption rules, understand how foreign tax relief works and how to benefit from it, and be aware of the advantages of the foreign tax credit method. Why? It could save you money.
Estonia is one of the best jurisdictions in the world where to set up your asset management and investment holding company. Read our deep dive into this topic here.
4. Do you need bookkeeping or tax planning services?
Accounting has a reputation of being a boring subject of crunching numbers. But, when it comes to international tax, it is anything but boring.
The Estonian corporate tax system can be utilized for international trading, holding, investing, finance, royalties, or mergers. Make sure your accountant is proficient in relevant EU tax directives like the EU Parent Subsidiary Directive, Interest and Royalties Directive, VAT Directive, and Tax Merger Directive. Find out if your accountant knows how to benefit from Estonia's international tax treaty network and understands treaty friendly shopping. The knowledge and experience in a fabulous world of international tax planning may save you tons of money. A professional accounting firm guides you in making wise choices while assuring tax and regulatory compliance.
5. What technological solutions, software and accounting programs does the accounting firm use?
Using state of the art technology saves time and money. Find out what technology and software they use and see how it works for you. Is it user friendly and easily understandable? Does it have a mobile application? Does it make your life easier, and allow more efficient cooperation with your accountant? How does it save you time or money? Can you upload accounting documents easily? Does the system enable you to raise invoices efficiently? Does it enable cloud sharing for remote accounting? How is data protected?
In case you already use your own preferred accounting program, your accounting firm might be flexible and use the same. In which case, see if your accountant is willing to learn and master your accounting software if need be.
6. Does your Estonia company have employees on its payroll?
If your business hires staff, make sure your accountant has the experience and accounting software to support payroll accounting and tax compliance.
7. Can the accountant deal with all necessary tax and regulatory compliance and support audits?
You need a local professional who knows the ropes and keeps you out of trouble. Find out if your accounting firm has experience with revenue rulings and is fluent in communication with the local tax authorities.
Also, find out if your Estonian company requires an annual audit. If yes, make sure your accountant works with a reliable auditor or audit firm.
8. Is the accounting firm complying with industry rules and standards?
For example, has it provided you with a written engagement letter or agreement? Does it have professional indemnity insurance?
You may find it beneficial that your chosen accounting firm is a member of a professional association like Estonian Assembly of Accountants, International Tax Planning Association or some international federation or association of accountants.
9. What methods of payment does your accounting firm accept and support?
Bank transfer, Stripe, PayPal? Find out the options offered and see if it meets your needs.
10. And the best for last: what are the fees?
When it comes to fees, less is more doesn’t work here. Like lawyers, accountants sell their time and generally charge by the hour. The more professional and experienced the accountant, the higher the rate. However, a professional accountant using state of the art software and technology might be more efficient, saving you time and money.
When it comes to international tax planning, tax compliance and saving your hard-earned money, it might be worthwhile to pay a little more and hire a top-notch professional to do the job. Along the road, you will see where that extra euro goes. It’s your money at stake here, but don’t focus on fees only. We have seen this time and time again: choosing the cheapest service provider may turn into a very expensive experience.
InCorpora’s core business activity is the formation, management, and day-to-day administration of Estonian companies. This includes: company administration, international tax planning advice, accounting, book-keeping, secretarial services, and audit support.
Accounting requires knowledge of local and international laws and regulations. This is a competence that we have curated over many years in business. InCorpora’s expert team has many years of combined experience. We understand the specific procedures, local and international laws, and regulations. Estonia has a wonderful and unique corporate tax system. We know how Estonia works best, and how it can benefit you through efficient corporate structuring.
To conclude this challenging topic, here is an amusing Q&A:
Question: “How did the auditor propose to his girlfriend?”
Answer: “With an engagement letter.”
Make good choices. Team InCorpora. Contact us now by clicking on the following image: