Times are changing. Cloud accounting is here and here to stay. It is scalable, cost-effective, and easy to use. This is great news for expats, tourists, and locals alike.
Cloud accounting means freedom. Freedom to roam the world while monitoring one’s financial matters and business endeavors. It is nothing more than using software and services in the cloud via the Internet.
Software as a Service—commonly referred to as SaaS—can be the key to keeping up with Costa Rica’s fast changing tax regulations. Especially useful for those expats trying to manage a Costa Rican business from some other part of the world.
Many expats renting their second homes and short-term rentals here are not collecting and remitting sales taxes as required by law. Ticos working in San José with vacation homes in other parts of the country are culprits too. Others do not pay income taxes if they make a profit in a business venture.
Some are willing tax evaders, many others just find keeping up too difficult because they find accounting tedious.
The good old days when the tax department was lackadaisical are over. Those evading taxes need to wake up. Some apartment and villa owners are reporting that homeowners associations are turning in tax dodgers on short-term rentals. Others are prohibiting the activity if owners cannot confirm tax compliance.
Getting up-to-date does not need to be difficult or time-consuming. It also offers other benefits. Renting property legally can exempt owners from taxes under Law 8683. Most people refer to this assessment as the luxury tax.
The answer to simplified account is in a single-ledger system. This means having one set of books in the cloud, accessible by all the users connected to the system. The accounting to run a business, track investments, and prepare tax returns is all in the ledger.
Xero, Kashoo, Wave Accounting, Zoho Books, Freshbooks and FreeAgent all offer single-ledger options. QuickBooks’ new international offering, QuickBooks Online Global, is giving the contenders a run for their money. It is designed for small businesses aspiring to save time and mental energy by simplifying small business accounting. It allows full capabilities to up to five users and limited functionalities for an unlimited number of others.
How does cloud accounting work?
It is simple. Just like all accounting, it is based on a chart of accounts, customers, suppliers, employees, and transactions. The latter, transactions, are made of up invoices, payments, bills, expenses and other types of activity and documents to produce reports like a balance sheet and profit and loss statement among others.
What makes if better is that these transactions can be input into the cloud accounting system by using a smartphone, tablet, or computer. Receipts can be photographed or scanned and then attached to the transactions. Originals, in most cases, can be trashed. Yes, thrown away.
The tax department’s resolution number DGT-02-09 of 2009 and clarification AIA-I-013-2010 states in summary that as long as documents are kept in good conservation with adequate backup procedures, they do not need to be physical. They can be stored digitally.
Keeping one’s own backup system is expensive. However, now days, there are a multitude of cloud backup options. The key players in this area are Amazon, Google, Dropbox, and Box. There are many others. New companies are emerging all the time to fill in the gaps where the leaders are weak. This is especially true in backup services.
Google is one of the pioneers of these new services and one of the least expensive. Microsoft has only recently – in the last few years – decided it should get on the bandwagon with its OneDrive and Office 365 offerings.
