If you are already running corporate entities in foreign countries, you will know how complex and time consuming it can be to properly manage and control your international business. The multitude of foreign regulations and compliance obligations can seem overwhelming. More importantly, they represent an expensive distraction from your core business.
At TMF Group, we help business succeed globally be taking over this back-off administrative burden, - saving you expense and reducing the inefficiencies of operating globally.
Below are some of the issues and requirements around maintaining your existing foreign entities from an accounting, reporting, tax and corporate reporting point of view. There are also many local associated obligations if you are employing local or expatriate workforce which you can read about here.
Operate locally compliant accounting software
In many territories around the world, you will be obliged to use officially certified accounting software. These packages are structured to local requirements such as officially approved invoices and charts of accounts. Even where this is no official obligation on which package to deploy, it is important that whichever solution you are using that it is compliant with the local tax and accounting rules. At TMF Group, our local offices around the world work with all the locally approved packages as well as the global systems, such as SAP, Microsoft Dynamic and JD Edwards. After spending time understanding your business and the management information requirements, we can advise on the best local solution and help with this implementation, if required.
Preparation of local accounting records
For your foreign entities, it is vital to be able to compile accurate and timely accounting and reporting information. This process will also require complex accounting reconciliations to ensure the numbers make sense and reduce the risk of errors or mis-statements. This whole process is essential for the successful management of the business, as well as being able to comply with local statutory filing obligations. In addition, whilst big strides are being made to standardise the global rules and treatment of accounting transactions, particularly through the adoption by many countries of the International Financial Reporting Standards, there are still many local peculiarities and pitfalls in local accounting rules. This is where TMF Group can help. We have an unmatched understanding of the rules and processes across the world, backed by thousands of locally qualified accountants who know the detail obligations and can ensure there are applied, in co-ordination with your central accounting team, with the minimum of fuss of disruption to your business.
Maintaining segregation of duties and control over your records
Your foreign branches or subsidiaries may have a junior accountant in place who can prepare original bookkeeping transactions. However, this will probably not be sufficient to comply with your head office segregation of duties or review controls. Instead of employing further, senior staff locally, it may be more economical for you to work with us and our local staff to perform these additional duties. In addition to providing independent review of your vital accounting records, we can also provide a back-up source of reference in the case of staff changes or holidays
Accounting consolidations for group reporting
Aside from the preparation of accounts for the local management or statutory reporting authorities, your foreign businesses will have to produce and submit their records to head office in a satisfactory format. For international businesses with offices in many different territories this can build into a huge burden around understanding the differences in local accounting rules, and how to convert them to your head office’s national accounting standards. This is where we do much of our work, helping clients with the transformation of locally prepared accounts, compiled under various national standards, into the consolidating office’s standards. Our local teams understand the nuisances of the rules, and how to quickly and accurately convert them into any major international standard – such as IFRS or US GAAP.
Prepare and submit local accounting and tax filings
Whilst trading in a foreign country, the local statutory and tax authorities will set demanding rules on the details and frequency of filings they will expect from you. This includes quarterly or annual returns for: accounting; payroll; VAT or GST; excise duties; corporate tax: withholding taxes; and income tax. In addition, any other country-specific requirements will exist. Again, every country around the world has varying obligations, treatments of entries and bases for taxation of net revenues. This is of course all compounded by business cultural and language barriers. Lastly, a growing minority of countries have already moved to electronic filings, which are now compulsory in a few instances. We can help with this. TMF Group’s professionals understand the exacting rules and deadlines for all the local statutory accounting or tax reporting, and can ensure the whole process works smoothly and at a sensible cost to you.
Annual audit obligations
Most countries worldwide require an independent audit of the accounting records of an actively trading company. The involves close scrutiny and questions of most of the major transactions and control procedures of your foreign business. If you have a number of foreign subsidiaries, they may well all need similar audits as part of your head office’s auditor’s requirements. TMF Group can co-ordinate this work for you, dealing with the both your central and local audit offices. Also, since TMF Group does not provide external audit services itself, we are free to work with all the large international auditing firms without fear of conflict. If you require a recommendation for a reliable, local auditing firm, we can help with that, too.
Preparation of corporate secretarial records and filings
Your business will be obliged to record and report on changes in the local entity, including directorships and shareholdings. There will generally be the requirement to prepare and submit an Annual Return, which confirms the status of various company secretary matters. In the case of special corporate changes, such as mergers or changes of address, locally compliant legal documentation will be required to be drafted and filed. TMF Group’s corporate secretarial experts can take care of this for you. They will maintain the company registers, and prepare the annual filings based on these, in conjunction with your head office legal counsel or company secretary.
Recording and archiving of all company accounting, tax and corporate records
You are obliged to retain import company records and proof of accounting and tax submissions for a statutory period. This will vary from country-to-country, but is typically around six years or more. There are every-changing rules on the use of electronic records which can help reduce the burden. Failure to follow these requirements will leave the company and its directors exposed to potential fines or other action. We can manage this for you, ensuring all records are securely logged and stored for the minimum statutory time limit or longer, as required.
If you would like to discuss the above requirements for any country, and learn about specific local rules and customs, then please contact one for our Account Managers, below.
TMF Group can generally offer a complete administrative service for supporting your local foreign entities anywhere in the world.
At TMF Group we have assisted thousands of companies successfully expand and operate seamlessly across borders. We look forward to helping you too.