Finrepo » Creating and Starting Business in Finland » Accounting for Entrepreneurs and Small Business » Transaction Confirmation Document


Content

  1. Simplified invoice entry
  2. Document Attachment
  3. Memorandum or memo document (Muistiotosite)
  4. Digital documents (not paper-based documents)
  5. Checking the content of the documents. Bank Statement
  6. Document records in the special cases
  7. The document contents. The mandatory data in an invoice
  8. Are all your documents stored? Arrangement of documents

Simplified invoice entry

Simplified invoice entry is possible if the amount of the invoice does not exceed 400 EUR (Taxable amount). Invoicing requirements for VAT at Finnish Tax Administration website and in the Value Added Tax Law / Arvonlisäverolaki 30.12.1993 / 1501 (in Finnish) ; and (in English), Chapter 22, Section 209. The data that have to be in a simplified invoice are the following:

  • invoice date
  • the seller’s name and business ID (Business Identity Code or Y-tunnus)
  • the amount of sold goods and their nature, as well as the nature of the services
  • the amount of tax payable according to the tax rates or the basis of the tax according to the tax rates

The simplified content requirements also apply to invoices or receipts that are issued by retail sellers or other related sales activities exclusively for private individuals. In this case, the total amount of the invoice is irrelevant and can therefore exceed EUR 400 (Taxable amount). For example, a kiosk, a shoemaker, a hairdressing salon or a funeral home may be act as a retail store.

Simplified invoice entry is also sufficient and fit for catering service and passenger transportation bills, with an exception when provided service is made for further sale.

In addition, simplified invoice is sufficient in the documents printed by parking meters and other similar equipment. It is possible to show prices with VAT in a simplified invoice, if the amount of tax payable is indicated. The prices without VAT is not required to declare.

Every account has a name or title that is determined by the type of transaction, thus the events recorded to the account are the same as an account content. Due to a change in the list of accounts/ the chart of accounts or other special reason, the content of the account may be also changed.

Document Attachment

If the data in an annual financial statement are not obvious, the additional document should be made in order to clarify its content.

Memorandum or memo document (Muistiotosite)

A memo document is an informal written document that do not refer to a payment and concerns different changes, error corrections or transfers from one time period to the next (carry over). It should be clear from the document according to which assumptions and calculation rules the numbers have been derived. This document has to be properly authenticated, i.e. it has to be obvious who has done the document. If memorandum touches on some important or exceptional case, it is also good to show who has approved this document.

Taloushallintoliitto (in Finnish)

Digital documents (not paper-based documents)

Typically, a digital document is, for example, an electronic bank account statement downloaded from online banking, sales invoices data from a customer invoicing software, or e-invoices (electronic invoices), scanned purchase invoices, cash or card receipts.

The purpose is that documents archive contains complete information about bank account statements data, sent or received invoices, so that all business transactions can be viewed on the computer screen just like from folder with paper invoices.

Checking the content of the documents

Only the documents related to the business can be included in the company's bookkeeping. The expenses or income of the business owner or his family cannot be a part of the company's accounting record.

Bank Statement

The bank account statement of the company is accounting material. The account statement shows the company's payment transactions. Transaction information can be used to record the debt as paid or revenue received. But if you want to record company 's expenses and income using bank statement, it must be accompanied by the original purchase invoice, a copy of sales invoice or other document before the statement of account can be used as a confirming document of costs and earnings according payment-based entry (cash-based accounting).

The information from account statement shows flow of funds (the money flow), but not What, to Whom and When the goods or services have been sold or What, When and from Whom have been bought. Of course, the bank charges, the loan repayment and the interest payment documentary data will be in the bank statement.

Document records in the special cases

The following items must be mentioned in the document:

  • sales with 0% VAT rate or zero-rated goods
  • reverse tax liability / reverse charge in value added taxation (käännetty verovelvollisuus). It means that buyer is VAT liable and the seller has to issue an invoice without VAT to the buyer.
  • information about new means of transport
  • a reference to the second-hand goods, works of art, antiques and collectors’ items or travel agency services within the VAT margin schemes
  • a reference to the taxable sales of the gold investments
  • the new changed invoice (= when the new invoice changes the previous invoice) has to have a reference to the previous invoice

The document contents

The essential data in the supporting documents are:

  • the date (transfer, invoice or payment date),
  • what and who has sold or to whom has been sold,
  • the payer,
  • the payee and
  • the reason for the payment should be visible

The date of delivery of the goods or services should be mentioned in a supporting document or in its attachment or otherwise.

To be entitled to claim a deduction for VAT on purchases you must have a proper purchase invoice issuing according to particular rules. Deducting VAT on purchases, Tax Administration

The mandatory data in an invoice

The VAT Law contains a list of compulsory information that must be indicated in an invoice:

  • date of issue / invoice date
  • current identifier / unique sequential number identifying the invoice. A unique identifier can help to identify an invoice. It is also essential, that the invoice number sequence could help to quickly identify the missing invoice. The invoice number should never contain repeats at the same year. Taxpayers may use different identification invoice numbering systems. The identifier should not be merely a number.
  • seller's VAT ID (Business ID - identification number, Y-tunnus)
  • the buyer's VAT ID in a reverse-charge procedure and Intra-EU trade
  • the name and address of the seller and buyer
  • the quantity and nature of the goods or the type and extent of services given
  • the date of delivery of the goods, service fulfilment or the date of payment in advance
  • tax base according to tax rates, unit price without tax, credit note, rebates and discounts (if not included into per unit price)
  • VAT rate
  • VAT amount payable
  • the grounds for tax exemption or reverse charge
  • information of a new means of transport
  • a reference to the second-hand goods, works of art, antiques and collectors’ items or travel agency services within the VAT margin schemes
  • a reference to the taxable sales of the gold investments
  • the new changed invoice (= when the new invoice changes the previous invoice) has to have a reference to the previous invoice

The Tax Administration office considers, that even when the buyer makes the invoices, they have to be coherent with the seller's invoice numbering system. This assumes that the buyer uses seller's invoice number sequence. An alternative is that the seller/vendor give own sequence to the invoices. In this case, the seller can use a buyer's sequence or a common sequence for all buyers.

Concerning to the buyer's address, it should be noted in particular, that it is not sufficient to mention just electronic invoicing address (E-invoicing address, billing address), but the buyer's address is also required for the invoice.

Taloushallintoliitto (in Finnish)

Are all your documents stored?

It is important to check that all payment transactions from the bank statement, i.e. the purchases and sales confirming documents have been recorded into bookkeeping.

The bank statements as well as sales confirming documents have to be recorded into accounting without any gaps and have to be coherent.

Arrangement of documents. How to organize business receipts and other financial documents?

The numbering of the electronic documents is generated in accordance with the chosen scheme/method of the accounting program. This method can also be an algorithm that identifies the document numbering in due order. In any case, the identification of documents must be systematic, clear and logical. Documentation should be handled and stored so that their content can be easily viewed, checked and printed in an understandable and accessible form if needed.

Paper documents should be arranged chronologically in bookkeeping. Arrangement is the most simple and clear when the documents are sorted in different groups according to their types, classes etc. The documents are numbered sequentially within the groups. The document groups are distinguished by, for example, the type number or by numbering of various groups using different one-thousandth or 10-thousandth serial numbers (3001, 3002, 3003, ... 4001, 4002, 4003, ... 5001, 5002, 5003, ...).

Folders and other different sorting facilities should be used in order to organize the paper documents for recording and checking. It is advisable to consult your accountant to find the most suitable method. The organization of unintelligible piles of papers will take a lot of time and effort. For this reason, it is best to keep the documentation always in order, or make scan or photo so, that you can quickly make accounting records. The needed data can be found easily if the documents are properly organized, for example, when payment transaction and debt collection is needed to be done.

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