Primary documents in accounting: rules of compilation and classification

Accounting is impossible without the presence and proper preparation of primary documents. Their absence may result in a fine imposed on the entrepreneur by the tax authorities.

How to properly and transparently document business transactions and what types of primary documents exist?

What are primary documents?

Primary documents are documents that confirm any business transaction at the enterprise. They can be prepared in electronic or paper form to confirm various actions, such as the sale or purchase of goods, signing an agreement with a client, conducting financial transactions, etc.

Primary documents are used by accountants for preparing financial statements and during tax audits. They record information about all business and financial transactions of the enterprise.

Primary documents for sole proprietorships

Since sole proprietors (FOPs) can operate under different tax systems, the issue of forming and maintaining primary documentation is resolved individually, according to the Tax Code and the Law on Accounting. It looks as follows:

1. FOPs on the general taxation system: according to p.177.10 of the Tax Code, it is mandatory to have primary documents reflecting actual expenses and income. Documentation is stored in electronic or paper form.

2. On the simplified taxation system: according to p.12 art.3 of the Law on ECR, it is mandatory to form primary documents for accounting for the disposal and receipt of inventory. If an FOP does not have documents confirming the origin of the product, the law prohibits the sale of such goods.

3. On the simplified taxation system without mandatory use of ECR or pECR: according to the Law on Accounting, such entrepreneurs may not form and store primary documentation. However, the tax authorities insist that having such documents is necessary to prove the legitimate receipt of material assets if needed.

Types of primary documentation

Primary documentation includes:

• Expense invoice. Used to record the actual transfer of goods. It refers to the agreement between the buyer and the seller. The supplier forms the expense invoice. Current legislation does not approve a specific form of the document, so it is drawn up according to the sample adopted at the enterprise;

• Goods-transport invoice. The document is formed in case of delivery of products from the seller to the client. The invoice is drawn up in the form approved by the Ministry of Transport Order №363;

• Acts of performed works. The document is drawn up to confirm the provision of services to the enterprise by another company. The act is formed upon completion of the ordered work when the client accepts it;

• Receipt and expenditure cash orders. The document records data on the actual receipt or withdrawal of funds from the enterprise's cash desk. The order is drawn up in a specific form approved by the NBU Resolution №148;

• Invoice. Such a document can also be primary, provided it contains data on the financial transaction and states that the invoice was paid. The form of the document can be free. However, it must contain all necessary enterprise details;

• Accounting reference. The document can be used to correct errors made in previous documents. The form of the reference is approved by the Ministry of Finance Order.

Primary documents do not include papers that do not contain data on a business transaction. Thus, an ordinary payment order is not a primary document, as a financial transaction may not occur based on it.

Details in primary documentation

The document must contain information confirming the transaction or agreement. The law defines a list of mandatory details, including:

• document creation date,

• the name of the company that creates it,

• the enterprise's USREOU code,

• document number,

• the content of the business transaction,

• responsible persons involved in the transaction,

• personal signature of the authorized person.

Non-mandatory details include:

• the basis for the transaction or agreement;

• information about the document indicating the recipient and so on.

Non-mandatory details may be omitted, including data such as the document's place of preparation and the company's seal.

However, if mandatory details are not included in the document, it will not be considered primary.

In what form is primary documentation prepared?

Primary documentation is essential for conducting business activities, so the law clearly defines the main requirements for its preparation. The following rules apply:

1. Primary documentation is prepared when a business transaction is conducted. Although the law does not set specific deadlines for its preparation, it should be done as soon as possible. Accountants use these documents to perform financial transactions in accounting.

2. The primary documentation must include the details established by law. Otherwise, the document will not have legal force.

3. Documents can be printed on a company-approved form.

4. Strict reporting forms must be printed only with their number and series applied.

5. All blank lines in the document must be crossed out.

6. The document is prepared only in the state language.

7. The person who prepared the document is responsible for entering incorrect data.

8. The document lists the persons who participated in the business transaction and signed the act.

9. The document is approved by the personal signature of the enterprise manager.

10. An electronic digital signature (EDS) can be used for signing.

11. The document is stamped by the company if available.

12. Copies of primary documentation are provided to all persons involved in the transaction or business operation.

13. No corrections are allowed in the document. If changes need to be made, an accounting reference must be prepared.

Typical errors in the preparation of primary documentation

1. Not all mandatory fields are filled. In this case, such a document cannot be considered primary.

2. Unapproved corrections made manually.

3. The document is not signed and not sealed. This rule also applies to the formation of primary documentation in electronic form. In this case, both parties sign the document using EDS.

Storage procedure for primary documents

According to the law, the retention period of primary documentation may vary depending on its category. Such documents may need to be stored for 5-10 years or more. For example, employment contracts, personal files, or payroll records may be stored for 75 years.

Given that primary documentation forms the basis for accounting, it must be stored in its original form for the period specified by law.

It is important to remember that violating these rules may result in administrative fines imposed by the tax authorities.