Accounting Management for LLC

Publication date/update: October 8, 2024

Any company, starting from its very first day of operation, is legally required to maintain accounting records in accordance with Federal Law No. 402-FZ, "On Accounting." Responsibility for maintaining accounting records and preserving documentation falls upon the company's director. This includes the establishment of accounting procedures and the preparation of financial statements, which must be signed by the director. In this article, we will delve into the nuances of accounting for LLC, highlighting potential pitfalls and critical considerations.

Accounting management for LLC entails organizing the collection of data regarding the company's assets and liabilities and continuously documenting these details in specialized accounting records. The accounting system comprises registers, ledgers, and reports. Additionally, tax accounting documentation, contracts, HR records, primary documents, receipts, and payment orders fall under this purview.

Employee Count: The larger the workforce, the more complex and voluminous the reporting becomes. For instance, with more employees, companies must calculate salaries, withhold taxes, and process social contributions monthly. Conversely, if there are no employees, filing zero reports becomes significantly cheaper.

Even the simplest accounting scenarios require professional knowledge or the use of specialized software to ensure accurate reporting.

Managing accounting records in any company involves adhering to specific steps. A well-structured approach facilitates efficient accounting while minimizing the risk of tax authority penalties.

Under Federal Law No. 402-FZ, financial statements include the balance sheet, income statement, and accompanying reports on changes in capital, cash flow, and targeted fund usage.

The balance sheet is prepared using standard forms approved by the Ministry of Finance’s Order No. 66n, dated July 2, 2010. In 2015, this document was renamed the "Statement of Financial Results." Companies must submit their financial statements for the year by March 31 of the following year. However, creditors, investors, or banks may request these reports earlier, necessitating timely preparation.

The standard form for the balance sheet is outlined in Appendix No. 1 of the Ministry of Finance’s Order No. 66n.

Newly registered LLC are required to develop and approve accounting policies within three months of registration. These policies define methods for both accounting and tax purposes, specifying key processes such as profit tax calculation, inventory management, cost determination, and depreciation methods.

The chart of accounts should include synthetic and analytical accounts and subaccounts necessary for LLC accounting. While accounts from the general chart may be included, it’s not mandatory.

Policies are formalized through a director’s order and are often among the first documents requested during tax inspections. Non-compliance can result in penalties. Adopted policies must be adhered to throughout the reporting year and can only be amended in subsequent years unless there are changes in economic conditions or legislation.

Every financial transaction within a company must be recorded in primary documents and reflected in accounting entries and tax registers. For example, payroll calculations are documented in payroll statements. Information on calculated and withheld personal income tax (PIT) for each employee is entered into a register, which is later used to compile reports such as Form 6-PIT.

Documents must be retained for the legally prescribed period. Losing or failing to prepare primary documentation, which may be revealed during audits, can be interpreted as an attempt to conceal the tax base and may lead to fines.

If a company qualifies as a small enterprise, it can operate under the STS, either as "Income" or "Income minus Expenses." This approach simplifies accounting procedures.

If a company opts to use STS, this must be documented in its accounting policy, including the chart of accounts and reporting forms.

The chosen tax regime serves as the foundation for developing tax accounting procedures and calculating taxes. The most complex approach applies to companies using the General Tax System (GTS), which requires tracking assets, issuing invoices, and accounting for both incoming and outgoing VAT. Additionally, income and expense tracking are essential for profit tax calculations.

Under STS, tax accounting depends on whether the company operates under "Income" or "Income minus Expenses." The primary record is the Income and Expense Ledger.

For agricultural tax systems (Unified Agricultural Tax, UAT), the Income and Expense Ledger is also used, requiring consistent documentation of all income and expenses.

It’s important to note that an LLC cannot simultaneously operate under multiple tax regimes (e.g., GTS, STS, or UAT). Each regime governs all aspects of the business rather than individual components.

According to Federal Law No. 402-FZ, primary accounting documents must be retained for five years. Documents reflecting tax calculations must also be stored for five years. Records related to insurance contribution calculations must be kept by the company for six years.

Documents related to the sale of vehicles, property pledge agreements, and operational reports for foreign currency accounts abroad must be retained for ten years.

The longest retention periods apply to employee-related documentation and records of paid income finalized before January 1, 2003. For records completed after this date, the retention period is 50 years. This includes data on salaries, dividends, personal accounts, and employee personnel cards.

Permanently, that is, throughout the company’s entire period of operation, it is essential to store annual financial statements and their appendices, transfer deeds, separation and liquidation balances, as well as certificates of registration with the tax authorities and documents related to the purchase or sale of securities.

All companies are required to submit annual financial statements for the previous tax period by March 31.

LLC using the Simplified Tax System (STS) must file their reports by March 25 each year.

Accounting for LLC operating as industrial enterprises differs from other business entities due to the complexity of their operations. For instance, the cost of production significantly impacts the overall financial results of the organization.

Compliance with FSBU 5/2019 "Inventories," which governs the accounting of inventories such as fuel, components, unsold products, and more, is critical. This standard, implemented in 2021, introduced significant updates to the accounting rules for inventories, work-in-progress, and finished goods.

The organization of accounting management in a company depends on the business's size and stage of development. It is essential to have sufficient information, a solid understanding of accounting principles, and proper software to automate processes. For small enterprises, the business owner may manage accounting independently, but this approach can be risky. Here are the primary options for managing accounting:

Improper accounting can lead to penalties for the company or its officials. Fines range from 5,000 to 10,000 rubles for significant violations of accounting requirements. Severe breaches include:

Missing primary documents, accounting registers, or reports.

For repeated violations, fines may increase to 20,000 rubles, and officials may face job suspension. Criminal liability applies for deliberate tax evasion or falsification of tax amounts.

Organizing accounting in a company is a complex and responsible process. Key steps include:

Creating a reporting schedule to maintain order and compliance.