You have set up your company, you have all the necessary documents and you are ready to get to work. But do not forget about the tax and accounting obligations you already have! Find out all about the first steps you need to take from Valentina Saygo, expert accountant and financial consultant.
The company documents were practically dropped in your arms and now you don't know what you have to do next. You should know that your company has obligations towards the institutions of the state the very moment that the company registration certificate is issued by the Trade Register Office. Don't put those documents in the closet, thinking that since you are not actually doing any business yet there is nothing else you have to do. The clock is already ticking and fines may flow in if you do that.
The first steps are the most confusing, so let's take them together.
Step 1. The share capital must be transferred to the current bank account of the company. The first trip you have to take with all those documents in your arms is to the bank, to transfer the share capital from the temporary account opened when you applied for the set-up of your company to the current account. This money becomes company capital and does not remain "subscribed and paid in" forever. I know, you're not the first person to think so, but let this be our secret. The minimum share capital threshold, i.e. RON 200, has just been eliminated, but that does not mean it should be RON 2, because this amount will be used to calculate many of the company's financial metrics, especially when you want to obtain funding. So, there is still time for you to increase it.
Step 2. Designate an accountant within no more than 30 days as of the company set-up date. Because from the very first day of its existence, the company has the obligation to submit various returns to tax authorities and other similar obligations. If the company was established on September 29, the first tax return must be submitted by October 25. That's exactly why I said that you should do this within no more than 30 days, and it's better for you to do this even sooner, because you don't want to start your business by paying a fine for your failure to submit the income/profit tax return. And one more thing, the accountant you choose should be a member of CECCAR (Body of Expert and Licensed Accountants of Romania) and you should execute a services contract with him/her, with rights, obligations and the liability provisions.
Step 3. Purchase the Inspection Register (Registrul Unic de Control - RUC) within 30 days as of the company set-up date, otherwise you could be fined. If you have already chosen an accountant, he/she can help you with this, so that you avoid making the first trip to the tax authorities. The Inspection Register is a sort of “holy register” that you must keep at the company headquarters and that only the representatives of an inspection body are allowed to fill in when they come for an inspection. Knock on wood!
Step 4. Stay in touch with the tax authorities through your electronic signature and access to the Virtual Private Space (SPV). Tax returns can be submitted only electronically, and the communication with the tax authorities is carried out only through the SPV. My recommendation is to authorize your accountant to use their signature for this, but it doesn't hurt for you to have one, for the relationship with other authorities, because in fact, this is the future. You can use your electronic signature for many things, be it a grant, technical unemployment or even a contract concluded with a customer.
Step 5. The anti-money laundering procedure should be prepared and submitted at the time of the incorporation of the company as well, and the fines for failing to do this are high. So, talk to your accountant about this topic as well.
Step 6. Check the tax classes you can choose from at the tax authorities (ANAF). Have you thought about the taxes and fees you are going to pay? Is it better to opt for the microenterprise income tax or profit (corporate) tax, should you register for VAT purposes or not, is it better for your company have employees or not? Have a discussion with your accountant and choose which the best option for your business type is, because what is default is not always what is best for you.
Step 7. Microenterprise with or without employees. If you chose to pay microenterprise income tax, now you have to decide whether you want it to be 1% (but you have to have at least one employee) or 3% (no employees required). Do the math and see if the extra costs for the tax discount are worth it. Sometimes they are not, especially if you do not necessarily need an employee, if you know what I mean.
Step 8. Billing. There is a lot to say about invoices, but what I want you to remember is that it is a marketing instrument and that the first thing you have to do if you want your invoice to be paid is to make sure it was issued correctly. I recommend that you use a billing software to avoid mistakes and errors that many have made before you, from missing mandatory invoice info to the invoicing and numbering procedure. Furthermore, it would also be helpful for you to know the difference between the following types of invoices: proforma invoice, advance invoice, canceled invoice, reversed invoice. And don't forget, an invoice issued and not registered in your accounting records is classified as tax evasion, so don't forget to submit all invoicing to your accountant.
Step 9. Wandering whether you need or not a cash register for your business? If you are going to collect cash from individuals, then the answer is YES. There are some exceptions, but it's best to discuss them with your lawyer or accountant. What’s that? You don't have either an accountant or a lawyer? Then go back to Step 2.
Step 10. There are many tax ceilings, cash payments or collections ceilings, and it is almost impossible not to forget about one. That's why I recommend you to use an invoicing software, because a smart one alerts you when you exceed a ceiling. I also recommend that you hand over the documents to your accountant as soon as the month is over, even if you submit your returns quarterly. If you exceed some specific ceilings you have to report this within 10 (ten) days as of the end of the month in question, so you’d better send the documents to the accountant on the 5th. Talk to your accountant about ceilings and what you have to pay attention to, because this discussion could save you from fines or complicated situations.
Step 11. VAT code or special VAT code for intra-Community transactions. If we enter the intra-community VAT area, things get more complicated. Well, VAT actually complicates things in general, even more so since it is constantly subject to changes and amendments. Discuss with your accountant about your business model or the things you plan to do, before doing them. And remember, the "VAT is not mine, is not yours, it's the state's!" and it will do whatever it takes to collect it.
Step 12. Keep the company documents at the company headquarters and do not leave them in your accountant’s custody for years on end, because your accountant is not an authorized archivist (there is a special law in this regard). Plus, this is how you can check if the accountant has fulfilled the obligations he/she has towards your company, i.e. the documents were processed and the statements were submitted and confirmations of receipt issued. I know you're not very good at checking your accountant, but if you have an unexpected inspection, at least you won't get fined for not producing the documents that should be present at the company headquarters. And this fine is not small, I can tell you that.
I wish you sky-high profits and may you be stay off the tax inspectors’ radar!
A material by Valentina Saygo - Accounting expert, tax consultant and entrepreneur
Valentina Saygo is the managing partner of “Ask for Accounting” company and has over 20 years of experience in financial-accounting advisory services.
Valentina is an expert accountant member of CECCAR (Body of Expert and Licensed Accountants of Romania), specializing mainly in the legislation and accounting of small and medium sized enterprises, with extensive experience in various fields of economic activity. She has participated in debates and consultations with the Ministry of Finance and ANAF, regarding the issues taxpayers face regarding the calculation and reporting of the due fees and taxes.
She has been invited as a lecturer at numerous tax conferences, specialized seminars, forums and TV shows, and through her articles published in the economic press she pointed out legislative irregularities and oversights or she expressed her opinion on the tax changes adopted by the authorities, offering advice to both entrepreneurs and colleagues in the industry.
Valentina Saygo is actively involved in the entrepreneurial environment, she is a translator of tax legislation, and can talk about complicated legislative acts in simple words that everyone can understand. She is an atypical accountant, who refuses to work only for ANAF and prefers to help Romanian entrepreneurs understand the accounting information and use it for their business.