The readiness of micro-entrepreneurs for changes in accountancy, in the example of Estonia

Abstract

In the last five years, accounting entities in Estonia have had to adopt a number of changes resulting from various EU directives, and soon they will have to start taking into account the changes arising from the vision of the real-time economy. Quite a few accounting entities have not yet adopted even the current requirements (for example, machine-processed invoices), and many accounting entities do not comply with the reporting obligation properly (fail to submit the annual report or fail to submit the report on time). The article reflects on the future directions of the accounting field and the fulfillment of the accounting obligations of Estonian micro-entrepreneurs, and the readiness for changes resulting from the vision of the real-time economy. A micro-entrepreneur in Estonia is a private limited company whose annual turnover does not exceed 50,000 euros, and the balance sheet volume does not exceed 175,000 euros; in addition, its liabilities may not exceed the equity capital, and such a limited company must be founded by one natural person who is also a member of the board of this private limited company. Micro-entrepreneurs have a simplified reporting obligation to the state: their annual report only consists of a balance sheet and a profit and loss account. Starting in 2018, micro-entrepreneurs are allowed to submit their annual report in a simplified form. The conducted research revealed that it is mainly private limited companies, including micro-entrepreneurs, who fail to submit annual reports. Among the micro-entrepreneurs who have not submitted annual reports, the majority have been operating for less than five years and are not registered as VAT payers. Half of the micro-entrepreneurs do not consider proper monthly accounting to be important, and only half are ready for the changes resulting from the vision of the real-time economy, and the submission of a simplified annual report has not led to a cognitive reduction of the administrative burden.