Just registered an LLC in Ukraine: bookkeeping, taxes and reporting in the first weeks

Registering a limited liability company (TOV) in Ukraine takes a few days. After that the director takes on duties that are easy to overlook in the first weeks: bookkeeping, taxes, the first employees and reporting. Penalties for missed steps arrive later, when everything already seems to run smoothly. This checklist covers what to decide right after registration.

1. Who keeps the books: the director’s decision

Under Article 8 of the Law of Ukraine on Accounting and Financial Reporting the owner or the head of the company is responsible for organising the accounting. The law allows several options: hire an in-house accountant or set up an accounting department, work with an accountant registered as a sole proprietor, outsource the bookkeeping under a contract to a specialised firm, or keep the books yourself. The last option is not available if the company’s financial statements must be published. Source documents, ledgers and reports must be kept for at least three years.

2. Accounting policy

The company sets its own accounting policy in agreement with the owner. In practice this is an internal order covering inventory, fixed assets, the threshold above which an asset is treated as non-current, who signs source documents and how documents flow. Without a written accounting policy, the first tax inspection or audit starts with questions that have no documented answer.

3. Tax regime

A TOV can use the general regime (corporate profit tax) or opt for the simplified single tax, group 3. Group 3 is open to a legal entity whose income for the calendar year does not exceed 1,167 times the minimum wage set as of 1 January of that year (paragraph 291.4 of the Tax Code of Ukraine). The right choice depends on your customers, costs and VAT plans, so it is best made with an accountant before the first sales.

Under the general regime a newly established company files its profit tax return on an annual basis (paragraph 137.5 of the Tax Code). The annual period also applies to taxpayers whose income for the previous year did not exceed UAH 40 million.

4. VAT

VAT registration becomes mandatory once taxable supplies over the last 12 calendar months exceed UAH 1,000,000 excluding VAT (paragraph 181.1 of the Tax Code). The total must be checked every month because the threshold counts any 12 consecutive months, not the calendar year. If your customers are VAT payers and want input VAT, you can register voluntarily on application (paragraph 182.1) without waiting for the threshold.

5. The first employee

• A notice of hiring must be filed with the tax authority before the employee starts work under the employment contract (Cabinet Resolution No. 413). An employee who started earlier looks undeclared to an inspector.
• Personal military records of employees are the responsibility of the head of the company (Cabinet Resolution No. 1487). You need a responsible officer, internal orders, lists and reconciliation with the territorial recruitment centre.
• Personal income tax and the military levy are withheld from salaries, the unified social contribution is accrued on top, and all of them are reported monthly in a single tax return (paragraph 51.1 of the Tax Code).

6. Financial statements

A small company prepares abbreviated financial statements: a balance sheet and an income statement (Article 11 of the Accounting Law).

Common mistakes in the first months

• An employee started work before the hiring notice was filed.
• The VAT threshold was crossed across two calendar years and nobody noticed.
• No accounting policy was approved, and source documents live somewhere in the mailbox.
• The tax regime was chosen at random, without a first-year estimate.

How we help

We keep the books of a TOV from its first month: we help choose the tax regime, prepare the accounting policy, onboard the first employees and handle all reporting. A dedicated accountant works with you day to day, and an auditor of the firm reviews the books every quarter. Bookkeeping for an LLC starts from UAH 5,000 a month, payroll and HR from UAH 400 per employee. Details are on the page accounting outsourcing in Ukraine, and a rough figure for your case is in the accounting fee calculator.

Prepared by the MK Audit team.