15 June 2011

What To Do With "Unofficial Expenses"

One of the most difficult part about doing business in Argentina is dealing with people who aren't above board. Since taxes are so high here, there are plenty of companies and individuals who just refuse to play by the rules. If you are equipping an office, for example, most of the people who work on the project (carpenters, plumbers, painters, etc) will probably refuse to give you an invoice at the end of the job. When you send paperwork via a messenger service you will probably get a hand written receipt rather than an official invoice.

The best suggestion is to avoid doing business with people who refuse to invoice properly because it complicates everything. If you start working with people who don't play by the rules, you'll soon be forced into the same game. You can't legally pay these people from your company funds, so you'll have to pay them off the company books. And if you are paying them off the books, then you'll have to start getting income off the books to come up with the off the books funds to pay these people.

Pretty soon your business has two sets of books - the official kind and the unofficial kind. This will be a huge headache later when you need to do your annual taxes or even analyze easily how your business is performing. It means your accountant can no longer give you any kind of real help with your business (since he is only keeping the official books, and not the real books) he has no idea how the business is actually performing.

Resist the temptation to use off the books providers. You may save a little in the short term, but the long term costs are not worth it.


1 comment:

  1. As someone who has worked in many emerging market countries, I can say that its very, very important to do everything properly, not off the books.