Most people who run their own business must keep accounts. Accounts form the basis for most statutory statements which you have to submit to the public authorities. It is therefore important to have good routines right from the start. Up-to-date accounts are also one of your most important management tools.
Some self-employed people do not need to keep accounts. This mainly concerns those with an annual income of less than NOK 50,000 who are not registered in the VAT Register. If this applies to you, you must still document all your income and expenses and retain this documentation in accordance with the applicable bookkeeping rules.
You can prepare your accounts yourself, but if you are not familiar with the relevant regulations, you should consider asking an accounting to do it for you. Alternatively, you could ask an accountant to help you during your start-up phase.
In Norway, the accounting regulations are split into two. Businesses are subject either to the bookkeeping obligation only, or the bookkeeping obligation and the accounting obligation.
Most sole proprietorships are subject to the bookkeeping obligation only. All private limited companies are also subject to the accounting obligation. In simple terms, this means that enterprises that are subject to the accounting obligation must submit annual accounts to the Register of Company Accounts, as well as a tax return and an income statement to the Norwegian Tax Administration.Office work and accounting – some tips and advice
Open a separate bank account for your business. Pay all your business expenses from your business account. It is important to maintain a systematic divide between your personal finances and your business finances. It can be both expensive and time-consuming to sort out your finances afterwards once your business finances and your personal finances have become mixed up.
If you decide to keep your own accounts, you must first choose an accounting system. Accounting systems must be systematic and clear. For example, they must be constructed in a way which enables you to extract reports for submission to the public authorities.
For a few hundred kroner a month, you can now get access to good online accounting software with a lot of built-in help and automated guidance. Many systems consist of separate modules, so you only have to pay for what you need. For example, if you don't have any employees, you will not need the payroll functions. Search online and contact a few suppliers before you decide.
If your business have fewer than 600 vouchers a year, you are permitted to use a spreadsheet for your bookkeeping. However, using a manual spreadsheet will mean you will need a much greater knowledge of how your bookkeeping must be carried out and it will be easier to make mistakes. The Norwegian Accounting Standards Board has prepared a standard for the use of text processing and accounting programs for bookkeeping purposes (NBS 6). It can be a good idea to familiarise yourself with this standard before you decide to keep your accounts in a spreadsheet.NBS 6 - bruk av tekstbehandlings- og regnearkprogrammer (in Norwegian only)
You must have a system for storing and safeguarding your vouchers. There are many ways in which you can systematise vouchers. Needs will vary from business to business. You must consider what would be most appropriate for you. On the vouchers, you must add a reference to the item in the accounts under which the voucher has been posted. Modern technology also offers many different ways of systematising vouchers, and in most cases, you will be able to discard your paper vouchers if you scan them and store them electronically. If you have an accountant, discuss with them how you should systematise your vouchers.
For most small businesses, it is sufficient to systematise vouchers in a folder with partitions in order to separate different types of vouchers.
Examples of voucher types:
Make a habit of sorting vouchers as soon as you receive them. In this way, you will be able to keep them organised, making it easier for you or your accountant to post them. You should also remember that vouchers are valuable documents. An invoice for a purchase you have made for your business will help you reduce your tax basis.
Once your vouchers have been systematised, the accounting process will be simpler and less time-intensive. This will reduce the price you have to pay if you use an external accountant.
Strict requirements apply regarding sales documentation. It is therefore important to clarify at an early stage what your needs are, so that you are ready to start sending out invoices or accepting cash payments as soon as you start trading. Different requirements apply concerning documentation depending on whether you make cash sales or sell on credit (send invoices).
If you make cash sales, you must have a cash register or a software program which fulfils the requirements set out in the bookkeeping rules. Cash sales are defined as sales where the buyer pays for the goods when they receive them. This applies regardless of whether payment is made using cash, a bank card or a payment solution on a mobile phone.
If you sell on credit, there are clear requirements as regards the information that must be included in the invoice. For example, an invoice must have an invoice number which is automatically assigned by a program. Alternatively, you must arrange for forms to be printed by a printing firm which contain consecutive invoice numbers and the name, address and organisation number of your business.
The sooner you send out a reminder, the better your chances of receiving the money. It is important that you follow the formal rules linked to reminders and debt collection in order for your claim to be valid. For example, if you want to charge a reminder fee, you cannot do so until at least 14 days after the due date.
If you are registered for VAT, you must submit tax returns for VAT to the relevant authority every other month (per period).
When you have been VAT-registered for a year, you can apply to submit returns annually if your turnover is less than NOK 1 million.
For holders/owners, there are various ways of withdrawing funds from a business, depending on the organisation form.
In the case of sole proprietorships, you can decide how much or little you want to withdraw for your own use. You will be taxed on the profit that the business generates anyway.
In the case of limited companies, as owner you will be employed by the business in the same way as other employees. The company will have the employer responsibility for you. You will receive your salary at the same time as you accrue pension credits along with sick pay and unemployment benefit rights (welfare rights).
As owner, you can opt not to be an employee of the business. Payments from limited companies to owners can also take place in the form of dividends. However, you will not accrue welfare rights on the dividends that are paid.
For many founders, the big change in accounting routines comes on the day they employ someone. You must comply with many different regulations in connection with appointments and salary payments. At this point, many people decide to outsource their accounts to an accountant or ask an accountant to take responsibility for payroll runs.
If you make substantial investments in your business, you may need to depreciate these investments over time. It is up to you to decide whether or not the investment should be depreciated or whether you can expense the investment in its entirety at once. As regards tax, there are clear rules regarding when an investment must be depreciated: when it is intended to be used for more than three years and has a cost price exceeding NOK 15,000 including VAT.
When you depreciate an asset, it means in practice that you recognise the fall in value of the asset as a deduction as it is used and becomes worn.
At the end of your financial year, you must close your accounts. Before you close them, you must ensure that you have included all expenses and income which should be included in the period. This is called 'accrual'. If you trade commodities, you must carry out a stock count to ensure that the cost of goods is correct for the period.
You must document all balance sheet items of importance. In other words, you must show what lies behind each individual balance in your balance sheet. For example, the balance in your accounts must correspond with the account statement from your bank.
All taxable businesses must submit a tax return. Self-employed persons and partners in shared liability partnerships must submit form RF-1030 'Tax return for self-employed persons etc.'. Private limited companies, cooperatives and other non-personal taxpayers must submit form RF-1028 'Tax return for corporations' (available in Norwegian only) .
In addition to submitting a tax return to the Norwegian Tax Administration, everyone who is required to prepare annual accounts must also submit their accounts to the Register of Company Accounts. The final deadline for submission is 31 July for businesses whose financial year ends on 31 December.More information about reporting obligations
As a general rule, all companies subject to the accounting obligation with a turnover exceeding NOK 5 million are obliged to have an auditor. However, there are a number of exceptions. Sole proprietorships are normally only subject to the bookkeeping obligation and do not need to have an auditor.
The Norwegian Tax Administration arranges courses specifically for new business start-ups. These courses are held nationwide and are free of charge. On these courses, you can learn more about: Accounts, advance tax, tax returns, deduction entitlements, VAT, tax returns for VAT and electronic submission.Courses for new businesses