Black Bookkeeping: What is it? What you need to Know

68
What is black bookkeeping?
Why do you need black bookkeeping

Very often on television, in the media, on Internet resources and in the conversations of the townsfolk you can find such an expression as “black bookkeeping”. It’s not easy for some people who, for various reasons, are far from legal and economic categories, to understand the essence of this concept.

Let’s try to figure out what is the meaning of this phrase and what it is in real life.

What is black bookkeeping?

Enterprises can be of various forms of ownership. A thousand people work for some, and only five for others. However, they all carry out any activity, only in different areas and volumes.

Accounting for all illegal business operations, the ultimate goal of which is to conceal income from the state and understate taxes is black bookkeeping. It doesn’t matter if it’s the salary “in envelopes”. The use of unaccounted for fixed assets, the purchase of goods without documents, the provision of services without closing them with appropriate papers, anyway, shadow schemes will affect all areas of accounting at the enterprise.

Why do you need black bookkeeping?

Why do people knowingly commit such offenses and still record them on media? Isn’t it easier to keep only white bookkeeping and sleep peacefully? Or not store any data that can be detected?

The answers to these questions are simple. Of course, it’s easier and more correct to do everything according to the law. However, for many, banal greed prevails over the fear of an offense. The business owner wants to withhold his income from the state so as not to pay taxes to the budget. However, he does not trust any of his subordinates. Therefore, you have to record all the operations performed so as not to get confused.

The situation is even worse if the company has several co-founders. All of them may suspect each other of fraud and the desire to cash in at the expense of other partners. But still do not want to pay taxes in full. So they have to control, including each other, to have a person who conducts black bookkeeping.

The essence of black bookkeeping

Black bookkeeping is manifested in such actions of entrepreneurs:

  1. Payment of wages “in envelopes” without withholding personal income tax from it. And without payment of the amount of accrual of insurance premiums;
  2. The presence of unaccounted for cash at the enterprise;
  3. Use of assets that are not on the balance sheet of the organization and are not leased;
  4. Concealment of a portion of revenues to reduce taxes

REMEMBER! Black accounting includes all actions that are performed informally, secretly from regulatory authorities and allows you to receive benefits for the enterprise

For what purpose and how to do black bookkeeping

The goals and reasons for the appearance of black bookkeeping enterprises

  • Management’s desire to reduce the tax burden;
  • Insufficient level of professionalism of the accountant, who, in order not to bring this fact to the employer, does not record part of the documents;
  • Cooperation with unscrupulous counterparties who do not provide a full set of documents necessary to reflect the operation in the account;
  • The use of illegal schemes for receiving orders, issuing permits bypassing legislative norms, which requires the infusion of unaccounted cash in large volumes.

The departure of enterprises partially or fully in the shadow sector of the economy. In some cases is due to the corruption component in government. The eradication of bribery at the state level will contribute to eliminating the illicit circulation of cash in the business.

Who can do black bookkeeping

The level of organization of double-entry bookkeeping in institutions depends on the scale of activity and the degree of involvement in shadow structures. In small enterprises, all unofficial accounting can be kept by the head in the notebook. Large legal entities sometimes reach the level of full-fledged secret accounting using software products, double-entry on accounts, reports.

For the organization of double-entry accounting at the enterprise can be responsible not only the head but also the chief accountant or the department of accountants.

A feature of black bookkeeping is that it is conducted according to the same principles and rules as the official one. An inventory of unaccounted assets is carried out, the data of official accounting and unofficial are combined to reflect the full picture of the financial condition of the enterprise. According to tax returns, such organizations can be classified as unprofitable, while their actual profit can be calculated in millions.

Ways of doing

Receptions used by black bookkeeping:

  1. The implementation of part of the operations involving one-day firms.
  2. Transfer of significant amounts to offshore.
  3. Illegal cashing of money.
  4. Payment of the entire amount of earnings to employees unofficially or a minimum salary according to official documents with a surcharge of the remaining amount “in an envelope”.
  5. This is the so-called gray salary.
  6. Fictitious deliveries.
  7. Fake documentation using fake stamps.

It is possible to suspect the presence of shadow salary schemes if employees of the enterprise were transferred to positions with a significant reduction in wages if the appearance of employees does not match their income level. When analyzing announcements about recruiting people for vacant positions, a signal for regulatory authorities is the situation when the declared amount of earnings differs from the transferred to the card employees.

The prosecution of employers in such situations may be based on testimonies of former employees or documentation reflecting illegal operations seized during control measures. Cash withdrawal schemes are using the tool of fictitious overstatement of salaries of hired personnel.

Tools of entrepreneurs practicing double-entry bookkeeping

  1. Execution of fictitious documents on the disability of workers;
  2. Work with entrepreneurs in the special regime under a civil law contract;
  3. Filing zero tax returns in the presence of the fact of acquisition or sale of real estate or vehicles;
  4. Lack of declarations of information on export-import operations;
  5. Overstatement of VAT deduction and frequent recourse from the budget;
  6. Registration of a large number of loans and borrowings, the total amount of which significantly exceeds the amount of revenue;
  7. Appeal to the services of third-party accounting companies in the absence of actual activities;
  8. Conducting activities that do not comply with the areas of work indicated in the registration documents.

Leave a Reply