Accounting for small businesses that have a presence in more than one country



Happy New Year everyone and as our first blog of 2024, we want to highlight a few points relating to multijurisdictional accounting for SMEs. If your small company has related companies or key stakeholders or even suppliers in places apart from the country of incorporation, this blog would be relevant for you.


There is hardly an SME that doesn’t have some kind of overseas business relationship. It could be as simple as having a set of customers in another country. At Evalua8 we’ve been long involved with SMEs that have a presence in more than one country. Most of our clients are set up across 2 or more jurisdictions which makes it super important to have a finance set up that captures this accurately


Here are some areas we pay attention to;


When there are multiple companies in a corporate set-up, it’s important to understand the relationship between them and specifically how money flows between them. There maybe loans between related companies. We will address transfer pricing as a separate point as it’s always central for inter-company transactions.


From a finance perspective, inter-company transactions should be captured on your accounting system when they occur. Leave it loo long, they become difficult to unravel sinking precious resources who then go back in time to track these. Additionally, maintain proper inter-company account reconciliations. Reconciliation notes are important for the professional to track back to exact status at a point and time if needed, especially for audits or in the event of


Transfer pricing is the determination of arms’ length, independent pricing between related parties, Any inter-company transaction should be set up as if you were unknown parties in a commercial arrangement. It’s a complex area and may have issues that arise from interpretation of tax laws across jurisdictions. However, it can’t be ignored, even if all the companies involved are in the same country/place of business.


Companies often misunderstand that transfer-pricing is a stand alone concept. But it’s terms that are built into a normal agreement such as royalty agreements or licensing arrangements which addresses the fact that the parties to the contract are related. It’s important for your accountant to understand what’s the basis of costing/pricing agreed between companies in a group and apply that consistently when inter-company invoicing or transactions take place.


When you have group companies across different jurisdictions, how do you handle the compliance and tax requirements of each of these different places? If there are established relationships with professionals or networks in other countries, that’s a great starting place. For SMEs going to a large practice might prove difficult cost and process wise. However many smaller professional firms now have affiliations with like-minded entities in other countries.


The finance departments (if not centralised) of different group companies need to work seamlessly together to achieve efficiencies for the year-end close process. This is where we find a central finance function to be of incredible value. A one-source of truth is maintained through out which makes compliance and tax reporting that much simpler and faster.



Standardisation for group reporting is key for Management to get a summarised view of key matters that need attention. While most companies produce monthly reports, getting them in a standard format that shows group level results is imperative for users. When you’re a group CEO or a COO, the idea that you need to piece together different pieces of financial information to get an overview of company performance is not appealing.


Multijurisdictional SME accounting will not produce decision making results if not for standarisation. As dull as it sounds, reports that have a neat layout that’s done month on month will help a reader grasp issues quickly. This in turn aids faster and more efficient decision making.


We hope this blog has helped in understanding some key areas of concern when companies are spread across countries. If there are specific questions, feel free to send them to us via our Contact Us page.



Notes and references


    1. All pictures used are from and are allowed for commercial purposes.




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