Every business needs to maintain certain records in its books of accounts. Bookkeeping is a part of accounting. It is the process of maintaining and recording financial transactions. Accounting, on the other hand, is a broader term that includes not only recording financial transactions on a daily basis but also analyzing the information that has been recorded for making better financial decisions. It provides information about the company`s assets, liabilities and owner`s equity. These two together help the decision makers make better financial decisions and give a comprehensive picture of the company`s financial standing.
Georgia has its own legal framework on how companies have to prepare their financial statements. It has to be in accordance with the International Financial Reporting Standards (IFRS). By making sure that organizations follow international standards for accounting, the government of Georgia wants to create a transparent financial system in the country, thus, facilitating better investments and making the country more attractive to Foreign Direct Investment (FDI). In this way, it will also align its accounting standards with most of the countries of the European Union.
Accounting and Bookkeeping Essentials in Georgia
Every country has its certain tweaks and differences to the international standards although these tweaks are more or less the same to what should be followed. The following are the accounting and bookkeeping essentials that are followed in Georgia by all the entities.
- Most of the entities including a Public Interest Entity (PIE- a commercial bank, an insurance company, an investment fund, non-governmental pension funds, nonbank depositories, and credit unions), in Georgia have to follow International Financial Reporting Standards for preparing various accounting documents. However, a Non-Governmental Non-Commercial Legal Entity may or may not follow IFRS.
- Accounting documents must contain daily maintained ledgers and documents according to which tax liabilities are determined by the tax authorities.
- If an organization`s accounting records have some discrepancies then the tax authority might use a comparison method to establish tax liabilities.
- Organizations can either follow cash or accrual method of accounting. In the accrual method, the expenses are recorded only when they are incurred.
- A Georgian entrepreneur who has a small business is not required to maintain records of income and expenses but should maintain tax documents.
- According to the International Financial Reporting Standards, assets of an organization should be recorded at market value, so that organizations are valued in real time. It is a measure of quality asset management.
- Every organization is supposed to keep the accounting and bookkeeping records for at least three years from the date they were issued so that whenever an audit is decided by the authorities, it becomes easier for them to assess the organizations` practices.
Why Organizations in Georgia Should Outsource Their Accounting and Bookkeeping Services?
Accounting and bookkeeping is not something that you do according to your instincts. There are certain conventions, standards, and laws that need to be kept in mind while maintaining the financial records and preparing the various types of financial statements and management reports that can be analyzed and examined in detail by the shareholders so that they can make better financial decisions for the furtherance of their corporation. The reasons why you should outsource these services are-
1.Improve the Quality of Financial Statements
Outsourcing accounting and bookkeeping to experts will reduce most anomalies and the experts will be able to quantify and publish specific fiscal risks, such as guarantees and other contingent liabilities that the management can work around.
2. Reliability of Results will not be Questioned
At Business Setup Worldwide our experts at accounting and bookkeeping in Georgia have years of experience and they are well versed with the intricate details that go into the process. As a result, you will have the best reports to rely on.
3.Enhancement in the Efficiency of the Organization
When you don`t have to constantly think about the ins and outs of accounting then you will be able to think more clearly about the bigger picture and this will indeed increase your efficiency and will also improve your effectiveness.
4.Better Utilization of Resources
When your valuable employees are not bothered about meeting the international standards for recording and maintaining financial transactions, then they can emphasize their attention and prioritize the tasks that are more urgent and most important.
5. Outsourcing is not Cost-Cutting, it is Cost-Saving
Once you outsource, you don`t only get reliable results but also save cost as well as your valuable time that can be better utilized elsewhere.
Now you must almost certainly and definitely be convinced that outsourcing accounting and bookkeeping services in Georgia is a good practice to take on by any organization whatever its size of operations maybe. It has many advantages from providing flexibility to an organization to cost-saving and better focus on core activities. This, in turn, helps organizations to maintain their competitive advantage.
Do contact us for any question that might pop up in your mind, we will be more than welcome to help you out.