Guide to accounting
This guide to accounting provides you with a simple introduction to the most important areas
of accounting. It is not our intention to provide comprehensive documentation. Our aim is to
help you get started.
The contents of the guide:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Take accounts seriously! .................................................................................................................. 2
Accounting system ............................................................................................................................ 5
Understanding accounts ................................................................................................................... 8
Budgets – a management tool ........................................................................................................ 11
Reporting requirements .................................................................................................................. 13
Invoice your sales quickly and correctly ......................................................................................... 16
Cashing up ...................................................................................................................................... 17
Payroll procedures .......................................................................................................................... 19
Stocktaking – why and how ............................................................................................................ 23
Guide to accounting
Page1 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
1. Take accounts seriously!
Can you keep the accounts yourself? What system should you choose?
Keeping accounts is not just an obligation; thoroughly prepared accounts are the best tool
available to you in the management of your enterprise.
Particularly to start with, you should spend some time on establishing good accounting procedures
and systems:





Find good partners with whom you can collaborate
Prepare a good accounts chart
Plan what reports you wish to have
Set aside some time for the accounts every day
Keep up-to-date – maintain an overview, so that you know whether you are on the right
course.
Can you keep the accounts yourself?
If you are interested and have sufficient know-how to keep your own accounts, you should consider
doing so, at least in the beginning. That way, you can be hands-on and keep a close eye on the
enterprise's 'internal life'. Whatever you choose to do, you should consult with an authorised
accountant in order to prepare an accounts chart and establish good procedures.
As your enterprise grows and recruits employees, or expands in some other way, you should consider
using an external accountant or employing someone to keep the accounts for you.
Important accounting terms
Some terms are essential when discussing accounts, and if you intend to keep your own accounts,
you should be familiar with the following:






Account – a place where accounting information is recorded and systemised. Similar
transactions are recorded in the same account. Example: Goods purchased are recorded in
the 'Goods purchased' account.
Accounts chart – a chart of accounts specified according to the nature of the enterprise in
accordance with the specification requirements set out in the Norwegian Accounting Act and
the enterprise's own need for information. There are two main types of accounts charts:
profit/loss account charts and balance-sheet account charts. An account number usually
consists of four digits.
Debit/credit – an account consists of a debit side (on the left) and a credit side (on the right).
Making entries on the debit side is called 'debiting', while making entries on the credit side is
called 'crediting'. This principle can be illustrated by a 'T' account, i.e. a visual image of an
account showing both the debit and credit side at the same time.
Balance – the net effect of all amounts recorded in one account at any given time. The
balance of an account is the total carried over from the previous period combined with the net
effect of all transactions in the account during the chosen period. The general ledger is a list of
all account balances on a given date.
Double-entry bookkeeping means that a transaction must always be entered twice, by debiting
and crediting equal amounts.
Closing of accounts – the total profit/loss is calculated by adding the balances of all profit/loss
accounts. The enterprise's equity is increased by any profit for the period, or reduced by any
loss for the period.
Guide to accounting
Page2 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
In order to keep your own accounts, you must be able to do the following:
1. Enter account codes (see Standard Accounts Chart) on vouchers, also called posting. This
involves assigning an account to each voucher to be entered in the books.
2. Decide how purchases are to be dealt with as regards VAT, considering that the rates differ.
Input VAT is only deductible when documented by a voucher.
3. Decide whether an expense allowance is subject to a reporting duty, payroll withholding tax,
and employer's National Insurance contribution. Expense allowances are benefits that
employees receive to cover costs incurred in connection with the performance of their work.
4. Decide whether major purchases of machinery and other fixtures and fittings should be
capitalised or expensed. As a rule, tangible assets should be capitalised in full (entered in the
balance sheet) at the time of purchase. Insignificant procurements can be charged to income
directly. In an accounting context, there is no exact limit for capitalisation while, in the tax
context, there will be clear criteria to consider.
5. Register accounting information in an accounting system. Accounting information is usually
registered in the accounting system using specially developed accounting software that has to
be bought. Although it is legal to keep accounts using pen and paper, in most cases, it is
hardly expedient or efficient. As a rule, you may not keep accounts using spreadsheets. Those
who have a bookkeeping obligation and less than 600 vouchers per year may nevertheless do
so. In this context, a 'voucher' means documentation of a single transaction with another party,
for example a purchase, sale or payment. A paper copy of the spreadsheet must be printed
out by given deadlines, dated, signed and filed (the accounts are deemed to be manually kept
accounts on paper). See the Norwegian Bookkeeping Standards Board's statement
concerning spreadsheets. GBS 14 – Bookkeeping by use of spreadsheets discusses this (in
Norwegian only).
6. Prepare accrued income statements and balance sheets, usually every other month. This is
also called accruals accounting. To accrue means to assign income and expenses to the
correct period.
7. Specify purchases/sales according to which party they are purchased from / sold to (keep
subsidiary ledgers). A subsidiary ledger (purchases/sales ledger with customer/supplier
specification) is a current account between a customer and a supplier or vice versa. When an
invoice is received, it must be entered in the accounts on the invoice date. It is debited to a
cost centre and credited to the purchases ledger for the relevant supplier. When the invoice is
paid, the payment is credited to a bank account and debited the purchases ledger.
8. Reconcile bank accounts, cash and taxes/public charges. All balance-sheet accounts must be
documented. In practice, this means that all balance-sheet accounts in the general ledger
must be reconciled.
9. Reconcile sales and purchases ledgers by obtaining bank statements and comparing the
amounts to the enterprise's corresponding accounts.
10. Prepare documents that you are legally obliged to submit to the tax collector, the tax office
and the Brønnøysund Register Centre, such as payment record forms, income statements, tax
returns, VAT returns and annual accounts.
Note that information about the forms you are obliged to submit is available on the website of
Brønnøysund's Register of Reporting Obligations of Enterprises. Here, everyone can look up 'their
obligations':


by entering the enterprise's organisation number, or
if you do not have an organisation number, by entering the enterprise's form of incorporation,
industry code and number of employees.
You can cope, but ...
Many people find this quite manageable. A bit of training, interest in the task and good accounting
software will enable you to tackle most common tasks, and you can ask the experts when in doubt. As
a rule of thumb, you should nevertheless devote your time to what you do best and buy other services
from reliable experts. This also applies to accounting.
To many people, the price is important: Maybe you reckon with a more favourable hourly rate for
yourself than that charged by the accountancy firm. But remember that an accountancy firm can do
Guide to accounting
Page3 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
the task must faster and, in most cases, more accurately than you yourself can. You should also put a
high price on your own free time!
When choosing an accountant, you should preferably find a partner with whom you can also discuss
how to resolve any problems that you encounter from day to day. Approach several accounting firms
and seek advice from your banking partner, auditor and other businesspersons.
The Norwegian Bookkeeper Act helps to provide those who buy accounting services with a better
product. All accountancy firms must have at least one certified accountant with a certain educational
background and length of service within the profession. The Financial Supervisory Authority of
Norway's spot checks have shown that the quality varies widely from one firm to the next.
The accountant is obliged to establish a written assignment agreement describing the tasks to be
carried out by the accountant and the tasks that you must carry out yourself, and what reports you will
get and when.
Keep the enterprise's finances separate from your private finances
It can be both expensive and time-consuming to tie up the loose ends of an enterprise's finances if you
have failed to keep your private finances separate. It is important to be systematic in keeping them
apart in your day-to-day work.
Open a separate bank account for the enterprise. Pay all business expenses using the enterprise's
funds.
What accounting system should you choose?
If you intend to keep the accounts yourself, you must choose an accounting system. The Norwegian
Bookkeeping Act sets out several requirements for accounting systems. Among other things, it states
that the accounting system must be proper and clear and capable of generating all statutory financial
reports.
Let an accounting professional (your accountancy firm or auditor) help you decide on the most suitable
accounting software in your case. It may also be smart to choose a system that others have
competence in, so that you do not find yourself completely alone in the world when things go wrong
after you have made hundreds of entries. You must also make sure that the system is capable of
generating all statutory reports.
More information about this topic can be found in: (In Norwegian only)
The Norwegian Tax Administration's brochure: Office work and accounting
Guide to accounting
Page4 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
2. Accounting system
Statutory requirements for the accounting system, requirements of the accountant, how to calculate
VAT in an accounting system, keeping vouchers in order.
What statutory requirements apply to accounting systems?
Good accounts are a very useful tool for you and your enterprise. Keeping accounts is also a statutory
requirement.
The Norwegian Bookkeeping Act requires you to keep records of all information that is necessary in
order to prepare mandatory specifications and reports.
Such records must include the following as a minimum:
1.
2.
3.
4.
5.
6.
Number and date
Information about amount and quantity
Codes showing assignment of account in the accounting system
Reference to supporting documentation
Calculation of VAT, if applicable
Name of buyer/seller (subsidiary ledger), if applicable
Before the accounts are closed for statutory financial reporting (submission of VAT return or similar),
book entries can be changed directly in the accounting system without further documentation.
Once the reports have been generated and the accounts for the period closed, it must not be possible
to change the recorded information.
Any correction of incorrectly recorded vouchers must then be in the form of a new entry. The original
posting must then be reversed as a whole. The correction voucher should refer to the voucher number
that is being corrected and state the reason for the correction.
When a posting is deleted, for example due to double-posting of an incoming invoice, it must always
be specified in the books or on the voucher that such deletion has taken place.
Reports
The Norwegian Bookkeeping Act specifies what reports must be prepared as a minimum:









Bookkeeping specifications (posting records)
Account specification (ledger)
Customer specification (sales ledger)
Supplier specification (purchases ledger)
Specification of withdrawals by owners
Specification of sales to owners/partners and own use
Specification of sales and other benefits to leading personnel
Specification of VAT
Specification of benefits/payments that must be included in certificates of pay and tax
deducted
An income statement and balance sheet shall be prepared for each reporting period.
You do not have to print the reports/ income statement / balance sheet, provided that the complete
reports have been generated and are stored electronically in your accounting system.
Guide to accounting
Page5 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
Storage
Section 13 of the Norwegian Bookkeeping Act states that the following accounting material must be
stored for ten years:







Annual accounts, annual reports and auditor's reports
Other statutory financial reporting (tax returns, VAT returns etc.)
Specification of statutory financial reporting (ledgers, posting records etc.)
Numbered letters from the auditor
Documentation of book entries and deleted information (vouchers)
Accounting system documentation
Balance sheet documentation
Some additional requirements apply to certain trades and industries, for example hotels and foodserving establishments, hairdressers and taxi drivers.
Some documents only have to be stored for 3 1/2 years. They are:
- Agreements of importance to the enterprise
- Correspondence containing material additional information to that entered in the books
- Outgoing packing notes etc. existing in hardcopy at the time of delivery
- Price lists required by law/regulations
Accounting material shall be stored in an orderly manner and be adequately secured against
destruction and theft. Throughout the storage period, it must be possible to present the accounting
material to public supervisory authorities in a form that enables it to be reviewed.
How to calculate VAT in an accounting system
VAT is easy to deal with using VAT codes. You must always enter the invoice amount inclusive of VAT
and then indicate how the amount is to be processed for VAT purposes by means of a VAT code. The
codes vary somewhat from one system to the next. The most common VAT codes are:
0 No VAT processing
1 Deduction for input VAT
3 Output VAT.
The book entry may take the following form:
DATE VOUCHER ACCOUNT VAT AMOUNT
NO
22.12
15030
6800
1
1,500
This shows an incoming invoice for office supplies entitling to a deduction for input VAT. The invoice
amount inclusive of VAT is NOK 1,500. When this is registered to account 6800 using VAT code 1, the
system will make the following postings:
Account 6800 office supplies, debit NOK 1,200
Account 2710 input VAT, debit NOK 300
Account 2400 trade creditors, credit NOK 1,500
When you have booked all vouchers for the period, you can generate a VAT return from the
accounting system.
How to keep your vouchers in order
You may choose to keep your vouchers in a ring binder, ordered by date. If you only have a few
vouchers in the course of a year, this is a simple system that makes sense. But if you have many
vouchers, it soon becomes difficult to keep an overview.
It is much quicker to register vouchers if the accountant can work with long series of similar vouchers.
Place the vouchers in a ring binder. Use a divider for each type of voucher.
Guide to accounting
Page6 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
If you have many vouchers, you should use one ring binder for each accounting period. One common
way of sorting vouchers is as follows:
1.
2.
3.
4.
5.
Miscellaneous vouchers
Bank
Cash – ordered by date
Incoming invoices
Outgoing invoices – ordered by number
The oldest vouchers are at the back under each divider. The newest vouchers are at the top of the
pile. The accountant will always start at the back of the binder and work his/her way forward
numbering the vouchers consecutively.
If you have many bank vouchers, you should separate incoming and outgoing payments. If your
enterprise uses several bank accounts, they should be sorted separately.
Set aside sufficient time to look through incoming mail every day. Check immediately that incoming
invoices tally with the packing notes received. Is the quantity on the invoice the same as the quantity
received and of the requisite quality?
If the invoice is correct, you can sign to confirm it and place it directly in the voucher binder. If you use
internet banking, you can schedule payment on the due date.
Remember that the invoice must be included even if it is not paid by the end of the period.
Whether a voucher belongs to the period or not depends on its date (the 'voucher date'). If you in any
one month receive an invoice for goods or services delivered in the previous month, a copy of that
invoice shall be placed in the voucher binder and marked with 'copy – to be accrued'.
If you receive an invoice for deliveries to be made in the following period, it shall be entered in the
books as a pre-paid expense. The expenses are incurred on the date when the delivery
takes place. Only the net amount is accrued; VAT follows the invoice date.
What more can you do?
An orderly voucher system saves time for you, or your accountant if you have one. Consider each
voucher at the end of the month to determine which period it belongs to.
If you have an external accountant:
Deliver the voucher binder to the accounting firm as soon as you have received the bank statements.
Write a small explanation on any vouchers that are not self-evident.
Respond quickly when the accounting firm asks for documentation.
Limit private withdrawals to one or two transfers to your private account per month.
The fewer private transactions your business has, the better.
You should therefore use a separate bank account for business purposes.
More information can be found at
Tax calendar
Electronic submission of VAT return
Guide to accounting
Page7 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
3. Understanding accounts
What do the profit/loss account and balance sheet tell us? The relationship between liquidity and
equity. The relationship between liquidity and profit. Can you save tax by faster loan repayment? Will
you save tax by investing this year?
The accounts are based on a standard. Roughly speaking, the accounts consist of two parts:
the profit/loss account and the balance sheet.
What are accounts?
Accounts are meant to provide the reader with financial information, and they are an important tool in
the financial management of an enterprise. The accounts are an aid that provides you with an
overview of your earnings, consumption of input factors, what you own and what you owe. The
balance sheet gives an overview of the enterprise's financial position at the end of an accounting
period, while the profit/loss account shows the enterprise's financial development during that same
period.
What does the profit/loss account show?
The profit/loss account is a statement of income and expenses. Revenues are assigned account
numbers between 3000 and 3999, while expenses are assigned account numbers between 4000 and
8999. Use of a standard accounts chart is an assurance that you will be able to meet all official
requirements for specification of your enterprise's accounts:
Account
Content of account category
3000 - 3999
Revenues
4000 - 4999
Cost of goods
5000 - 5999
Payroll expenses
6000 - 6099
Depreciation
6100 - 7999
Other operating expenses
8000 - 8199
Financial income and expenses
8200 - 8999
Extraordinary items, tax and allocations
= Profit/loss
The profit/loss is the enterprise's actual profit or loss for the period. If rent is paid per quarter, only
rental payments for the relevant accounting period should be expensed. Other rental payments should
be entered as pre-paid rent. The accounts have been accrued when they show actual income and
expenses for the period.
Typical accruals items:







Depreciation
Insurance
Interest
Holiday pay
Employer's National Insurance contributions
Accrued, not invoiced revenues
Changes in stocks of goods
Guide to accounting
Page8 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
The profit should cover the enterprise's taxes and dividends. Any remaining profit after tax and
dividends is added to equity and carried forward to the subsequent year. Retained profit strengthens
the enterprise's equity.
The enterprise increases its solidity and builds up a buffer, so that it is better able to take a loss in
future. Make sure that you retain some of the profit until the enterprise's equity corresponds to
between 20 and 25% of its assets.
If you are operating a sole proprietorship, the profit must also cover the owner's 'salary', i.e. private
withdrawals and taxes.
What does the balance sheet show?
As the name tells us, a balance sheet has two sides that must balance. What assets do we have and
how are they financed? The balance-sheet equation: total assets = total equity + liabilities. When the
accounts are settled and the profit/loss is transferred to the balance sheet, the two sides of the
balance sheet must always be equal. If they do not, you must have made a fundamental mistake
somewhere. Additions to assets are always accompanied by a corresponding reduction of other
assets, or a corresponding increase in liabilities or equity. Similarly, an increase in a liability account
must be accompanied by a corresponding increase in assets, or a reduction in another liability account
or in equity. Obviously, a combination of the above alternatives is also possible.
Account
Content of account category
1000 - 1399 Tangible assets (investment of more than NOK 15,000 and long-term
receivables)
1400 - 1999 Current assets (stocks of goods, receivables and bank deposits)
= Total assets
2000 - 2099 Equity
2100 - 2299 Long-term liabilities (debt with more than one year to maturity)
2300 - 2999 Short-term liabilities (overdrafts, trade creditors, accrued expenses)
= Total financing
When tangible assets are acquired, they must be entered in the balance sheet and the asset must be
depreciated (expensed) over time. There is a big difference between depreciation for accounting
purposes and depreciation for tax purposes. Enterprises that only have a bookkeeping obligation or
that have a limited accounting obligation need only observe the tax-related depreciation rules.
Tangible fixed assets and significant operating assets that decrease in value due to wear and tear etc.
are depreciated for tax purposes using the reducing balance method of depreciation. An operating
asset is deemed to be a tangible fixed asset when it is expected to have a service life of at least three
years from the date of acquisition. An operating asset is deemed to be significant when the cost price
is equal to or exceeds NOK 15,000 (excl. of VAT).
The balance sheet says a lot about the enterprise's 'health condition'. An experienced reader of
accounts will form an impression of financing, stock-keeping, investments, credit periods and liquidity.
As a rule, all investments should be based on long-term financing. This means that equity plus longterm liabilities should be at least equal to fixed book assets.
You should also ensure 20-25% equity financing. Equity financing improves the enterprise's ability to
cope with a recession.
Limited companies are required by law to have 'adequate' equity. Board members are personally liable
if the board fails to act correctly when more than half the enterprise's equity is lost.
Guide to accounting
Page9 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
More about the relationship between profit/loss and the balance sheet
When establishing an enterprise, you are required to prepare an opening balance (sheet). We
distinguish between opening balance and closing balance. The opening balance is the initial balance
of an enterprise. On closing the first accounting period, you get a new balance, which is the closing
balance of the enterprise on the date that you have chosen to settle the accounts. This closing
balance will be the opening balance at the start of the next period. In other words, a profit means an
increase in equity, while a loss means a reduction of equity. What you get is a new balance sheet that
shows how your assets are currently financed. At the end of the period, all accounts in the profit/loss
account are set to zero, so that you start the new period with a clean sheet. This can be illustrated by
the following example: You invoice sales to a customer for NOK 1,000. This involves debiting NOK
1,000 to the balance-sheet account 'Trade debtors' and crediting NOK 1,000 to the profit/loss account
'Sales'. When the amount in a balance-sheet account is increased or reduced 'through' changes to a
profit/loss account, the balance sheet becomes imbalanced. This 'imbalance' corresponds to the
profit/loss for the period. The balance-sheet balance is restored by transferring the profit/loss to the
balance sheet equity.
At the start of a new accounting year, the balance of the balance-sheet accounts will be transferred,
while the profit/loss accounts are reset to zero. The difference between income and expenses
(profit/loss for the year) is the only item that is transferred from the profit/loss account. The profit/loss
is added/deducted from the balance-sheet equity. Equity at the end of the period is thus equal to
equity at the start of the period +/- profit/loss for the period.
What is the relationship between liquidity and equity?
There is no direct relationship between liquidity and equity. It is a common misconception that an
enterprise with a book equity of NOK 150,000 has NOK 150,000 'in the bank'.


Liquidity consists of bank deposits plus unused overdraft facilities.
Equity is paid-up capital plus any retained profit. In other words, equity does not consist of
cash, but is an indication of what proportion of the enterprise's assets is owned by the
enterprise itself. The rest is owned by the bank and other creditors.
What is the relationship between liquidity and profit?
There is no direct relationship between liquidity and profit. An enterprise can be insolvent, even if it
makes a large profit.
It is true that a profit can strengthen liquidity, but liquidity is also influenced by instalments on longterm loans, new investments, additions to stock, outstanding receivables, payments to suppliers and
distributions to owners.
Can you save tax by faster repayment of loans?
No, there is no tax deduction for loan instalments, only for the interest you pay.
Will you save tax by investing this year?
Yes, you can save tax by investing in December rather than waiting until January next year. If the
procured operating asset is worth more than NOK 15,000, it must be capitalised however. You are
entitled to full depreciation for tax purposes even if the investment is made in December (provided that
the delivery is also made in December).
In connection with investments, it may be useful to be acquainted with some of the most important
depreciation rates:



Office machinery, computer equipment: 30%
Lorries, trailers etc. 20%
Passenger cars, fixtures and fittings 20%
Guide to accounting
Page10 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
4. Budgets – a management tool
Must you have a budget? How to prepare a budget. Do you have adequate funding? Budget
simulation. Monitoring performance.
Do you need to have a budget?
In order for the enterprise to be favourably placed at start-up, you must have made plans and defined
a system for measuring the effect of what you do. You work within a financial framework, and all
decisions have consequences. Without a budget, you will be groping in the dark. You will not know
where you are going or how far you have come.
How to prepare a budget
Your budget should be based on your business plan and, if applicable, the previous year's accounts.
1. Performance requirements
Review the accounts, one by one. Use a spreadsheet. The following setup may be useful for preparing
a rough budget:
Account Description
Last year’s Change
result
Next year's budget
3000
Revenues (goods sold)
500,000
+ 5%
525,000
4300
Cost of goods
300,000
+ 5%
315,000
5000
Payroll expenses
100,000
+ 3%
103,000
5092
Holiday pay
10,000
+ 3%
10,506
5400
Employer's National
Insurance contributions
15,538
+ 3%
16,004
5990
Other social costs
15,000 unchanged
15,000
When you have reviewed all income and expenses, you start on the second phase of the budget work.
Will the profit/loss satisfy your own and the owners' goals?
In a limited company, the owners will probably require a return in the form of dividends. You will
probably have to review your plans again in order to identify possible cost cuts, changes and
opportunities for increasing income.
When you have a budget that provides a satisfactory profit/loss, you are ready to proceed to the next
step:
2. Monthly performance budget
If you wish to compare your budget and accounts each month, you must prepare a month-on-month
budget.
What will be your income and expenses each month? Take account of seasonal variations and
estimate revenues and cost of goods each month. Do seasonal variations affect payroll expenses?
3. Liquidity budget
If you are about to make investments, take up new loans or have poor liquidity, you will need a liquidity
budget. A liquidity budget simulates loan instalments, credit periods, tax payments etc. A spreadsheet
may have certain shortcomings when many parameters have to be taken into account. It may be a
good idea to request the help of your accountancy firm in preparing the liquidity budget.
Guide to accounting
Page11 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
4. Evaluation of financing
A well-prepared liquidity budget will be able to uncover any unnecessarily tied-up capital and poor
financing solutions. Based on the assumptions entered in the budget system (income, expenses,
credit periods, interest rates etc.) you will be able to view month-on-month liquidity developments.
A clothing shop typically has 60% of its turnover during the second half of the year. Such significant
seasonal variations will have a great impact on liquidity.
5. Budget simulation
A thoroughly prepared liquidity budget is also a good basis for assessing the effects of new
investments and new financing.
The budget allows you to play with various business scenarios on paper. What if there is a 1%
increase in the gross profit? What if the credit period is reduced by ten days? What if we repay the
overdraft and take out a long-term mortgage loan? These are fun, interesting and very important
exercises that you can do alone or together with your accountancy firm or auditor. You will be
surprised how great the effects can be of seemingly small and simple measures. An experienced
budget user can provide you with much input so that you can increase the enterprise's profitability and
have more financial leeway.
6. Monitoring performance
The final step in the budget process is to check actual accounting figures in relation to the budget.
Most accountancy software will be able to present accounting figures and comparable budget figures
in a single report.
When you check actual income and expenses in relation to the budget, you will see whether the
performance of your enterprise is good or poor in relation to the goals you set yourself.
You will be able to identify budget variances at an early stage. Some variances are acceptable. If you
have a problem with your earnings, any budget variance will require a correction of the course. You
should correct your course while you still have momentum! Perhaps you need to return to phase one
in the budget process in order to review the plans?
More information, in Norwegian only, can be found at
Example of business plan
Example of operating budget
Example of liquidity budget
Financial key ratios/figures
Guide to accounting
Page12 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
5. Reporting requirements
Are you liable to VAT? Reporting (VAT, annual accounts, tax return, employer's National Insurance
contributions, payroll withholding tax)
VAT returns
Anyone operating an enterprise that is liable to VAT must submit a VAT return every other month (for
each period).
Enterprises with sales liable to VAT of less than NOK 1 million exclusive of VAT can apply to the tax
office to submit annual VAT returns.
The VAT return shall be submitted even if the enterprise has been without activity. The accounts must
not be changed once the VAT return has been submitted (the period must be locked for editing). If you
fail to submit a VAT return, the tax office will stipulate an amount that you will subsequently be
required to pay. If you then submit a VAT return, the tax office will disregard the stipulated amount.
You must always be ready to pay an additional charge of 3% of output VAT, however.
The tax office calculates interest on overdue payment. Public agencies are quick to contact the
Enforcement and Execution Commissioner in order to collect their claims. If you are smart, you will
submit the VAT return and pay outstanding VAT in time.
You can submit the VAT return electronically via Altinn. On electronic submission, you will be notified
immediately of any accounting errors or missing information in your VAT return. The deadlines are the
same as for submission on paper, however.
You can read more about VAT in 'Value Added Tax – Guidelines for businesses'
Annual accounts
All private and public limited companies, foundations, housing associations, housing cooperatives etc.
that are under an obligation to submit annual accounts pursuant to the Norwegian Accounting Act
Section 1-2 must submit their annual accounts.
No later than one month after adoption of the annual accounts, those who are obliged to submit
accounts shall send a copy of the annual accounts, the annual report and notes to the Register of
Company Accounts in Brønnøysund. Those who are subject to an auditing obligation must also submit
the auditor's report.
The reporting obligation applies from the date on which the enterprise is established, including to
enterprises that are being wound up, until the date of deletion from the Register of Business
Enterprises. The obligation exists even if the enterprise has not had any activity.
If the annual accounts are not submitted to the Register of Company Accounts by 1 August (or 1
September via Altinn), the enterprise will be subject to a penalty charge. The penalty charge increases
every week and can reach a total of around NOK 45,000. Members of the board are jointly and
severally liable for payment. In practice, a remission of this charge is very difficult to obtain.
Tax returns
Pre-completed tax return for self-employed persons etc.
Just like tax returns for wage earners, the tax return for self-employed persons (RF-1030) has been
pre-completed with information received from employers, banks, financial institutions and
kindergartens, among others. The tax return for self-employed persons has a separate page for
entering business items. You will still need to fill in the necessary business forms.
Guide to accounting
Page13 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
Easier to submit online
If you do not have an accountant or an annual accounts program, the quickest and easiest way to
submit your tax return is to submit it via the internet.
You will find your pre-completed tax return and all relevant attachment forms in your message box in
Altinn.
Self-employed persons using Income Statement 1 (RF-1175) can get help in Altinn to fill in the
necessary attachment forms and transfer values between the forms.
You will find support in control and help functions during the filling-in process.
Your tax return is stored for ten years in your own electronic archive at www.altinn.no.
If you submit your tax return electronically, the tax settlement notice will also be sent to you
electronically.
For persons using an annual accounts program
Users of annual accounts programs are already used to quick and simple electronic submission of
their tax returns. The web service has been extended so that preliminary information from the
Norwegian Tax Administration can be downloaded to your annual accounts program.
Self-employed persons etc. who wish to submit their tax return before 1 April can do so from midFebruary using an annual accounts program (without obtaining preliminary information).
Important dates for self-employed persons etc.:
30 April: deadline for submitting your tax return on paper
31 May: deadline for submitting your tax return electronically via www.altinn.no
For companies and partnerships:
31 March: deadline for submission on paper
31 May: deadline for electronic submission
The tax return is submitted electronically via www.altinn.no.
Ordinary wage earners submit their pre-completed tax returns by 30 April. Shareholders in private
limited companies must check that any share dividends received and their calculated personal income
are included on the tax return.
Employer's National Insurance contributions and payroll withholding tax
Employer's National Insurance contributions and payroll withholding tax (tax deducted from
employees' pay) shall be paid to the tax collection office every other month.
Tax deducted shall be deposited in a separate bank account no later than on the first business day
after pay day. The amount will remain there until the tax deducted is transferred to the tax collection
office. As an alternative, the enterprise can provide a bank guarantee in an amount great enough to
cover the amount deducted at all times.
It is up to you to calculate employer's National Insurance contributions and pay the amount to the tax
collection office / tax collector. Employer's National Insurance contributions are paid directly from the
enterprise's current account.
Certificates of Pay and Tax Deducted:
Certificates of Pay and Tax Deducted and the accompanying cover letter are submitted in the year
following the accounting year, subject to the following deadlines:
20 January: deadline for submission on paper
31 January: deadline for electronic submission
You can read more about tax deducted and employer's National Insurance contributions in Chapter 8
'Payroll procedures'
Guide to accounting
Page14 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
More information can be found at:
Electronic submission of VAT returns
Electronic submission of tax return for self-employed persons etc.
Annual accounts – submission obligation
Guide to accounting
Page15 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
6. Invoice your sales quickly and correctly
What should an invoice look like? Should you add VAT? How often should you invoice? How much
does the credit period cost?
If you are supplying goods or services on credit, you should issue the invoice as soon as
possible after delivery. It is important that the money comes in quickly.
As a result of poor invoicing procedures, some people actually forget to invoice deliveries. In other
instances, invoices are so poorly filled in that they provide a basis for the tax authorities to increase
the issuer's income by discretionary assessment.
What should an invoice look like?









Date of issue
Computer-generated or pre-printed number
The seller's name and organisation number, followed by the letters MVA if the enterprise
is registered in the VAT Register
The buyer's name, address or organisation number (some exemptions exist for cash
sales)
A clear description of the goods or service
Nature and scope of the goods/service provided
Price of the goods or service and due date for payment.
Time and place of delivery
If applicable, VAT and other taxes
For limited companies, public limited companies and branches of foreign enterprises the word
‘Foretaksregisteret’ must be stated on all sales documents
Sales liable and not liable to VAT and sales that do not fall under the scope of the Norwegian VAT Act
shall be stated and added up separately. The same applies to sales that are subject to different VAT
rates.
Invoices must be issued in at least two copies, one of which shall be retained by the seller.
Incorrectly filled-in invoices must be kept but marked as 'discarded', so that the number series of the
invoices remains intact. Where outgoing invoices are entered manually in the books, the 'discarded'
invoices can be left out. Where amounts are transferred automatically from the accounting system's
invoice module to the books, incorrectly filled-in invoices must be credited internally.
Should you add VAT?
In principle, everybody registered as liable to VAT must add VAT to all outgoing invoices, regardless
of who the recipient is. Exemptions apply to exports and the sale of used cars, among other things.
How often should you invoice?
You should invoice the goods/service as soon as possible after delivery, preferably on the same day
as the delivery takes place.
Reminders
When an invoice has fallen due, you should send a reminder as soon as possible. The faster you put
forward your claim for the invoiced amount, the more likely you are to get it.
Guide to accounting
Page16 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
How much does the credit period cost?
In recent years, the number of debt collection cases has increased significantly. One reason is that
customers often try to stretch the credit as much as possible. What does it actually cost if the
customer uses the credit period to the maximum? Assuming that you have a credit facility of 9% and
credit sales of NOK 4 million, you will earn NOK 20,000 if you are able to reduce the credit period by
20 days.
7. Cashing up
Minimum statutory requirements for cashing up, and how to do it.
What are the minimum statutory requirements for cashing up?
Your cash etc. should be counted and reconciled every day. You will often be personally liable if cash
differences cannot be explained. Reconciliation is an accounting exercise that shows the relationship
between the day's sales and the cash that is counted. This exercise can be time-consuming if you
have used the cash register for advance payments, purchases and private withdrawals.
How to cash up
Use one cash register and one cash box: The cash register is used for the day's cash sales and the
cash box is used for paying bills etc.
The cash box is used for paying small bills. You can, for example, start with NOK 3,000 in cash. When
small bills have been paid with money from the cash box, the cash and amounts for which you have
receipts in the cash box will always add up to NOK 3,000.
Make sure you have vouchers
Make sure that all expenditure is documented by vouchers. If you do not have a voucher, you must
write a note stating what the amount has been spent on and any important accounting information.
The cash box must be reconciled for each accounting period so that the vouchers are included in the
correct period. If the box contains NOK 10 plus receipts for NOK 1,990, you must ensure that you
remove exactly NOK 1,990 from the cash register. Put the money in the cash box and attach the
receipts to the back of the withdrawal voucher. Place the withdrawal voucher in the voucher binder.
When purchases are paid for in cash, remember to ensure that your enterprise's name is included on
the voucher.
Make it a rule to always use bank transfers for private withdrawals (and advance payments to
employees). Keep cash payments to a minimum by requesting monthly invoices for small day-to-day
expenses (petrol, office supplies, groceries, computer equipment etc.).
Register every sale on the cash register
Ring up every cash sale on the cash register when the sale is made. If you are a hairdresser or
running a hotel or food-serving establishment, there are special statutory requirements for
specification of sales according to product group.
Enterprises with a bookkeeping obligation that engage in ambulant or sporadic cash sales are exempt
from the requirement to have a cash register, provided that the value of the ambulant or sporadic
activities does not exceed three times the National Insurance basic amount in the course of an
accounting year. These enterprises can instead document cash sales on a continuous basis in a
bound ledger the pages of which are pre-numbered, or by keeping copies of dated, pre-numbered
sales vouchers.
Guide to accounting
Page17 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
The Norwegian Directorate of Taxes has written an article about the interpretation of the terms
'sporadic' and 'ambulant' (in Norwegian only).
The Norwegian Tax Administration: Article on ambulant and sporadic cash sales
Deposit cash from sales in the bank
Cash received on the sale of goods etc. should be deposited in the bank regularly, preferably every
day. Ask your bank about night safe arrangements etc.
Cash up and reconcile the cash register every day
Run day reports from the cash register and count your cash. The day report (Z report) must be dated
and signed, and the time of running the report must be stated. In practice, you will start the day with a
fixed amount of cash, for example NOK 3,000.
Reconciliation is then carried out as follows:
Opening balance
+ Today's revenues (take to income)
- Card payments (to bank account)
NOK 3,000 carried over from yesterday
NOK 10,000 in accordance with day report from the cash
register
NOK 1,000 customers who have paid by card
= Calculated cash balance
NOK 12,000
- Counted cash balance
NOK 12,050
Shortfall (+)
Surplus (-)
Corrected cash balance
.
-NOK 50 The cash difference is entered in a
separate account in the accounts
NOK
12,050
.
- Night safe deposit (in bank
account)
NOK 9,050
.
Closing balance
NOK 3,000 to be carried over to the following day
Cash reconciliation is carried out using a form. Use a new form every day. The form must be dated
and signed by the person who cashed up.
Attach the day report from the cash register and the card sales report to the back of the form. File the
forms continually in the voucher binder under a separate divider for cash.
If the cash differences exceed +/- NOK 50 per day, you must review the procedures together with your
employees. Remember that the cash box should be used for expenses, if any. The possibility of
making errors is reduced if the cash register is used to calculate the amount to be returned to the
customer.
More information can be found at:
The Bookkeeping Regulations
Guide to accounting
Page18 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
8. Payroll procedures
What must you remember before you pay your employees? Can you leave payroll procedures to the
accountancy firm? Can you pay your employees yourself? Travel expenses claims.
Many entrepreneurs find that they have to make major changes to their accounting procedures
when they start to employ others. Many choose to employ the requisite competence, or they
outsource the accounting and payroll administration to an accountancy firm.
If you wish to handle payroll administration and reporting yourself, the regulatory framework that you
need to observe is extensive. If you are only required to calculate pay and deduct tax for your
employees, you can create a spreadsheet to keep the figures in order.
Payroll withholding tax
As an employer, you are obliged to deduct tax from pay and other remuneration paid to your
employees. The amount to be withheld is stated on the employees' tax cards. If you are an employee
of your own limited company, you must also deduct tax from payments made to yourself.
Among other things, tax deductions have to be made for free board and lodging, free use of a
company car and the benefit of low-interest loans from the employer. The employee shall present you
with a tax card on which the amount to be withheld is stated. If the employee does not present you
with a tax card, you must deduct 50% withholding tax.
The amount deducted shall be deposited in a tax withholding account no later than on the first
business day after pay day. You can also establish a bank guarantee instead of a tax withholding
account. The tax deducted must be paid to the tax collector on the same day as you submit the
payment record forms for the period. Payment record forms showing the amount of tax deducted
during the past two months must be sent to the authorities via Altinn or to the tax collector in the
municipality where the enterprise is domiciled or has its head office.
Employer's National Insurance contributions
When you have employees in your service, you are obliged to pay employer's National Insurance
contributions on pay and other remuneration paid to your employees. If you are an employee of your
own limited company, you must also pay employer's National Insurance contributions on payments to
yourself.
It is up to you to calculate employer's National Insurance contributions and to pay the amount to the
tax collector every other month. Payment record forms showing the amount of employer's National
Insurance contributions calculated during the past two months should preferably be submitted via
Altinn. On submission via Altinn, a receipt will be generated containing a Customer ID (KID) number
and an account number for the tax collector. If it is not possible for you to submit the form via Altinn,
you can submit it on paper to your local tax collection office. You can generate a KID number at
skatteetaten.no/kid. There, you will also find a link to the account numbers of individual tax collection
offices. If you wish to receive a payment giro, please contact your local tax office to arrange it.
Employer's National Insurance contributions are paid directly from the enterprise's current account.
Certificates of Pay and Tax Deducted
After the turn of the year, Certificates of Pay and Tax Deducted shall be submitted for each individual
employee. The employee shall also receive a copy. The deadline for submitting Certificates of Pay
and Tax Deducted electronically or via Altinn is 31 January. If you submit them on paper, they must be
sent to the tax collector before 20 January.
Guide to accounting
Page19 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
Annual Statement of Employer's National Insurance Contributions / cover letter for Certificates
of Pay and Tax Deducted
Employers who submit Certificates of Pay and Tax Deducted on paper shall send the annual
statement to the tax collector together with the Certificates of Pay and Tax Deducted by 20 January.
Employers who have submitted these certificates electronically must send the statement as soon as
they receive confirmation of receipt of the data. Employers who submit Certificates of Pay and Tax
Deducted via Altinn will get a pre-completed annual statement from the Norwegian Directorate of
Taxes and are therefore not required to submit this form.
Spouses and children
When both spouses work in a single proprietorship, the profit from the activities (net business income)
can be allocated for taxation according to the hours worked by each of the spouses. The submission
of Certificates of Pay and Tax Deducted is not required for this income. Pay and other remuneration
paid to children/youths working in their parents' enterprise shall be reported.
Can you leave the payroll procedures to the accountancy firm?
If you have many employees, travel expense claims, insurance schemes, free company car and/or
free telephone, it may be a good idea to buy this service from an accountancy firm. This also gives
you a partner that can support you in personnel matters. Problems often arise concerning the Holidays
Act, leave of absence, lay-offs and notices/dismissals.
The accountancy firm needs to receive a confirmed pay basis on a fixed date. The pay basis shall
include all information that is necessary in order to make correct payments.
The pay basis may take the following form:
Employee
Pay
Supplements
Advance payment
Other
01 Hansen
Fixed
.
.
.
02 Nilsen
Fixed
Bonus 5,000
5,000
.
03 Pettersen
20h x NOK 150
.
.
.
Confirmed travel expenses forms are enclosed with the pay basis.
Can you pay out salaries yourself?
Small enterprises often choose to pay out salaries themselves. In connection with each payroll run,
you must fill in a simple form. Use spreadsheets to create a template for each of your employee.
Employee's name:
Personal ID number:
Position:
Tax municipality:
Tax table number and/or deduction rate on tax card:
Pay day:
Pay for the period: from................... to ....................
Gross pay:
Basis for deduction of tax etc.:
- Tax withholding:
= Payment to be made:
To be paid into account number: 1234.56.78900.
Basis for holiday pay:
Guide to accounting
Page20 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
The employee and the accountancy firm shall have a copy of the pay slip. You must then send a list to
the bank showing the amount to be paid to each employee. You must also inform the bank about the
amount of tax deducted to be transferred to the payroll withholding tax account.
Can you leave the reporting to the accountancy firm?
You can let the accountancy firm register the information in a payroll system and submit payment
record forms and Certificates of Pay and Tax Deducted on your behalf. Some enterprises prefer to fill
in the payment record forms themselves, while they leave it to the accountancy firm to prepare
Certificates of Pay and Tax Deducted. You should consult with the accountancy firm and agree on
what is most appropriate in your case. If you leave it to the accountancy firm to do all the official
reporting while you make the payments yourself, you have in effect outsourced so much of the payroll
procedure that you might as well leave all the accounting to the accountancy firm.
How to prepare a travel expenses claim
Employees are not automatically entitled to have their travel expenses covered in accordance with the
government rates. In your capacity as employer, it is you who decide how much to pay. Even if you
make payments in accordance with the government rates, you must inform about these payments on
the Certificates of Pay and Tax Deducted. This applies to what is called reportable benefits, for
example subsistence allowances and night supplements.
If necessary information is not included in the travel expenses claim, the recipient risks having to pay
tax on the payment received.
A travel expenses claim must contain:





The employer's name and address
The employee's name, address and signature
Date (and time for subsistence allowance) of departure and return
The purpose of the trip
Which event(s) the employee attended
When a subsistence allowance is claimed, the travel expenses claim must also include the following:
 Name(s) and address(es) of the place(s) where the employee stayed overnight, and the dates
of overnight stays
 The type of accommodation (hotel, guest house or private accommodation) must also be
stated when a night supplement is claimed.
When a car allowance is claimed, the travel expenses claim must also include the following:
 Travel route, stating the place of departure and the place of arrival, local driving at the place to
which the employee was assigned, and any reasons for making detours
 The total distance driven based on the car's odometer reading at the start and end of each
job-related or business trip
 The name(s) of any passenger(s) for whom a passenger supplement is claimed.
For reimbursement of expenses, the travel expenses form must also include:
 All expenses documented by receipts/ original vouchers (flights, taxis, overnight stays etc.).
The Ministry of Government Administration and Reform has published updated rates and a program
for preparing travel expenses claims here.
Be particularly careful to fill in where you have stayed overnight. The government subsistence
allowance rates for business travel with overnight stays in Norway are the same regardless of the type
of accommodation. For private accommodation, however, the rate not subject to payroll withholding
tax (the 'portacabin rate') is reduced. If you use the government rate as a basis, the subsistence
allowance in connection with private accommodation must be split into one part that is subject to tax
and one part that is not. The night supplement is not subject to tax, however. One day means the time
of departure plus 24 hours. Note that you can claim a subsistence allowance for two days when
travelling time extends into the next day by more than six hours.
Guide to accounting
Page21 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
Sole proprietors cannot claim travel expenses using the government rates, but must document all
expenses by vouchers. The proprietor is granted a deduction for use of a private vehicle; see page 4
of the income statement.
More information (in Norwegian only) can be found at:
Wage ABC
Norwegian Tax Payment Act
Tax calendar
Government travel allowance rates
Guide to accounting
Page22 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.
9. Stocktaking – why and how
What is required by law? How to establish good procedures. Checklist for stocktaking.
Section 11 of the Norwegian Bookkeeping Act states that, in connection with the closing of
accounts at year end, documentation must be available for all balance-sheet items unless they
are insignificant. Stocks of goods are a significant balance-sheet item in many enterprises.
This means that businesses must take stock of all goods owned at 31 December.
Stocktaking can be time-consuming, depending on the quantities stocked. Good procedures relating to
stocktaking can prevent unnecessary use of time. You must also consider when to take stock and
whether the enterprise needs to close during stocktaking. If a shop stays open during stocktaking, it
may for example prove difficult to keep an overview of the goods that are removed from stock while
stocktaking is going on. Stocktaking is therefore often carried out after closing time or on the nearest
holiday/day off. The timing should in any case be consistent with the closing date for the accounts,
which for most people is 31 December.
The stocktaking shall be documented using stock lists; see the Norwegian Bookkeeping Regulations
Section 6-1. These lists must contain a specification of the type, quantity and value of each of the
goods, and a column stating the total for each of the specified goods. A distinction must also be made
between the accounting value and the tax value, as these two will often differ. For enterprises with a
bookkeeping obligation that do not at the same time have an accounting obligation pursuant to Section
1-2 of the Norwegian Accounting Act, it is sufficient to assess the tax value of their stock, including for
accounting purposes. For tax purposes, goods must always be valued at original cost (original cost =
purchase price + related expenses (e.g. customs duty, freight, dispatch etc.) - discounts/bonuses).
Stock write-downs on account of obsolescence or lower market prices are not permitted for tax
purposes.
Enterprises with an accounting obligation must assess both accounting values and tax values.
The lowest of original cost and fair value shall be used for accounting purposes (see Section 5-2 of the
Accounting Act). It is permitted to write down obsolete stock for accounting purposes.
Checklist for stocktaking:








Plan stocktaking well in advance; if possible, tidy up the storeroom/warehouse before you
start.
Stock sheets should be printed from the warehouse system, with specification of all the goods
types.
Prepare stocktaking instructions if more than one person is involved.
Use pre-numbered stock lists or, if applicable, a stock book.
Make sure you have a good system for keeping an overview of what you have taken stock of
at any time.
All goods must be included on the list, including obsolete items.
Do not forget that stock must be accrued:
o If you take stock before 31 December, you must remember to add goods that have
arrived between the stocktaking date and 31 December.
o If you take stock after 31 December, you must deduct any goods bought between 31
December and the stocktaking date.
o Only goods that have been purchased but not sold as of 31 December must be
included.
The lists must be dated and signed by the person who carried out the stocktaking.
Guide to accounting
Page23 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.


In manufacturing enterprises, stock is classified according to whether it consists of raw
materials, semi-manufactured goods, work in progress or finished goods
The stock lists are accounting vouchers and must be stored for ten years.
Example of stock list design
Guide to accounting
Page24 of 24
Altinn would like to emphasise that the information presented here is of an introductory/general nature and that the guide
is not exhaustive.