Accounting services and tax accounting

Jan, 23 2024


The law requires to record and systemize information about the objects of business activity – this is what accounting is particularly involved in. It implies that professionals will form financial reports on the main document flow basis of the company which will help internal and external users to assess the company’s activity. 

The aim of accounting services and tax accounting is to prepare the impartial report for internal and external use. It is impossible to assess the company’s activity relying on the tax data only. This is the reason why banks, for example, rely on financial documents rather than tax reports when making their lending decisions. The company must also provide the financial reports if it wants to take part in a tender or competition.

Accounting services and tax accounting allow the state authorities to control how timely and correctly the taxes are paid by the company. Managers and business owners are also interested in financial reporting due to the fact that it is possible to make effective decisions, applying information from accounting reports. 

Thus, companies must maintain accounting and tax reporting – it is necessary to calculate the tax base. Professional accounting allows business owners to make competent decisions, avoid risks, and prevent penalties from the inspection authorities.

What does accounting include?

Accounting implies several directions of work. The first one is reporting and taxation. A specialist forms and sends reports to government authorities, including zero reports if the company does not actually operate and does not make profit. You can submit reports through the Internet.

Notable, that accounting services and tax accounting are vital elements of any company’s activity regardless of the chosen tax system and the size of the enterprise. Accounting also deals with such issues as formation of primary documentation, preparation of bookkeeping, and consulting. Sometimes a specialist can perform these tasks remotely.

The second area of work is personnel accounting and salary calculation. Accounting also deals with the calculation and payment of employees’ salaries, bonuses, and advances. Specialists form receipts, as well as calculate mandatory contributions and taxes.

The third area of accounting is legal optimization of tax burden. A competent specialist knows the legal ways to reduce tax payments, for example, through benefits, refunds, and correction of mistakes in the company’s activity.

Differences and peculiarities of tax accounting.

The aim of tax accounting is not to reflect all the financial transactions and assets of the company. It is a system that summarizes information related to the tax base relying on primary documents. Thus, it is impossible to conduct tax accounting without proper accounting.

Regardless of what system company applies: general or special, tax accounting is obligatory. One of the most important documents that sets out how the tax accounting is conducted is the accounting policy. Please keep in mind that the accounting policy must be confirmed by the order of the Manager to be valid. There are several accounting goals, but the main one is to create complete and reliable information about the state of affairs. Tax accounting means summarizing and organizing information and its registration in accordance with current legislation (it may be amended, so it is important to keep track of changes).

Specialists collect and register a wide range of data: income, expenses, losses, reserves, and liabilities. The information must be confirmed by primary documents, analytical registers, and calculations – all information must be justified by carefully compiled papers.

While state authorities are external users of information formed by accounting, the main internal user is the company’s administration.

Main principles.

The Tax Code of the Russian Federation prescribes what principles to follow when working with documentation. In particular, the law requires information about the company’s income and expenses to be presented in financial terms. When preparing reports, everything must be converted to monetary equivalent, even if the calculations were made by goods, materials, services, or intangible property. The Tax Code also requires the company’s property to be accounted separately from the property of other legal entities that the company may use.

There are other important principles required by law. They indicate that accounting should be kept continuously from the moment of registration of the company until its liquidation (reorganization). Even if the company does not actually operate, does not make profit, it does not eliminate the necessity to report to state authorities, providing zero reporting.

It is important to keep in mind that Tax Code requires the economic activity to be clearly and unambiguously defined in time. It means that income and expenses must be accounted for in the period when they occurred, even if the funds were actually accrued at a different time. Remember that violation of tax principles implies sanctions imposed by state authorities, so it is critical not to violate them.

There are two more tax accounting principles. The first is the sequence of application of rules and regulations. It implies that the rules are applied consistently from one period to another, and this concerns all accounting items without exception. The second important principle is equal recognition of income and expenses. It hides the necessity to reflect expenses at the same period as the income for which the company incurred expenses.

Tax reporting options.

The law provides two options of working with accounting services and tax accounting. The first one implies using accounting as a base, that means approach of two types of reporting. In this situation, special registers are created only when the legislation provides for fundamentally different rules of tax reporting.

The second option is to correct accounting information. In this case, it is necessary to reflect in registers only the difference between the two accounts and only when these differences occur. Which of two accounting options to choose depends on the specifics of the organization, its business activities and management preferences.

VALEN offers accounting services and tax accounting in Moscow and other regions. Our specialists will prepare reports to state authorities and will file them in time, will systemize and correctly formalize internal documentation, will consult on all relevant issues. 

We carefully keep track of legislative amendments, so we note that all recent amendments of the Russian Tax Code are aimed at bringing accounting services closer to tax accounting. Our company cooperates with small and large businesses, provides support to foreign enterprises that operate in the Russian Federation.

Please contact us directly at +7 (495) 7-888-096 or leave the request on the website to get the consultation or to order our services. We also will be glad to see you in our office in Moscow.

Author of the article
Accounting services and tax accounting
Valentina Khlavich
Managing Partner
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