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Bookkeeping services in Thailand
Bookkeeping services in Thailand are crucial for investing in the Thai highly competitive market, as the strict tax and accounting regulations differ from international standards. The financial conditions stipulations are complicated with no counsel to assist and direct your business. Thai financial regulations are inaudible for a foreign investor not used to Thai conditions and regulations without bookkeeping services.
All commercial organizations in Thailand are required to prepare and maintain financial statements. This requirement is applicable to limited companies and partnerships, other foreign legal entities and joint ventures in Thailand. Only natural persons are released from this obligation. The accounts must be prepared in accordance with Thai Accounting Standards and reflect the movements and the assets of the company.
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What is bookkeeping ?
The company’s financial statements organization is based on an accounting system, a discipline that provides continuous real-time reporting on the current financial status of a company. Its purpose is to account for all of the company’s cash flows. These flows can be of an economic, commercial, or in-kind nature and include its revenues as well as its expenses. The company is able to obtain accurate information concerning its value progress by drawing up, at the end of financial year, two essential documents: annual accounts and a profit and loss statement. The latter documents, which can be made up in any language, must be accompanied by a Thai translation.
What are Thai bookkeeping services standards ?
A company must keep its account books by the procedures in the Civil and Commercial Code , the Tax Code, and the Accounting Act. Generally, Thailand accepts the basic accounting principles and legally recognized accounting methods and practices in the United States. The Thailand Institute of Chartered Accountants and Auditors is a body that promotes the application of generally accepted accounting principles. All accounting principles a company applies must be consistent and the authorities can only change them. Examples are:
- Depreciation : Separate depreciation rates are allowed by the tax law based on the type of an asset. As a result, an investment may be eligible for up to higher depreciation rates and age faster than its useful life. The maximum rates of depreciation are not obligatory. In fact, a company can use a smaller rate and close to the asset’s useful life. However, the corporate tax return must indicate the same rate if the accounts use a smaller rate.
- Accounting for pension : Payments to a pension or welfare fund are not liable to tax unless they are made to the employee or the tax departments are content with the regime. A qualified fund, by the prescribed, must be recognized by a fund manager.
- Consolidation : There is no requirement that local companies owning foreign or local sects must consolidate their accounts. However, companies listed with Thailand’s Securities and Exchange Commission do consolidate their accounts or for other reasons.
- Legal reserve : A company should set up a legal reserve that is not less than 5% of the company’s net profit annually for every share capital it tabulates until the reserve is statutorily 10%.
- Stock dividends : Stock dividends are ordinary dividends except they are taxed as an ordinary dividend and paid if the authorized capital increase is obtained. Law demands that they be paid after the new is made with old shareholders purchasing their entitlement.
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How often will financial statements be provided ?
Depending on the agreement between the business and bookkeeping services provider, the frequency at which financial statements are provided may vary. In general, the following format is most common :
Monthly Financial Statements : Many businesses go for monthly financial statements. Due to the close frequency of oversight over whether the financial conditions meet the actual profile, such regular reporting can assist in making timely decisions. This means that any issues that a business may have will be discovered earlier when they are still reasonably easy to fix.
Quarterly Financial Statements : Some small businesses or those with a lesser financial presence may benefit from quarterly financial reports. It is an adequate frequency between monthly and annual that may be less financially burdensome to maintain while still offering a reasonable amount of insight into the company’s finance.
Yearly Financial Statements : In most cases, yearly financial statements will be sufficient only for very small businesses with infrequent transactions. Such a process might appeal to businesses with little need for financial stability. However, that would be rare, and regular reports will always be preferred.
Deciding on which frequency of receipt to discuss with the accounting services provider during the initial date may be very important. The choice depends on the size and complexity of the business being run, as well as on how often it needs detailed financial performance to make decisions. Regardless of the chosen frequency of delivery, financial statements should always be accurate, complete, and on time. In the cases of serious discrepancies or irregularities, the business may suffer from additional costs or even legal sanctions. Therefore, a successful employment engagement always includes honest communication and the fulfillment of expected obligations between the company and the bookkeeping services provider.
How do you prepare the company’s annual report ?
You are required to approve the company’s annual report each year after which the auditor must attest to it. You must convene an extraordinary general meeting not later than four months after the end of the company’s financial year, by April 30th, outlining its agenda as the approval of the accounts of the preceding year. It must submit the approved annual accounts to the Business Development Department within 1 month at the latest, of holding the General Assembly, by May 27th.
Furthermore, the approved audited annual accounts and the company tax return with the form “PND 50”, must be submitted to the Department of Business Development , 150 days after the termination of the accounting year but not later than May 27th. This is the annual corporation tax return of the company’s earnings of the past year. Moreover, following the annual return, your company must submit its semiannual corporation tax return to the Inland Revenue, within 2 months at the latest, of the end of the first half year’s accounting period, by August 31st, using form “PND 51”.