What is triangulation?

Triangulation is a simplification measure to reduce the administrative and regulatory burden on traders and tax authorities. It is intended to reduce the administrative and compliance burden related to VAT registration and accounting. This simplification measure can only work if all three traders involved are registered for VAT in the European Union.

Triangulation involves two supplies of goods between three Value Added Tax (VAT) registered traders in three different Member States of the European Union (EU). For example, if a trader established in one Member State (MS1) sells goods to a trader established in another Member State (MS2). However, the goods are delivered to a trader in a third Member State (MS3).

Transactions involving more than three companies
The simplification measure can only work in a classic generalization situation. If more than three companies are involved (eg successive sales between companies located in Member State 2), a strictly legal position applies. In such cases registration may be requested in at least one other Member State, depending on the precise circumstances.

What is operating activity

Operating activities are the main activities that a company performs to gain profits. Those activities affect the cash flow getting in and out and determine the net profit of the company.

Some major operating actions for the company are sales, customer service, administration and marketing. These activities are part of the regular functioning of a company that affects its monthly, quarterly and annual income and earnings. They also give the majority of the cash flow and manage profitability.

The operating activities of a company are found in the business’ financial records especially the cash flow statement and the earnings statement.

The operating activities section in these reports is considered the most essential section since it provides cash flow data compared to the daily operations of the company and allows stakeholders to see the viability of the company. It also manages the business’ ability to pay its current charges such as labour costs and debt payment.

The operating activities that occur in income generation are:

• Cash receipts from sales
• Settlements of lawsuits and insurance claims
• Income received from the investment
• Supplier refunds
• Accounts receivables collection
• Sales of shares

The operating activities that occur in cash outflows are:

• Supplier payments
• Tax payments
• Refunds to customers
• Settlements of fines and lawsuits
• Interest to creditors
• Equipment purchase
• Interest payment on loans and dividends
• Employee payments

In the statement of money flows, the cash flow from those activities is placed in the operating activities section. They are centred on changes in the current assets and current liabilities and the net profit. Cash flow report also lists the cash flow from investing and financing actions.

Business ownership types

The first step for any entrepreneur is setting up a company that will be used to formally start on the business journey, but several new business owners struggle to know the best way to go forward. These are the most common ways to organize a business, from the simplest through the most complex.

The most popular business ownership types include:

Sole Proprietorship
A sole proprietorship is the most elementary form of business ownership, where there is one sole owner who is liable for the company. It is not a legal entity that separates the owner from the business, meaning that the owner is liable for all of the debts and responsibilities of the company on a particular level. In trade for that liability, the owner keeps all the profits earned from the company.

Partnership
Partnerships are business ownership where two or more people work as co-owners. There are two kinds of partnerships, which are General Partnerships and Limited partnerships, separated primarily by the liability coverage by the partners. In a general partnership, all partners of the company have unlimited liability in the company. For a limited partnership, at least one of the partners has limited liability, expecting they are not individually liable for the debts of the company.

Limited Liability Company
A form of company ownership that is taxed like a partnership but uses the advantages of limited liability like a corporation is a “limited liability company”. In comparison to a corporation, it is easier to prepare and does not get double taxation. While together getting more credibility than a partnership or sole proprietor when it comes to finding resources such as working funds. This form of ownership is normally reserved for a group of experts such as accountants, doctors and lawyers.

There are more business ownership types such as s corporation, franchise, co-operative and corporations.

Ways to get a merchant account

A merchant account is a special type of business bank account that allows your company to accept various types of payments, usually debit and credit card payments.

There are two ways to get a merchant account; both request a contract:

• Agree with a member bank that has a processing relationship with Visa and Mastercard.
• Have a contract with a member bank's authorized representative, such as an independent sales organization or member member service provider (ISO / MSP).

The agreement means that your business agrees to abide by the terms and conditions of card credit markets.

Once your merchant account is made, you're ready to start taking credit card payments. It can be as simple as logging in to a software product, entering customer payment information, and clicking the Get Payments button to process a transaction and deposit funds into your bank account, once you've reached a great merchant account provider.

Agency Company

An agency company is a company that has an agreement with an offshore company (principal) on the activities of an agent. The agency company itself is not established in Austria but earns income from the agency commission.

At all stages, the agency company is doing business on clients behalf who, under the terms of the agency agreement, can be a tax haven company. Business transactions are made through an Austrian company and the proceeds are credited to its bank account. After deduction of the commission, the amount of capital is transferred to the account of the real seller (eg EU company). Agency fees can be set at 2%, 5% or even more and are usually paid annually. The Austrian company will declare the commission received as taxable income in Austria.

Austria as a whole is not hostile to low tax territories and does not impose strict restrictions on doing business with tax havens. However, the jurisdictions which have signed double taxation treaties with Austria are preferred to agencies. For example, an agreement between a UAE company and an Austrian agent is subject to the Austrian tax treaty with the UAE.

Hong Kong Limited or Singapore Pte, like many other companies in jurisdictions other than tax, havens, are also good options for such structures. In any case, all agency structures should be covered by a thorough and detailed agency agreement.

International audit and its purpose

An examination of a company's financial statements is called an audit. This is usually reported in the annual report of the company prepared by the auditors. Usually, this refers to a certain prior accounting period. An audit report based on a selective examination of an entity's activities is a mandatory requirement upon completion of the audit. The report includes a profit and loss statement, a balance sheet, a statement of changes in equity and a cash flow statement and explanatory notes, together with a summary of significant accounting policies.

An audit reflects the financial position of the entity at a particular date, including whether everything that the entity owes and is owed is properly recorded in the balance sheet and that its losses and gains are properly measured. The financial statements must be prepared in accordance with the applicable legal requirements. Once the report has been prepared, it must be approved by the company's executives (such as the board of directors) when deciding on its accuracy.

Audits may also include: asking formal and informal questions, verifying company-owned material items such as mechanical and electrical equipment, obtaining written approvals, verifying certain procedures, and overseeing the company premises.

The standards used for the proper review of the financial statements are set by the government. International Standards on Auditing (ISAs) are available on the Internet and contain clear statements that auditors should address. They consist of an introduction, objectives, definitions, requirements expressed by the words "to be performed by the auditor", the application and other explanatory material.

Offshore Company Formation Procedure

There are a few basic steps you need to take to incorporate a company in Hong Kong, Belize, Seychelles or Saint Kitts and Nevis. Firstly, the costs of the basic services necessary for the incorporation of the company, which include the certificate of incorporation, the decision on renting the office and the register of directors (approximately € 700). Second, there is an additional charge for privacy; depending on the law firm chosen by the entrepreneur (around € 400). There is also a fee for opening a bank account with the personal participation needed to open it for business security purposes, the cost of getting a logo, rubber stamp, seal, data plate, and apostille, virtual offices, etc. The person will be required to provide their personal credit card information and contact information. It is also necessary to sign a power of attorney specifying who has the right to control the open bank account, add, remove signatories and close it. It depends on the company's articles of association.

Often, the aforementioned services may also include optional international business start-up, registered agent, company management, document storage and business administration services, management, participation, offshore investment fund creation and offshore insurance licensing assistance. companies and offshore banks, offshore bank account implementation, virtual office services and business search. These services can be offered and provided by professionals such as high-value individuals, private entrepreneurs, professional consultants, accountants and legal advisors working for local jurisdictions in Hong Kong, Belize, Seychelles or Saint Kitts and Nevis, etc.