Accounting routines and practical tips

Keeping accounts

The accounting provides you with an overview of the financial situation and the development of your business. Up-to-date accounts will therefore be one of your most important management tools. The accounts will provide you with an overview of the financial situation and development of your business. Up-to-date accounts are also one of your most important management tools. 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. Enterprises 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/business information statement to the Norwegian Tax Administration.

The Norwegian Tax Administration – good routines for day-to-day operations

Do not mix your business finances with your personal finances

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.

Accounting system

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. 

Systematising vouchers

You must have a system for storing and safeguarding your vouchers. We usually systematise according to different types of vouchers.

Examples of voucher types:

Outgoing invoices (sales documentation)
Cash book balancing (in connection with cash sales)
Bank vouchers
Incoming invoices (purchase documentation)
Miscellaneous 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 many small businesses, it is sufficient to systematise vouchers in a folder with partitions in order to separate different types of vouchers. If you store the vouchers electronically, you might consider saving the different types of vouchers in individual files.

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 or receipt 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.

How should the customer pay?

Will you issue an invoice, or should the customer pay when the goods or service is delivered (cash sales)? Different requirements apply concerning documentation depending on whether you make a cash sale or issue an invoice. It is therefore important that you determine what your needs are as soon as possible so that you are ready to issue invoices or receive cash payments when you start trading.

Cash sales

If you make cash sales, you must have a cash register system which fulfils the requirements set out in the bookkeeping rules. Anyone who uses a cash register system must ensure that the system comes with a product declarationthere must be a declaration from the supplier confirming that the cash register system satisfies the requirements in the Cash Register System Act and Regulations. Cash sales are sales where the buyer pays for goods or services on delivery. Cash payments include payments made by cash, credit/cash card and various payment applications (for example Vipps).

Invoices

The Norwegian Bookkeeping Regulations specifies clear requirements regarding the information that you must include in invoices. Invoices must, among other things, contain an invoice number which is automatically assigned by a program. Alternatively, you must arrange for invoices to be printed by a printing firm. The invoices should contain consecutive invoice numbers in addition to the name, address and organisation number of your business.

What happens when the customer doesn't pay?

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.

VAT reporting

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 one year, you can apply to submit returns annually if your turnover is less than NOK 1 million. The due date for the application for annual VAT returns is 1 February.

Withdrawals to the holder/owner

For holders/owners, there are various ways of withdrawing funds from a business, depending on the organisation form.

In a 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.

Salary

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 let the accountant do the payroll runs.

Depreciation

If you make substantial investments in your business, you may need to depreciate these investments over time. You need to consider whether the investment should be depreciated or if the investment can be recorded as an expense immediately. 

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. 

Closing accounts

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 have goods in stock, you must perform a stock count to ensure that the cost of goods for the period is correct.

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.

Tax returns

All businesses with a tax liability must submit the tax return. The deadline for submission of the tax return is 31 May each year. The deadline for submission of the tax return is 31 May each year. As of 2024 (for the income year of 2023), sole proprietorships under the obligation to submit annual accounts and all companies must submit through an accounting system or annual settlement program. Some sole proprietorships will be able to submit the tax return directly through skatteetaten.no, but the Tax Administration encourage all businesses to submit through an accounting system or annual settlement program.

The Tax Administration on submission of the tax return from a system

Annual accounts

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.

The Brønnøysund Register Centre on accounting obligation

Do I need to have an auditor?

Whether or not you need an auditor will depend, among other things, on your form of incorporation and the size of the turnover. Sole proprietorships are normally only subject to the bookkeeping obligation and do not need to have an auditor. Private limited liability companies can choose not to have an auditor when the turnover is less than NOK 7 million. For other companies with an accounting obligation, it is generally mandatory to have an auditor when the turnover exceeds NOK 7 million.

Retention of accounting documents

As a general rule, vouchers and other accounting documents must be retained for 5 years. If you choose to store the vouchers electronically, backup copies must be made. You may dispose of the documents in paper form when you have made backup copies of the electronic documentation. The documentation must be stored in a manner that enables you to make paper print-outs upon request during the entire statutory storage period.

Want to find out more?

The Norwegian Tax Administration arranges courses for entrepreneurs who have just started a business. These courses are free of charge, and you can attend either digital webinars or physical courses in Oslo.

You can choose between courses tailored for sole proprietorships or limited liability companies. The courses are also available in English.

The Norwegian Tax Administration has also created instructional videos covering many of the topics from the course. These can be useful when, for example, you need to pay taxes, register for VAT, or submit your tax return.

The Norwegian Tax Administration - Courses for new businesses