Accounting is a branch or discipline that deals with financial transactions of a business organization. It refers exclusively to finished data records and not to their prediction.
Accounting services are a prerequisite for providing a financial status report of business activities in accordance with the law for every entrepreneur or crafts business
Accounting services include:
- Accounting and bookkeeping services
- Services of preparing a financial report
- Services of preparing special reports
- Forensic accounting
Accounting services in Croatia are delivered in accordance with the Accounting Act, International Financial Reporting Standards, i.e. Croatian Financial Reporting Standards (depending on the size and requirements of business units), VAT, Income Tax and other provisions that regulate the accounting and financial activities in Croatia as well as with client accounting policies.
Accounting services in Croatia:
- Bookkeeping services: trial balance, general ledger, subledger records, depreciation calculation, petty cash management
- VAT: incoming invoices control, VAT calculation, VAT records
- Financial reports form Croatian National Bank about foreign bank loans and foreign proprietary investments
- Foreign trade activities and managing foreign payment register systems
- Registration of clients with tax authority (VAT system registration)
- Delivering documents to client offices, banks, Croatian Pension Insurance Institute and other regulatory bodies
- Report submission via the Internet
- Assisting auditors with financial report audit
- General ledger management applying chart of accounts generally used in Croatia
- Preparing reports in English language
- Data formatting in accounting software appropriate for delivery via the Internet
- Preparing quarterly financial reports in accordance with Croatian legislation
- Annual financial reports in accordance with Croatian legislation
Types of financial reports:
- Balance sheet: A report on financial status
- Profit and loss account- A report on general income/economic outturn
- Report on the owner’s equity changes
- Cash flow report
- Notes along with financial reports
Objectives and importance of financial reports:
- Providing information about financial status, economic outturn and changes of the financial position of the subject, which is useful for economic decision-making
- Presenting results of the management or its liability
Who is required to prepare reports?
- Companies and sole traders
- Entrepreneurial business units seated in a foreign country
- Business units from a foreign country liable to income tax payment
- All legal entities and private persons liable to income tax payment
The objectives of accounting services in Croatia:
- Setting up accounting systems necessary for transaction records and preparing reports
- Creating reports for the entrepreneur, tax administration and FINA (Financial Agency) based on general ledger records, AP and AR ledgersas well as other documents
- Employee registration/termination and payroll calculation
- Consulting services related to creation and management of all accounting documents
Bookkeeping documents present business documents containing important components that make the document authentic. These documents comprise all data necessary for registration into ledgers and they present a business change.
The importance of bookkeeping documents:
- Bookkeeping documents present a written record of a specific business activity and they mainly serve as data subjects. They are used as a certain basis for data entry into business books and with the purpose of supervising a business activity.
- They reflect business activities that can result in changes in asset, liability or capital status
For the overall process of financial report, the accounting documents are prepared exclusively at the time and place where a transaction has been effected, with the exception of those documents that are prepared at the bookkeeping department of the entrepreneur.
Bookkeeping documents can be grouped according to:
- The source of their origin: internal and external
- Purpose: ordering, justifying and combined
- Data coverage: original and ZBROJNE
Internal bookkeeping documents:
- Are created in the company (outgoing invoice, payroll, payment slips, payment orders, treasury report, travelling orders, etc.
- They show the asset flow within the company and its conversion into useful effects
- They are used for a correct reproduction process account and as a means of control
- They serve as the basis for opening books, turnover transfer, correction of records, conclusion of books, etc.
External bookkeeping documents:
- They come from the surroundings, i.e. they are created outside the company (supplier’s invoice, statements of giro account, entry notifications…)
- They serve as a record of business changes that cause status or success changes in the business system
Ordering bookkeeping documents:
- They present a written order for a person to perform a specific activity (cash payment order, work order, purchase order…)
- Issued and signed by authorized persons
- They serve as a means of control for a certain activity on the basis of which entries into business books are made
Justifying bookkeeping documents:
- They serve as a record of a specific business activity
- They are the basis for entry into business books (travelling order)
Combined bookkeeping documents:
- Separating persons authorized for signing ordering i.e. justifying documents
Preparing and control of bookkeeping documents:
- A business subject is responsible for preparing bookkeeping documents
- An authorized person guarantees by his/her signature on the bookkeeping document for the authenticity and reality of business changes documented.
- Every incoming and outgoing document must be controlled prior to its entry into business books
The purpose of accounting:
- To satisfy informational needs of different users, i.e. providing the users with different information necessary for different purposes
Who are users of accounting services in Croatia?
- External users (banks, Ministry of Finance) and internal management
- Current and potential investors
- The public
It is important to emphasize that services provided by accounting offices are constantly adjusted according to the needs of its clients.
Phases of accounting process in Croatia.
- Collecting data about business activities; the subject of recordkeeping can exclusively be activities performed within the company, between certain companies and surroundings or in the surroundings
- Preparing a bookkeeping document i.e. a confirmation about a certain business activity
Analysis and classification of business activities that are to be entered into accounting records i.e. become its subject; the following item are taken into account:
- Material expenditures
- Users satisfaction
- Facilities capacity
- Paid professional fees
- Concluded sales contract
- Sold final product
- Trade receivables
- Payroll account
- Record entries into business books
- Journal: chronological entries of business activities
- General ledger
- Inventory process: register of assets and liabilities to determine the available balance and to record possible variances
- Trial balance: recapitulation of balance and turnover of all accounts in the general ledger
- Preparing financial reports
- Journal: chronological list of business activities
- General ledger: records of changes on financial status and/or business performance;
- consists of two parts: balance and off-balance records
- Subledger records: kept separately
An important segment of doing business for each entrepreneur is quality accounting which ensures business activities complying with law regulations as well as a good information source for the company management. The tax aspect is also very important as it ensures tax efficiency in terms of lower tax rates in line with prescribed regulations. There is a famous quote: The difference between a tax evasion and a tax avoidance is the thickness of prison walls.
Keeping in mind contemporary ways of doing business and a technological progress, we try to provide for our clients an efficient service by using technology in terms of communication as well as in terms of business solutions that we use in our own activities.
We help you maintain good quality business records by:
- providing advice on how to create, file and manage the required accounting documents such as sales invoices, statements and payments
- setting up an accounting system where the transactions are recorded and reports obtained
- providing bookkeeping services to process or generate accounting documents
- preparing VAT returns, accurate, timely periodic management accounts and annual statutory accounts
Our long term tradition and experience in the accounting sector are a cornerstone for future cooperation with any client.
Accounting Osijek, Hrvatske Republike 17b – Vomi Commerce d.o.o.
If you have any question about accounting in Croatia, please contact us on e-mail [email protected].
If you are setting up company in Croatia, and you need accounting we provide both services
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