Accounting Facts & Myths
Fact vs. Myth: The Added Value of Accountants
Entrepreneurs who are happy to invest time and energy in their administrative affairs are hard to come by. However, thanks to the digitization of bookkeeping, entrepreneurs, in general, have become more involved in their administrative affairs. Even if it is for the sole purpose to save money on their accounting fees.
In this article, we’ll discuss the typical relation between a (startup) global entrepreneur and his accountant. And of course, the myths and facts on which this relation is based.
Myth #1 Accounting is only necessary for tax month
First of all, it’s never too soon to involve your accountant. Even when you have registered a representative office in the form of a branch, and you are not expecting any profits at all, it makes sense to discuss a timeline on the tax (filing) requirements that you can expect in your first book year. Besides that, there are certain basics that are relevant to each company of any size. For example;
How do you deal with intra-group loans and transactions?
What are the invoicing (VAT!) requirements?
Can I file for an extension of my filing due date?
Are there are tax liabilities I need to consider (such as minimum wage salaries, freelancer vs. employee considerations, etc.)
When you do expect to have a turnover in the Netherlands, the accountant can help you optimize your taxes and assist you to focus on your optimal Return on Investment by delivering the right numbers.
When you have successfully incorporated your company (using INCO’s services) our in-house bookkeepers and tax specialist will contact you for a full intake and prepare a timeline on your requirements so you can feel comfortable about your tax liabilities. This even applies when you decide to do most of the bookkeeping yourself.
Myth #2 Accounting is easy
Keeping your books in order is more difficult than you think if you have to consider the accounting rules of a country that you are not familiar with. Vice versa, it requires some extra attention (for a Dutch bookkeeper) to process invoices and receipts which originate from a different country, and are often in a foreign language.
Many of our clients work with foreign banks, which often implicates that the online software is not able to process those statements. We also notice that many entrepreneurs use their overseas holding company or HQ to deal with certain transactions on behalf of their Dutch subsidiary, which requires careful attention.
Apart from the practical affairs that an accountant has to deal with on each transaction that takes place in your company, the accountant keeps an eye on the tax consequences and how to optimize your taxes! There might be special incentives or deductions in place for the type of expenses that you make, or you might be better off structuring certain transactions in a different manner. In short, there are numerous practical issues and accounting considerations that are involved in keeping your books.
Even if your company is just starting. It’s reasonable to expect that you will require the help of a bookkeeper for at least 1-2 hours per month. Find out more about our company services.
Myth #3 Accounting will be taken over by computers
In the current fast-changing entrepreneurial landscape, we expect to become more and more automated. We expect our accountants, and their software, to automatically process invoices and receipts and preferably not charge for this service at all. Because why would you? If the software is doing all the work… As described in Myth #2, it might not be as simple as that. However, INCO has implemented a pricing schedule to fit close to the current entrepreneurial mindset.
INCO uses competitive fees, that is focused on two types of scenarios:
You have an active VAT number, in which case INCO offers a fixed monthly fee to manage the VAT administration, and file the quarterly VAT returns
You don’t have an active VAT number (and don’t perform VAT taxable transactions), in which case INCO offers a fixed fee to prepare the annual report, and file the corporate tax return, based on your input
In both scenarios, our fees are aimed at tax compliance and filing, not on the processing of invoices. Although in the case of the first scenario (VAT administration) we offer fixed fees, depending on the number of invoices that are involved. Extra fees do apply, in case INCO processes more invoices that agreed upon, or when certain transactions/invoices require extra attention. Get in touch to find out more about our Accounting services and fee structure.
Myth #4 Accounting is only data entry
If you are still not convinced that you need an accountant, after reading the first 3 myths ...well, you might be an accountant yourself!
In any other case, you should consider that opening an overseas company requires a lot of energy. In both time, and money. An accountant can help you to efficiently use this energy, but can also help you to have the right expectations of your overseas adventure. How many results do you expect, based on the energy you are putting into it? Furthermore, an accountant can recognize if, and how, you should attract funding, and support in your communication with banks and investors...who often prefer the insight of an accountant, rather than of an entrepreneur. (and who can blame them!)
Myth #5 Accounting is only for big companies
Any company, of any size, requires attention to it’s bookkeeping. Even in case, you operate a simple Dutch branch, which is technically not even required to prepare its financial statements, you have to understand the relevant tax issues. Especially in case of a branch, the consequences of non-compliance can be severe, because they also reflect on your HQ.
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