In the previous article, we reviewed the main procedure of public organization registration in Ukraine, a list of the documents needed and the stages of the procedure. We also discussed the aspects and nuances of obtaining a tax payer status which may arise while having a separate division of a foreign NGO accredited and whether it is worth involving third party organisations in the process of registration.
Our company provides registration services for public organisations and foreign NGOs. You may find all the necessary information by following the link here.
In this article, we will outline the following topics:
- What key point should be foreseen while opening a bank account for a public organization
- Why is it essential to decide at the stage of registration who will keep accounting records or just accounting, who will be responsible for payroll
- How to choose software to keep accounting, personnel accounting, and payroll
How to open a bank account for a public organization and how to make payments correctly
At the very stage of collecting documents for registration (accreditation) of foreign NGOs, it is advisable to study the procedure of opening a current account in a selected bank specifically for foreign organisations and to prepare all the necessary documents to open it.
According to the Law of Ukraine “”On prevention and countermeasures against legalization (laundering) of proceeds obtained through crime, financing of terrorism and financing of the proliferation of weapons of mass destruction” dated 06.12.2019 № 361-IX (henceforth –the Law № 361- IX) all Ukrainian bank institutions are subjects of primary financial monitoring and they are obliged to take measures to minimize the risk of being used for the purpose of legalization (laundering) of proceeds obtained through crime regarding non-profit organisations.
Therefore, while opening a current account banks have the documents submitted thoroughly checked by relevant services. After you have successfully opened a bank account and carried out transactions to enroll funds, it is advisable to figure out what threshold and suspicious financial transactions are (articles 20-21 of the Law № 361- IX).
If opening a bank account takes longer than expected, you may face the need to pay hired workers. As a temporary way out, you may use the service of outstaffing, i.e. when the company hires employees under an employment contract and then leases them out to another company. For a short-term period, it will allow you to sort out the troubles with employing hired workers, as well as meet short-term personnel needs when the load increases without personnel accounting.
Supposing the founding document (statute, provisions) of a separate division of a foreign NGO does not allow entering into agreements for an amount exceeding a certain limit, in order not to violate the prescribed norms for the payment, you might involve a parent company or a donor. There is no direct prohibition to carry out such operations in the legislation of Ukraine. The main point is to correctly draw up a contract taking into account these features.
Why it is important to decide on who will keep accounting records or just accounting, and payroll at the very stage of registration
If you have completed the registration procedure form the first attempt and opened the bank account swiftly and easily, you might feel relieved. However, this is only the beginning of your activity to achieve the goals set. Taking into account the fact that Public Associations and Charitable Organisations are obliged to report to regulatory bodies and donor organizations (we explained that in our previous article), it is advisable to think over the following processes:
- Identifying
- Measuring (Assessing)
- Registration
- Accumulation
- Generalization
- Saving and passing on the information on your activity to external and internal users to make decisions, i.e. about the organization of keeping accounting records.
The proper organization of this process is a prerequisite for providing reliable information in reporting which, by and large, contributes to the positive reputation and trust of donor organisations and society in general. You must be aware of significant fines in case you violate labour legislation regarding improper employment of hired workers, as well as of numerous aspects and nuances of payroll and vacation payments. Otherwise, you might easily get into the nearest scheduled list of inspections by the regulatory bodies, which may lead to ineffective spending of working time on correcting the mistakes made (we will discuss this in our further article).
So, it is not advisable to use the policy of simplification and keep records in Excel. It is recommended to use the best practices and methods of organizing and keeping accounting using modern tools and means to collect and register the information about economic processes adapted to the legislation of Ukraine in terms of preparing reports for management personnel and supervisory bodies.
How to choose software for keeping accounting, personnel accounting, and payroll
Those who are reading the article have probably forgotten what the log-order system is, so let’s leave this scary phenomenon aside. Modern communication technologies and computer technologies allow the organizing and processing of data related to the activity of an organization investing the least labour cost, and the usage of cloud technologies provides access to information from anywhere in the world where there is the Internet without any worries about proper storage of information.
Taking into account active military operations in our country, there are uncontrolled risks of property loss and, what is more, life loss. Therefore, it is necessary to ensure the safety of your employees, which is crucial now. And the usage of cloud technologies is our forced reality. So, there are a number of requirements to software for keeping accounting:
- Compliance with the requirements of Ukrainian legislation (tax legislation, labour legislation)
- The possibility to synchronise data with other programmes and sectors of economic activity (if needed)
- Access to data base from anywhere in the world, where there is the Internet
- The possibility to arrange remote work with the information
- Safe data storage as, for example, russian applications are not suitable to be used in Ukraine due to risks of being blocked by the state
- The abilities of the developers team to promptly adapt the software to changes in legislation
Therefore, it is advisable for both the parent company and the performers on site to thoroughly analyse accounting (or even ERP) programmes and choose the one which complies with their goals and tasks to the maximum extent.
Conclusions
To sum up the above mentioned, the process of NGO registration has a lot of features and nuances, upon which not only tax outcomes of the company activity depend, but operational activity as well, in particular, efficiency of the staff working time allocation, accounting and personnel accounting, as well as the ability to keep it all and save data using software.
Due to this, it is especially important to choose a qualified contractor company with experts both in accounting (taxes) and the legal sphere, which will provide you with a differential approach while analyzing the purpose of the creation of the company and, consequently, of its registration and placing on the relevant records in the supervisory bodies.
References and contractions
- the Law of Ukraine “On prevention and countermeasures against legalization (laundering) of proceeds obtained through crime, financing of terrorism and financing of the proliferation of weapons of mass destruction” dated 06.12.2019 № 361-IX
- NGO – non-governmental or non-profitable organization, Public Associations (CPOs), or Charitable organizations (BOs), or public formations (GFs).
Article authors
Natalya Lytvynenko
Project manager
Volodymyr Jyvun
Expert
