Capital contribution to the bank account
Debit: 102x Bank account
Credit: 3100 Nominal value of share capital

Previously, it was possible to establish a private limited company without making a contribution (until January 31, 2023). For a private limited company established without a contribution, there were 2 options for accounting:

a) Private limited company established without capital contribution (no deadline for the contribution is specified)
Debit: 3101 Unpaid share capital
Credit: 3100 Nominal value of share capital

The following transaction shall be added with the payment date of the share capital:
Debit: 102x Bank account
Credit: 3101 Unpaid share capital

b) a private limited company founded without a contribution to the share capital, the payment deadline is fixed
Debit: 1330 Receivables from the owners
Credit: 3100 Nominal value of share capital

The following transaction shall be added with the payment date of the share capital:
Debit: 102x Bank account
Credit: 1330 Receivables from the owners

Debit: 5350 Banking services
Credit: 102x Bank account

Debit: 1010 Cash registry
Credit: 102x Bank account

Debit: 102x Bank account
Credit: 1010 Cash registry

As of April 2021, there are expenditure reports in the program, and we recommend that you prefer them when entering checks from the reporting person.

 An advance payment will be made to the reporting person 

a) Money from a bank account or cashier’s account
Debit: 1405 Receivables from the reporting person
Credit: 10xx Bank account or cash registry

NB! Expenditures (checks) made by the reporting person are entered as purchase invoices and recorded as paid with the „Reporting Person“ account (add under Settings -> Accounts and cash).

b) A separate entry shall be made to offset the advance payment on expenditure received and the transaction on expenditure incurred:
Debit: 2690 Other accruals
Credit: 1405 Receivables from the reporting person

c) In case the amount received as an advance exceeded the actual amount of the expenditures and the reporting person reimburses the amount, an entry shall be made:
Debit: 102x Bank account or cash registry
Credit: 1405 Receivables from the reporting person

 Post compensation of expenses 
a) checks/invoices are entered under purchase invoices as usual and recorded as paid with the „Reporting Person“ account. As a result of the payment, the debt to the reporting person is recorded in the general ledger.

b) the debt is paid to the reporting person
Debit: 10xx Bank account or cash registry
Credit: 2680 Debt to the reporting person

If desired, separate accounts can be created for the reporting person or existing ones can be renamed. When creating new ones, it must be made sure that they are reflected in the correct lines of the balance sheet.

Whether VAT is due or prepaid can be seen in the VAT report (in Accounting menu). Under this report, you can save the closing entry of the VAT account period, which transfers the amount due or overpaid sum to account 2510 VAT summary account. If VAT is due, the amount is in credit. If there is an advance payment, the amount is in debit.

a) VAT is due:

Entry when transferring VAT from the bank to the EMTA prepayment account:
Debit: 1520 Prepayment account for taxes
Credit: 102x Bank account

Settlement of VAT liability with a prepayment account (follow the date of the transaction from the statement of EMTA operations, usually on the 20th):
Debit: 2510 VAT summary account
Credit: 1520 Prepayment account for taxes

b) There was a prepayment with regard to VAT

Transferring the amount of VAT prepayment to the tax prepayment account (follow the date of the transaction from the statement of EMTA operations):
Debit: 1520 Prepayment account for taxes
Credit: 2510 VAT summary account

c) In case a refund request has been made regarding the amount in the prepayment account, EMTA will transfer this money to the company’s bank account. Make an entry in the company’s account when the money is received:
Debit: 10xx Bank account
Credit: 1520 Prepayment account for taxes

d) If there is money in the prepayment account, and you can fully cover the next month’s VAT liability with it (no additional transfer is needed):
Debit: 2510 VAT summary account
Credit: 1520 Prepayment account for taxes

e) If there is money in the prepayment account, but it can only partially cover the next month’s VAT liability, then the required amount needs to be transferred to the Tax and Customs Board’s prepayment account:
Debit: 10xx Bank account
Credit: 1520 Prepayment account for taxes

After that, a regular entry for closing the tax liability:
Debit: 2510 VAT summary account
Credit: 1520 Prepayment account for taxes

The basis for the payment of dividends is a decision on the basis of which an accounting entry is made and the payable income tax must be calculated.

a) Dividends at the standard rate (income tax 20/80):
Debit: 3600 Retained profit/loss 1000.00
Debit: 6900 Income tax on dividends 250.00
            (or 53xx Corporate income tax expense on dividends)
Credit: 2xxx Corporate income tax debt on dividends 250.00
Credit: 2xxx Dividend debt 1000.00

b) Dividends with preferential rate (income tax 14/86 and 7%):
Debit: 3600 Retained profit/loss 2000.00
Debit: 6900 Dividend income tax 325.58
            (or 53xx Corporate income tax expense on dividends)
Credit: 2xxx Income tax withheld from dividends 7% 140.00
Credit: 2xxx Corporate income tax debt on dividends 325.58
Credit: 2xxx Dividend arrears 1860.00

c) Dividend payment entry:
Credit: 102x Bank account 1000.00
Debit: 2xxx Dividend arrears 1000.00

Dividends are declared on the form TSD of the month following the payment in annex 7 and on the INF1 form (submitted by the 10th).

d) Upon transfer of income tax from the bank account to the prepayment account of the EMTA, the following entry shall be made:
Debit: 1520 Prepayment account for taxes
Credit: 102x Bank account

e) An entry is made (date according to the statement of EMTA operations) to set off the tax liability and the prepayment account:
Debit: 2xxx Income tax withheld from dividends 7% (in case there are dividends with preferential rate)
Debit: 2xxx Corporate income tax debt on dividends
Credit: 1520 Prepayment account for taxes

● Account numbers may vary depending on the nature of the loan.

a) obtaining a loan, a short-term loan
Debit: 102x Bank account
Credit: 2110 Short-term loans and notes

b) loan repayment, short term loan
Debit: 2110 Short-term loans and notes
Debit: 6410 Interest expenses
Credit: 102x Bank account

c) obtaining a loan, long-term loan
Debit: 102x Bank account
Credit: 2810 Long-term loans

d) transfer of the short-term part of a long-term loan
Debit: 2810 Long-term loans
Credit: 2120 Current portion of long-term debt obligations

e) loan repayment
Debit: 2120 Current portion of long-term debt obligations
Debit: 6410 Interest expenses
Credit: 102x Bank account

When a service is paid for in advance, it is initially recorded as prepaid expenses and expensed over the service usage period.
For prepaid expenses on the purchase invoice, use the account 1530 Prepaid expenses for future periods.
When recording to the period expenses, the entry is:
Debit: 5xxx expense account
Credit: 1530 Prepaid expenses for future periods

The prerequisite for recording the expense is the decision in the articles of association that the establishment costs are borne by the company.
Debit: 5370 State fees
Credit: 2680 Debt to the reporting person

Debit: 2680 Debt to the reporting person
Credit: 102x Bank Account

At the end of the year, the unused holidaydays of employees are calculated, and their holiday pay is calculated as if everyone were to be paid on January 1st. This holiday pay, along with all taxes, forms the size of the holiday reserve.
For the first time, the entire holiday reserve is recorded as an expense. In subsequent cases, the reserve adjustment is recorded as either an expense or a reduction of expenses.

Debit: 5xxx Holiday pay expense
Debit: 5610 Social security costs
Debit: 5620 Unemployment insurance costs
Credit: 2612 Holiday reserve

Recognition:
Debit: 1410 Interest
Credit: 6400 Interest income

Receipt:
Debit: 102x Bank account
Credit: 1410 Interest

The amount of bank interest is usually quite small, and it can be recognized on the date of receipt.
Debit: 102x Bank account
Credit: 4850 Bank interest received

In the Tax office, accounting is usually done on a single prepayment account, so it is advisable to operate in the software using the same principle. When making a transfer, the amount should be recorded in the prepayment account for taxes in the program. On the tax due date, the obligations are settled from this account.

Debit: 1520 Prepayment account for taxes
Credit: 102x Bank account

Tax interest expense entry:
Debit: 5830 Interest due the Tax Board
Credit: 2590 Tax interest debt

Settlement of the liability:
Debit: 2590 Tax interest debt
Credit: 1520 Prepayment account for taxes

Income tax expense entry on tax interest:
Debit: 5835 Income tax on interest on taxes
Credit: 2570 Income tax and fringe benefit income tax

Settlement of the liability:
Debit: 2570 Income tax and fringe benefit income tax
Credit: 1520 Prepayment account for taxes

Expense entry:
Debit: 5510 Social tax on fringe benefits (expemse)
Credit: 2560 Fringe benefit social tax debt
Debit: 5500 Income tax on fringe benefits (expemse)
Credit: 2570 Income tax and fringe benefit income tax

Settlement of liabilities:
Debit: 2560 Fringe benefit social tax debt
Debit: 2570 Income tax and fringe benefit income tax
Credit: 1520 Prepayment account for taxes

Expense entry:
Debit: 5540 Income tax on the costs of entertaining guests
Credit: 2570 Income tax and fringe benefit income tax

Settlement of liabilities:
Debit: 2570 Income tax and fringe benefit income tax
Credit: 1520 Prepayment account for taxes

Invoices that include reception costs should be entered as purchase invoices, using the expense account 5530 Costs of entertaining guests. Since input VAT cannot be deducted, it is advisable to use the tax type “Not taxable.”

Expense entry:
Debit: 5860 Income tax on gifts
Credit: 2570 Income tax and fringe benefit income tax

Settlement of liabilities:
Debit: 2570 Income tax and fringe benefit income tax
Credit: 1520 Prepayment account for taxes

Invoices that include gift costs should be entered as purchase invoices, using the expense account 5850 Gifts and donations. Since input VAT cannot be deducted, it is advisable to use the tax type “Not taxable.”

Recorded donations are noted with the entry:
Debit: 5850 Gifts and donations
Credit: 102x Bank account

For more information on taxation, please refer to the information provided on the EMTA website:
“Gifts, donations, and reception costs“

● Account numbers may vary depending on the nature of the loan.

a) Short-term loan, granting the loan:
Debit: 1340 Other short-term receivables
Credit: 102x Bank account

b) Short-term loan, repayment of the granted loan:
Debit: 102x Bank account
Credit: 1340 Other short-term receivables
credit: 6400 Interest income *
(credit: 1410 Interest)

* The interest receivable can also be recorded separately in advance, and in this case, the interest income (6400) is replaced by the interest receivable (1410) account in the loan repayment entry:
Debit: 1410 Interest
Credit: 6400 Interest income

c) Long-term loan, granting the loan:
Debit: 1760 Various long-term receivables
Debit: 1340 Other short-term receivables (if repayments are made within the next 12 months)
Credit: 102x Bank account

d) Long-term loan, repayment of the granted loan:
Debit: 102x Bank account
Credit: 1340 Other short-term receivables
Credit: 1410 Interest *

* For long-term loans, an accrued interest entry is made at least once a year according to the agreed interest rate (if interest is paid at the end of the loan period). Accounts can be added or renamed as desired. It is important to ensure that receivables are correctly recorded in the balance sheet.

Although the received funds are credited to the bank account, they cannot be immediately recognized as revenue. The conditions for receiving targeted financing usually require reporting within a specified period or ensuring the continuity of the business for a certain number of years. If the conditions are not met, the funds (in whole or in part) must be returned.
Start-up support is recorded in the individual account. Once the company is established, it must be transferred from the individual account to the company’s account.

Receiving targeted financing:
Debit: 102x Bank account
Credit: 2880 Deferred income from targeted financing <- recorded under long-term liabilities

If it is a short-term grant (a period of up to 12 months, during which you need to report), then the credit account is 2720 Revues for future periods received in advance.

Recording targeted financing as revenue:
Debit: 2880 Deferred income from targeted financing
Credit: 4990 Other operating revenue

You can change the names of the accounts to suit your needs or create new accounts. When creating new accounts, it is important to ensure that they are reflected in the reports in the correct places.

More detailed information on recording targeted financing is provided in the Estonian Accounting Standards Board guidelines 12.

Land tax expense
Debit: 5900 Land tax expense
Credit: 2580 Land tax liability

Transfer to the EMTA advance payment account
Debit: 1520 Prepayment account for taxes
Credit: 102x Bank account

Payment of tax liability
Debit: 2580 Land tax liability
Credit: 1520 Prepayment account for taxes

1. Sales invoices
The company is not subject to VAT
Debit: 1210 Trade receivables 100.00
Credit: 4xxx Sales revenue 100.00

The company is subject to VAT
Debit: 1210 Trade receivables 122.00
Credit: 2511 VAT on sales 22.00
Credit: 4xxx Sales revenue 100.00

2. Proceeds
Debit: 10xx Bank account or cash registry
Credit: 1210 Trade receivables

3. Prepayment receipt (Without sales invoice) (Operations -> Incomings -> New receivable)
Debit: 10xx Bank account or cash registryt
Credit: 2210 Prepayments by buyers

4. When linking the advance payment to the sales invoice, a second entry shall be made on receipt. The date of entry is the date of the sales invoice.
Debit: 2210 Prepayments by buyers
Credit: 1210 Trade receivables

5. Purchase invoices
The company is not subject to VAT
Debit: 5xxx/6xxx Expense account (or 18xx Fixed assets)
Credit: 2310 Trade creditors

The company is subject to VAT
Debit: 5xxx/6xxx Expense account
Debit: 1510 Input value added tax
Credit: 2310 Trade creditors

When entering car costs, use the appropriate type of VAT, either 20% Car costs (100% for business use) or 20% Car costs (partly for business use)

100% of the purchase invoice for the cost of a business car
Debit: 5xxx Car costs 100.00
Debit: 1513 VAT on car costs (100%) 20.00
Credit: 2310 Trade creditors 120.00

Entry for the cost of purchase invoice of a car used partly for business purposes. When entering the purchase invoice, it is not necessary to write down the amount of car costs on several lines, it is enough to select the correct type of VAT and the entry will be made correctly.
Debit: 5xxx Car costs 110.00
Debit: 1514 VAT on car costs (partial) 10.00
Credit: 2310 Trade creditors 120.00

Fixed assets’ purchase invoice entry. The type of VAT 20% Acquisition of fixed assets must be selected for the purchase invoice.
Debit: 18xx Fixed assets
Debit: 1512 Value added tax paid upon the acquisition of fixed assets
Credit: 2310 Trade creditors

6. Payments
Debit: 2310 Trade creditors
Credit: 10xx Bank account or cash registry

7. Prepayments made to creditors (Operations -> Payments -> New payment)
Debit: 1xxx Prepayments
Credit: 10xx Bank account or cash registry

8. When linking the prepayment to the purchase invoice, a second entry is made with the payment with the date of the purchase invoice
Debit: 2310 Trade creditors
Credit: 1xxx Prepayments