What are the legal requirements?
A well prepared financial statement is an important steering tool for you and your business. Furthermore, the authorities require that you keep accounts. The Bookkeeping Act states that all information necessary to produce specifications required by the act and the required reports must be entered.
The registration must at least include:
- Number and date
- Information of sum and amount
- Codes that indicate location in the accounting system
- Reference to accompanying documentation
- Possible tax calculation (e.g. VAT)
- Possible name of buyer or seller (account ledger entry)
Before the financial statement is finalised for submission to the authorities, the registered date may be altered in the system without additional documentation. When the reports are produced and the period finalised, the system must not accept any changes.
Correcting misplaced vouchers must then be carried out by entering a new record. The original record must be reversed in its entirety. The corresponding voucher should indicate which original voucher is corrected and the reason for the correction.
If a registered record has to be deleted, e.g. if an invoice is entered twice, a journal of records or a voucher must specify that the deletion has occurred.
The act specifies the minimum suite of reports the system must be able to produce:
- Journal of records (bookkeeping specification).
- Account specification (main ledger).
- Customer specification (customers' ledgers).
- Supplier specification (creditors' ledgers).
- Specification of owner withdrawals.
- Specification of sales to the owners and/or partners and personal withdrawals.
- Specification of sales and other benefits to management personnel.
- Specification of VAT.
- Specification of taxable remunerations included in the periodic record sheet.
Note that there are specific regulations regarding cash sales. These are discussed in chapter 7, On Balancing the cash.
The Bookkeeping Act states that the following records must be kept for 10 years:
- Annual accounts, annual report and the auditor's report.
- Additional required accounting reports, e.g. annual tax return, the periodic VAT return, etc.
- Specifications of the account records required by the legislation, such as the main ledger and the journal of records.
- Numbered letters from the auditor.
- Documentation of recorded and deleted information (vouchers).
- Documentation of the accounting system.
- Documentation of the balance sheet.
Some business sectors, e.g. hotels, businesses serving foodstuff, hairdressers and taxis must comply with additional requirements.
Certain documents (records) must be stored for 3.5 years. These are:
- Significant business contracts.
- Correspondence adding valuable additional information in connection with an entry.
- Packing slips or similar records available on paper at the time of delivery.
- Price lists required by the legislation or regulations.
The accounting records must be stored in an orderly manner and shall be adequately secured against destruction, loss or alteration. The records must be available for inspection by the proper authorities during the entire storage period.
How to calculate the Value Added Tax (VAT) in an accounting system?
The VAT is easily handled by the aid of VAT tags. The sum on the invoice, including VAT, is recorded. How to handle the VAT is then indicated by the tag (code) given to the transaction. The tags may vary from one system to the next, but the most common are:
|1||Deductible input VAT|
The record may appear as follows:
From the above you will recognize the record as an input invoice, i.e. one that permits the deduction of the VAT. The invoice sum is NOK 1500. If the sum is punched into the account no. 6800 with a 1 (one) VAT tag, the system will produce the following records:
|Account no. 6800||Stationary, debit NOK 1200|
|Account no. 2710||Input VAT, debit NOK 300|
|Account no. 2400||Supplier debts, credit NOK 1500|
When all the vouchers are recorded in the period, you may produce a VAT Return directly from the accounting system.
How to organise the vouchers?
If you only have a few vouchers per year, you may file all the vouchers by date in a folder. With a higher number of vouchers, this method may not provide necessary insight.
The registration of the vouchers will be faster if the bookkeeper can work on similar vouchers in series. File the vouchers in a folder and use a dividing front page for each section.
When starting a new business you have to:
- Present a start-up balance
- Have a share capital of at least NOK 100 000
(for an AS)
- Design a suiting chart of accounts
If you have many vouchers you should use one folder for each accounting period. A common method for organising the vouchers is as follows:
- Sundries vouchers
- Cash register – sorted by date
- Input invoices – sorted by suppliers
- Output invoices – sorted by number
The oldest vouchers are placed at the back of each section, and the newest at the top. The bookkeeper will always start at the back and work forward while numbering the vouchers consecutively.
If the number of bank statements is substantial, you may consider dividing between payments and deposits. If you use more than one bank account in your business, sort each one separately.
Allow for time to scan the mail every day. Immediately check input invoices against the corresponding list of contents. Does the invoiced number of items match the received number of items?
If the invoice is correct, you may immediately certify it and file it in the vouchers' folder. If you use internet banking, the payment is easily prepared at the due date. If you use payment by letter giro, the giro part must be prepared and filed in a system according to date due.
Remember that the invoice must be recorded in the period even if payment is not due until the next period. It is the date on the corresponding voucher that determines which period the invoice belongs to. If you receive an invoice the month after the commodity or service in question was received, a copy of the invoice must be filed in the vouchers' folder carrying the print "copy – time limited".
If you receive an invoice on a delivery that will take place next month (the following period), the invoice is recorded as a pre-payment expense. The actual expense is activated when the commodities/services are received. Note that it is only the net value that is time limited, the VAT follows the date of the invoice.
What else to do?
A sound system for the vouchers is an important step to reduce the amount of time spent on the bookkeeping. In the transition time between periods, check each voucher specifically in order to determine the correct period.
If you have engaged an external bookkeeper:
- Hand over the vouchers' folder as soon as you have received the bank statement for the period. If a voucher is not self explanatory, add an explanation.
- Respond quickly when the bookkeeper asks for additional documentation.
- Keep the number of own withdrawals at a minimum, preferably no more than 1-2 transactions per month.
- Personal and business matters should not be mixed. Therefore, use a separate bank account for the business.