Navigating through the accounting practices in Georgia often leads to hiring an accountant. Having an experienced local accountant can certainly help you to minimize your taxes. Furthermore, you can also save significant time and stress when it comes to filing declarations and navigating the online portal. So how do you choose an accountant that will be the right fit for your unique business needs?
In this article, we’ll explore the most common questions we’ve received from the expat community regarding finding an accountant in Georgia.
Do you actually need an accountant?
The reality is, no matter what type of business you run, accounting and taxes need to be handled. For most business structures in Georgia, monthly tax declarations are required, which may also include VAT reporting. For some, annual filing and annual financial reporting may be necessary.
Unless your business remains very small, its accounting requirements can easily become too much for you to handle yourself.
The Georgian Tax Code and Georgian accounting standards may be quite different from those you were familiar with in your home country. Rather than spending hours figuring them out, an experienced local accountant and tax adviser can provide you with all the answers you need. Experts of the field can help you plan your best tax strategy, file your taxes efficiently, and remove the risk of you being personally liable for any errors.
The 3 main factors to consider when deciding if you need an accountant:
In general, when your taxes are even moderately complex, expats have found that it’s better to hire a local professional. This enables them to avoid errors, and to have the accounts recorded using professional software compliant with Georgian standards.
In addition to reducing potential errors, many expats find that hiring a local accountant gives them more time to devote to business development, management, and growth, allowing them to do the things they do best, rather than the things they are unfamiliar with. Ultimately, it’s a question of how much your time is worth.
If any of the above resonates with you, then hiring an accountant is probably the right solution for your business.
If you decide to go the DIY route and handle accounting tasks by yourself, please be aware that we do not provide accounting coaching. You can reach out to the Revenue Service directly. But it is our strong recommendation that any information obtained from the RS should be in writing, as we’re aware of numerous situations where RS employees have provided wrong or outdated advice verbally (over the phone or in-person).
If you want to hire someone to help you, the next question you should ask yourself is: do you need an accountant, or would an accounting firm be a better option?
Should you Hire an Accountant or an Accounting Firm?
Full-Time Accountant (in-house)
If your business is large enough, hiring a full-time accountant to work in-house could save you money. This would mean that you have someone who can focus daily on the unique elements of your business.
- If the monthly wage totals less than what you would pay for hourly services, this could be cost-effective.
- The accountant would be 100% focused on the needs of your business, rather than working with multiple clients.
- If you have hundreds or thousands of transactions per month, then this approach normally works out to be more cost-effective.
- Initial recruitment can be a lot of work. Do you have the knowledge to test an accountant you hire to know they can do the job?
- If that person moves to a new job, you will have to start from scratch again.
- You have to deal with sick leave and holidays when your accountant may need someone else to cover for them.
- Individual accountants don’t have the same support from tax lawyers and other senior staff that you would find at an accounting firm.
For simple accounting needs, a freelance accountant paid by the hour or task can often be a good choice for a small business.
- No need for employment contracts.
- Pay as you go.
- Works on their own schedule for multiple clients. If they are busy or get sick, will the work you need get done by the deadline every time?
- Again, solo accountants lack the equivalent level of assistance provided by tax attorneys and experienced senior personnel typically available within an accounting team.
Most firms are used to handling accounts both large and small, and you get the benefit of senior staff who are directing the junior staff. You are not relying on the knowledge of a single person to handle all your accounting and tax questions. The power of consensus avoids a lot of tax errors.
- Reliability – your accounts are always handled, as you have a team, rather than just a single individual, looking after your account.
- Knowledge – a mix of senior and junior staff means that you always have access to higher-level advice when needed.
- Typically higher rates than freelance or in-house accountants.
- You may sometimes be dealing with a team, rather than necessarily always having one single point of contact.
What Are the Warning Signs of an Unreliable Accountant?
Let’s be candid. Some accountants have the goal of reducing your taxes by any method possible. There is a big difference between tax minimization and tax evasion. The former is great for your bank balance; the latter often ends in fines and lengthy court cases.
Ask yourself these questions when you have an initial consultation with a new accountant:
- Is the accountant telling me what I want to hear so that they’ll get my business, or are they telling (and preferably showing) me the legal facts, backed up by the tax code?
- Does the accountant seem willing to bend the rules to save me money?
- Is the accountant openly offering solutions that break the law on the basis that “the tax department will never check, so it’s fine”?
In Georgia, the statute of limitations is 3 years. This means that the Georgian Revenue Service has 3 years to audit a business. A violation can lead to back-taxes, interest, and fines for the past 3 years.
Remember, the Revenue Service is not always open about who they are preparing to audit. Once you find out you are being audited, they almost certainly already have a full case built against you, and it may be too late.
Where to Find a Georgian Accountant?
If it hasn’t happened to you personally yet, you might know someone who has a story like, “I had to find a new accountant as my last one was doing X wrong”. Be thorough when interviewing your potential accountant in order to avoid a lot of wasted time and money on having to switch accountants in the future, or worse, ending up in court for tax evasion.
The first step you could take is to ask your friends for referrals. You might have Georgian friends or other expat connections living here who can introduce you to a professional accountant. You might also find some potential candidates by posting in expat Facebook groups.
However, if you can’t find anyone with the help of your network, there are Georgian websites where publishing job opportunities is possible. Some of them are free but usually, it costs around 40-50 GEL to post a hiring ad. The biggest websites are jobs.ge and hr.ge.
Here are our recommendations for the selection process:
- Check if the candidate has experience working in a similar industry or for a company comparable to yours.
- Ask if a candidate is used to working with modern accounting software. (Familiarity with prominent accounting and business software packages not only saves time but also helps in avoiding costly errors and mistakes.)
- Try to determine if a candidate is proactive and continually tries to improve their accounting processes.
- Ask how they have helped companies or individual entrepreneurs save money or better use their financial resources, including reducing taxes or coming up with different strategies to reduce unnecessary expenses. Asking for references may also make sense.
When Should You Consider Hiring an Accounting Firm?
As technology develops and communication becomes easier and faster than ever before, more and more companies (especially small and medium-sized businesses) have started to partner with accounting firms. This happens mainly because of the comfort and additional benefits which accounting and tax companies provide for businesses.
Here are the Top Reasons why you should consider hiring an accounting firm:
- Access to a high level of expertise
As stated previously, tax and accounting firms are generally more reliable than individual contractors. They have experience working on lots of cases, and often specialize in working with expats or working within particular industries. Accounting firms can also choose to focus their services on a specific market niche, such as small businesses or corporations. As a foreigner, it would be best to contact a firm that specializes in serving foreigners, since they would have more practice and experience related to expats in Georgia.
- Save money on overhead costs
Overhead costs are those spent on office space, supplies, computers, and software expenses. Accounting firms provide you with all the necessary equipment and software to get the job done, so you save money that otherwise you would need to spend on purchasing essential tools.
One of the largest expenses is purchasing accounting software. Such software is essential, as it not only provides important financial information for filing tax declarations and financial reporting but also improves the speed of completion and the accuracy of accounting.
- Save time and spend it on core business activities
Accounting firms give you the opportunity to save time, which you can then use for your core business activities. Instead of spending hours reading tax codes and doing bookkeeping, it’s better to do whatever you are an expert at, which will help your business to grow more productively.
- Increase your tax-savings
Since a tax and accounting firm specializes in these topics, they know more about the tax-saving opportunities available to you. Their advice might save you a lot of money or make higher tax returns possible.
- Reduce risks and avoid errors
Working with tax and accounting companies guarantees you that there will be minimal errors and reduced risks.
These are the major advantages of hiring a tax and accounting firm. However, depending on your unique situation and needs, they can provide even more value.
An accounting and tax firm usually handles the following accounting functions:
- Tax return preparation
- Preparing financial statements, including the balance sheet, income statement, and statement of cash
- Analysis or problem-solving advice
If you do decide to hire an accounting firm, these are our recommendations for the selection process:
- Make sure you choose an accounting firm that is familiar with the special requirements of your business and your tax situation. If you are a digital nomad, you need a company that works with digital nomads and is knowledgeable about international tax issues.
- Check what other services they provide. As your business grows, you might need extra services, and it would be ideal if the same tax and accounting company provides everything that you need.
- Make sure that the company you want to start working with is very responsible and responsive. Communication with your accounting firm should be easy and comfortable.
- Make sure the company’s policies and inside systems support the concept of confidentiality.