It is quite easy to establish an IT company in Georgia, but the further business and competent organisation of accounting and taxation cause a lot of difficulties. The answer to the question of the peculiarities of bookkeeping of an IT company is obvious and it is one of the basic conditions for its success.
Competent accounting of the IT company includes:
- minimization of financial and tax risks;
- optimization of the tax burden;
- possibility to attract investors and borrowed capital;
- access to foreign markets.
Specifics of accounting of an IT company
All over the world, there is a course for creating a comfortable environment for the development of information technology, but despite this, there are specific features of the IT sector and discrepancies in legislative norms, as well as some restrictive measures. All this complicates both the business operation as a whole and accounting in IT companies.
Peculiarities of accounting
First of all, it is work with intangible assets, rights to the results of intellectual activity, etc. All this is subject to accounting.
Speaking of the specifics of accounting of an IT company, you should also remember that in most cases its business is related to foreign economic activity, and this requires additional knowledge and special training of the accountant.
The organisation and maintenance of bookkeeping and tax accounting in IT companies are carried out according to general rules. To avoid problems with the fiscal authorities in the future, it is important to develop a competent accounting policy from the very beginning of the firm’s existence. It is used as a basis for further accounting and document flow formation.
Popular taxation systems in IT
Depending on the nature of their activities, the number of employees, and annual income, IT companies can operate under the general simplified system of taxation, and there are preferential systems of taxation (international companies and virtual zones). The most popular legal entities in IT are international companies and virtual zone companies.
Cost accounting in IT
A crucial moment of accounting policy in IT-company is the choice of cost calculation method.
The costs of IT services are traditionally divided into direct and general production costs.
The way of determining the prime cost depends on the company’s activity: the company may provide services and may sell its products.
The legislation permits the use of any internationally recognized methods of calculating. Often this is applied to the account of all direct costs for individual orders.
Labour relations in IT.
Speaking of the peculiarities of accounting in IT companies, one cannot forget about the personnel, as a competent organisation of the firm’s staff employment allows it to optimise taxation.
The company may:
- officially hire all the developers (the most expensive variant);
- make contracts with programmers as with entrepreneurs (in this case, there is a risk that tax inspectors will consider these relationships as labour);
- choose a combined variant: employment of key employees + conclusion of service contracts with a part of developers.
- register an international company or a company in the virtual zone.
In any case, the company needs a competent accountant to provide an account for working hours, payroll, record keeping, calculation and payment of taxes, filing reports, etc.
How to choose an accountant for an IT company
As at enterprises of any other type of activity, accounting in IT firms can be carried out by:
- an in-house accountant and
- outsourcing of accounting services.
Given the specifics of IT business, the second option is more popular, as engaging an accounting company for the organisation and maintenance of bookkeeping is the most effective way.
More so that the format of distance work practised everywhere is customary in the IT sector.
Most IT firms have a relatively small staff. Often cooperation with developers is realised based on employment contracts or subcontracts.
And interaction with specialists takes place online. Therefore, it is impractical to spend time looking for a qualified accountant and creating a full-time position.
Why is it advantageous to apply to a specialised company?
- Some qualified experienced specialists know the peculiarities of accounting in IT companies.
- The customer does not need to spend time and money on setting up a workplace, training, and material support for the accountant. Problems such as dismissal, maternity leave, sick leave, or vacation are eliminated.
- A specialised firm is ready to provide a full range of services, including accounting, tax, and personnel accounting.
- An outsourced accounting company is ready to be involved at any stage of the firm’s development, and when needed to organise accounting from scratch and to restore accounting.
So, to sum up
Companies operating in IT have to take into account the peculiarities concerning employment schemes, income receipts, taxation, VAT relief, and other accounting nuances.
The evidence from practice suggests that hiring full-time professionals and creating their accounting departments in IT firms is often impractical. A more advantageous and convenient solution is to cooperate with a specialised company, which is ready to provide professional accounting support.
Specialists of Jara Accounting have successful experience in cooperation with companies specialising in IT development. We are ready to provide services for the preparation of primary documents, preparation, and submission of accounting and tax reporting, payroll calculation, making bank payments, and other accounting operations.