Basic accounting rules and processes in Estonia are regulated by The Accounting Act. Accounting for taxes is regulated by other laws and acts.
In practice, there are two different approaches to accounting: yearly reporting (for companies without a VAT number and companies that don't have paid employees) and monthly reporting (companies that obtain VAT ID and pay salaries to their employees). Let's take a look at both of them.
Yearly ReportsAccording to the Accounting Act, an accounting entity must prepare an annual report for the fiscal year at the end of each financial year (January, 1 — December, 31). The annual report should be filed at the Commercial Register within six months after the end of the financial year and consists of the annual accounts and the management report.
Monthly ReportsThe accounting process is a bit different for companies that obtain a VAT number. The taxable period is one calendar month, and VAT returns must be submitted to the tax authority (even for the months when there could be nothing to declare) by the 20th day of the month following the taxable period.
The report typically includes the following:- Management report
- Balance sheet
- Income statement
- Cash flow statement
- Statement of changes in equity