A collection of data and process knowledge to enable collaboration inside projects, handling finances, forms and involvements for the Edgeryders social enterprise registered in Estonia.
1. Company information
2. Financial processes
3. Other processes
1. Company information
Some salient documents are available here on our platform, without accessing the Estonian e-Business Register.
|Company name ||Edgeryders OÜ ||
The official business name as listed by the registry includes "OÜ" (capital-O, capital-U-umlaut). It's the abbreviation for "Osaühing", the private limited company in Estonian law. It's always abbreviated in company names though.
(How to type umlauts, and more details about that.)
|Company number ||14213857 ||Called "Registry code" by Estonian officialdom. Proof: e-Business Register record. |
|Place of registration ||Estonia ||Do not use the office address, reference to the company register or other for a "place of registration" field. |
|Company type ||private limited company ||The authority which approved the registration is the Tartu County court. Proof: e-Business Register record. |
|Date of incorporation ||2017-03-01 || |
|Management board ||Alberto Cottica |
Noemi Eleonora Salanţiu
John Mc Kenzie Coate
Required when a form asks for "directors", "executive officers" or similar.
Spelling is exactly as on the Estonian E-ID cards, and as entered into the Estonian business register.
Proof: e-Business Register record.
|Management board birthdays ||Alberto: 1966-02-08 |
|All dates in international format (yyyy-mm-dd). These birthdays are sometimes required in contract forms (for example, Host Europe webhosting contracts). |
|Official e-mail address ||firstname.lastname@example.org |
This "official e-mail address in Estonia" of the company is "designed for interactions with the Estonian state". Current redirections are: email@example.com.
Proof: page in the e-Business Register, after clicking "Alter" there.
|Non-profit status ||yes ||While Estonian private limited companies are typically for profit, the Articles of Association (AoA) of Edgeryders OÜ make it a not-for-profit. Proof: Edgeryders OÜ Articles of Association. This is a public document that can be downloaded from the Estonian e-Business Register for a fee of 2 EUR. NB: the binding version of the AoA is the one in Estonian. |
|Registered address ||Kai tn 1, |
Tallinn, Harju 10111,
Important! From 2019-02-01 this will change to:
Pärnu mnt, 158
"mnt" abbreviates the Estonian maantee, "road".
Components in more detail: street address "Kai tn 1", district "Kesklinna", city "Tallinn", county "Harju", post code "10111", country "Estonia".
Also named "registered office [address]", "[address of] head office" in forms.
This is not a "business address". It is for legal, reporting and governmental usage only. – Compare "Use of the registered address" below.
The address is the office address of e-Accounting, our accountant.
Proof: e-Business Register record
|Headquarters address ||Rue Pierre Decoster 75, |
Components in more detail: street address "Rue Pierre Decoster 75", city district "Saint Gilles", post code "1190", city "Forest", region "Brussels", country "Belgium".
Also called "business address", "trading address". It is also our postal address. The name "Edgeryders" is on the post box, so works on address labels.
Proof: None. This is not registered anywhere, just the de facto address of Edgerders.
|Tax ID ||14213857 ||
Also called TIN (tax identification number). Used for national taxation purposes, so only inside Estonia. In Estonia, the tax ID is identical with the company's so-called "registry code" (source).
Proof: e-Business Register record.
|VAT ID ||EE101972833 ||The company's VAT identification number, using the scheme of the European Union. Needed to take part in international trade. As of 2017-05-19. |
|Financial year ||Jan 1 to Dec 31 ||same as the calendar year |
|Phone ||+32 2 5881268 ||Currently we can use this (landline number of Alberto and Nadia in Brussels) where we have to give a company phone number in a form. |
|Fax ||n/a ||If we need fax, we can however get us a number from a fax-to-email provider. @matthias recommends Sipgate. |
Use of the registered address. The registered office address is only for legal purposes. Note that the registered office address should not be prominently displayed, as mail sent to it other than from Companies House or financial authorities will not be forwarded to us. For that reason, an actual trading / business address should be the prominent one, and the registered address mentioned in a footer only to meet the legal requirements (example).
Requirements for legal and taxation compliance. For the Edgeryders OÜ company, the authoritative information sources about taxation and legals in Estonia are:
2. Financial processes
State of completion. By now, all relevant financial processes from the equivalent document for Edgeryders LbG ("Managing the finances of Edgeryders LbG") have been taken over into this one and adapted as needed. So, no need to look into any legacy document anymore!
2.1. Accounting system
We use FreeAgent (as stand-alone software, not tied to any accountant organization) as our accounting software:
Bank transaction data are the main input into Freeagent, but there is no direct feed from our bank account to LHV. We add them semi-automatically, through the following process:
- From the online banking, save the banking statement in CSV format
- Download our Python script for converting banking statements into a format that FreeAgent recognizes. There are two versions of the script depending on which software version of Python you use (2 or 3).
- From FreeAgent, select "Upload statement" – it's on the main dashboard or in the "Banking" menu.
Non-EUR transactions are handled in the following way. Our account is multi-currency, which means that incoming payments in currencies other than EUR are not converted into EUR, but deposited in "virtual accounts" with the same IBAN as the main one, but denominated in the currency of the transaction. The Python script detects any non-EUR transaction, and exports additional CSV files, one per each currency encountered. The files are always called
transactions_in_[CURRENCY CODE].csv. These files must be uploaded onto FreeAgent, selecting the "virtual account" of the appropriate currency. If one does not exist, you should create it.
2.2. Banking information
Account holder: Edgeryders OÜ
Bank name: LHV
Branch address: Tartu mnt 2, Tallinn, Estonia.
IBAN: EE12 7700 7710 0255 0175
(An Estonian IBAN has 20 digits, the letters "EE" followed by 18 numbers.)
Document of proof: To prove the bank account in a form, normally a recent bank statement will do which you can obtain via CFO. Else there is the confirmation letter for the account opening.
Bank account users. @noemi and @alberto are so far the only registered user of the account. To add more users, as of 2018-10 LHV Bank still requires a visit of the new user to their offices in Estonia.
(Details: Parliament approved a new law in October 2016 that allows banks to open accounts etc. with no branch visit. As of October 2017, this new regulation was reportedly implemented by several bank already. However, LHV is not yet among them.)
Online banking login. We use LHV's online banking. It is cost-free to use and based on Estonian e-residency cards. You choose a username, and log in with the username and the e-residency card in the card reader in your computer, plus PIN1. Alberto's username for example is
albertocottica (case insensitive). Banking operations are authorized via the same method, except with PIN2.
Banking fees. The fees for payments and other services by LHV are published here. Especially relevant:
2.3. Creating and managing a budget
The process for creating a project budget and monitoring it for overspending and cashflow issues during the project is documented in detail here:
2.4. Executing a payment
We only use regular bank transfers, the company's MasterCard credit card an occasionally TransferWise for making payments:
Bank transfers. See above for the LHV online banking login. The bank payment feature in there is well-designed and intuitive, so no need for specific documentation.
MasterCard. We have a MasterCard debit card / prepaid credit card, with online payment enabled (card number ending in
2016). It is in the office in Brussels, as is the PIN code. For normal business, its daily limit is set to 1,000 EUR; its monthly limit to 2,000 EUR. Limits can be changed using LHV's online banking interface, and changes are effective immediately.
TransferWise. Go to transferwise.com and log in with the company's account. To send a transfer, you can then fund it with company money via a bank transfer or credit card payment.
Azimo. We used it fora time, but no longer recommend it. TransferWise is now the better alternative for all its use cases.
2.5. Invoice payments
The process for submitting your invoices and getting them paid by Edgeryders OÜ is documented in detail here:
2.6. Expense reimbursements
The process for being reimbursed by Edgeryders OÜ for your expenses during projects is documented in detail here:
2.7. In-kind benefits
There are legal ways how a company can offer in-kind benefits to its employees and collaborators, which offers them tax advantages compared to getting more money. In Edgeryders OÜ, we offer this only to close, regular collaborators. In addition, this process is only possible for items that the beneficiary needs and uses for her work for Edgeryders OÜ, such a computer or phone. Otherwise the item cannot be justified as a business expense for the company but instead would count as implicit profit distribution, which would be taxable for the company and is something we can't do anyway as a not-for-profit company.
The process step by step:
The company buys an item and pays for it.
The item is accounted for as an expense of an Edgeryders OÜ "Core" project in FreeAgent. (Because it is not tied to the execution of any particular client project.)
The item is also recorded as an asset of Edgeryders OÜ in the accounting system, with its purchase value.
The beneficiary issues a credit note document for the cost of the item to Edgeryders OÜ.
The credit note is recorded in FreeAgent as a "bill credit note" in the same "Core" project. It is basically booked as "an invoice with a negative amount".
Edgeryders OÜ performs the recommended reconciliation procedure for netting the bill credit note against the bills already issued by the beneficiary.
Edgeryders OÜ pays the outstanding bills of the beneficiary, less the amount of the credit note.
Edgeryders OÜ deducts the cost of the item as business expense, distributed over the legally mandated depreciation time (e.g. 3 years for a computer). This decreases the value of the asset in the books until it hits zero.
If you have to include in-kind benefits in your tax statement in your jurisdiction, in addition follow these steps (adopted from recommendations for tax-free benefits to employees in Germany:
Sign a leasing contract with Edgeryders OÜ where you pay a low, nominal amount for being allowed to use the item. The leasing contract makes it explicit that getting to use the item is not a gift, so you don't have to include it as an in-kind benefit in the tax statement.
If you use the item for your own business / solo entrepreneur company, book it as a business expense. (Not applicable if you also use the item privately and your jurisdiction mandates that such items cannot be registered as a business expense.)
At the end of the leasing period, you buy the item for its low remaining value that it has in the books of Edgeryders OÜ. (In some jurisdictions, there are even rules for this, for example "3% of new price" for a smartphone leased to an employee in Germany.)
This process keeps our project accounting in order, since project costs (and project costs only) are assigned to projects, with their full amounts. It is tax neutral for Edgeryders OÜ: it is not possible to deduct the full costs as a business expense in the first year, which increases the profit – but for an OÜ, profits are not taxed until distributed. It is a tax advantage for the beneficiary, since the use of the item is not taxed in their jurisdiction, unlike the equivalent in money.
2.8. VAT tax returns
VAT in Estonia is monthly. VAT returns are due on the 20th of the following month: the VAT return for February is due March 20th.
2.9. Approving and filing the annual report
The financial year of Edgeryders OÜ coincides with the calendar year. The annual report, relevant for corporation tax, is due by June 30th of the following year. So, accounts for financial year 2017 must be filed with the tax authority by June 30th, 2018.
According to Estonian company law, the management board is responsible for approving the annual report and submitting it to the Estonian tax authority. Legally one signature is enough, but we (the management board) have decided that all board members should digitally sign the annual report.
How it works in practice:
Report preparation. The accountant prepares the annual report based on FreeAgent data and a short report they will request us to write about the company's operation in the year. (This is required by Estonian law to be included when filing the annual report.)
Report upload. The accountant uploads the report onto the Company Registration Portal, then informs us by mail.
Log in. All board members go to http://www.rik.ee/en , then navigate to "Company Registration Portal" and log in using their E-ID card (needs PIN1).
Find report. Choose "Annual reports", locate the current year's report in the "Incomplete reports" section, and click the "view" link next to it.
Download reports. This next screen contains some general information. Download the annual reports, both in Estonian and in English. They are easy to find because they have PDF icons.
Check that the report is consistent with FreeAgent. FreeAgent is the authoritative record for bookkeeping, if anyone asks questions we need to be able to refer back to it. To do this:
- Log into FreeAgent.
- In FreeAgent, click "Accounting → Reports".
- Examine the Balance sheet and Profit and Loss reports, checking that they are consistent with those in the annual report.
- If they are not, inform the accountant and ask why: some further reconciliation might be necessary. Note, however, that the accountant might be presenting the report in a slightly different form than FreeAgent. For example, FreeAgent records depreciable assets at book value (acquisition value - depreciation), while many accountants prefer to record the assets at full acquisition value, and put the depreciation as a liability.
Important: Remember to also check the English version against the Estonian one. The latter is, as always, the one with legal value.
Sign. Back in the Company Registration Portal, click "Add a digital signature to the report" and sign (needs PIN2).
Add profit distribution information. After all board members signed, one has to go to the same online place where the signing happened and fill in the form about the distribution of profit or covering of loss. It is important (for us as a not-for-profit company) to not indicate any distribution of profit as that would subject it to taxation (see). Instructions (as derived from how our accountants did it for 2017):
- Click the button "Continue to the next step" at the bottom.
- Add the following two forms to the report: "Profit distribution proposal" and "Profit distribution decision".
- In both forms, fill in the field "Retained earnings after distribution (covering)" with the total amount of profit as noted at the top of the form.
- In both forms, also fill in the "additional information" free-text field at the bottom with a note like this (in English only is fine):
According to the Articles of Association, Edgeryders OÜ is a not-for-profit company. This prohibits us from distributing our profits, so we retain them for future use in business activities according to the business purpose of the company.
Submit. As a final step, one of us or the accountants should then submit the finished annual report by using the "Submit now …" button at the same screen where the profit distribution forms were added. Note that this must be done before or on June 30 for the annual report of the previous calendar year.
Download to archive. After submission, the submitted files will be available for download in the Company Registration Portal under "Annual Reports → Reports submitted:".
2.10. Monitoring the company's cash flow
Our current process is a monthly call with all management board members and project managers to detect and prevent cash flow issues. These calls are coordinated by @nadia. For and in these, calls, we look at the following:
- the Magic Spreadsheet, our company-wide cashflow forecasting tool
- project status reports by project managers
- our accounting in FreeAgent
How to use the Magic Spreadsheet
This is our main tool to predict and monitor the company's overall cash flow, to look at the size and health of our project pipeline, and to get an overview of the projects we're doing. You can find it in the Edgeryders Google Drive folder here (but it is only accessible by management board members and some close collaborators):
Edgeryders Admin → Finances and Legals → Edgeryders OÜ → Magic Spreadsheet v1
The Magic Spreadsheet will generate an accurate cashflow prediction automatically, but only if project managers follow the process. So to detect and fix the most common errors with project budgets, you'd use the Magic Spreadsheet like this:
Enter the day's bank balance in field
Projects!B1. (It's possible to automate this with the FreeAgent API, but we didn't so far.) In a perfect world, this should be the only thing you need to do before getting an accurate cashflow prediction in sheet "Cashflow".
Make sure all projects are listed. Starting with October 2018, all Edgeryders projects should be listed in the "Projects" sheet of the Magic Spreadsheet. This also includes also all internal projects (core and investment projects) in order to capture all costs for an accurate cashflow prediction. Only projects that were already "Finished" or "Dropped" in October 2018 are excluded, because they pre-date the Magic Spreadsheet. If a project is not listed, ask the project manager to create a budget spreadsheet for it.
Make sure all active projects are marked active. Because only active projects are considered for the cashflow prediction. You can check this right in the Magic Spreadsheet, on sheet "Projects". If you need to mark any one as active, you need to do it in its budget spreadsheet, in sheet "Status". The budget spreadsheet is linked from the Magic Spreadsheet, sheet "Projects".
Complete sheets CashflowData1 and 2. Fill down the formulas in columns B and further, to make sure there are as many rows in these columns as there are in column A (where rows are automatically generated). Otherwise, the cash flow graph will show the wrong results.
Check project budgets and costs. You can go through the active projects in the Magic Spreadsheet, sheet "CashflowData1". Sum up a project's revenues to see if it matches what you remember about the project's budget. Sum up the costs to see if it's around 80% of the revenues. You can also look at the predicted project profit margins in sheet "Projects" – each should be ≥20%.
Check project cashflows. In Edgeryders OÜ, the cashflow of all revenue generating projects ("client projects") must stay positive. You can check that in sheet CashflowData2 by progressively selecting the cashflow change values in a project's column and ensuring that the sum (shown in the footer) stays positive. This information is shown in more comfortable form in the project's budget spreadsheet, sheet "Cost".
Look at the cashflow graph. The green line is the company's cashflow prediction. The red line is the minimum of money we always want to keep in the bank. So you can see when the company is approaching uncomfortable or forbidden territory
2.11. Obtaining audited accounts
Some project applications require us to provide audited annual accounts.
[TODO: Process and cost how to get these. Also detailed information about the various types / levels of audits.]
2.12. Contacting our accountants
Starting from November 2018, the accounting service provider to Edgeryders is e-Accounting Estonia OÜ, which is the affiliate of our business service providers, E-Advisors OÜ.
Legal address and banking data:
e-Accounting Estonia OÜ
Pärnu mnt 158, Tallinn, 11317
The accountant in charge of our company and our single contact point is Mrs. Nele Keres-Valvas.
2.13. Financial reporting for a Horizon 2020 project
This is covered in its own topic:
2.14. Monitoring fixed costs
One of our needs is to keep close watch on fixed costs. Fixed costs are those that we incur in regardless of whether we are doing well or not. They are insidious, because they put financial pressure on the company during a dry spell.
FreeAgent has a helpful report on cost categories. Access it via "Accounting → Reports → Spending categories":
This goes some of the way, but not much. Some categories ("Accountancy fees") are indeed entirely attributable to fixed costs; others ("Travel") are entirely attributable to project costs; but others still ("Subcontractor costs", "Rent") have to be split between project and fixed costs.
We have been taking a different path: using the FreeAgent Projects functionality to keep track of fixed costs.
For "pure" fixed costs (accountant, office rent, web hosting, subscription to SAAS like FreeAgent and Zoom) we use a project called "Core". Core is annualized (Core 2017, Core 2018 and so on), so that we can better compare whether core costs go up or down over time, and by how much).
For "ad hoc" investment projects like the Research Network, we normally don't bother annualizing. However, if an investment project is meant to be multi-year, you might want to consider whether to annualize it or not. Annualization is valuable if you plan to do something for a long time, and then you need to check that your costs do not grow too much.
Needless to say, all this requires that every cent spent by Edgeryders is always allocated to a project. When reconciling banking transactions, select "More options" to choose a project for the transaction you are reconciling.
To access the "Projects" functionality, go to "Work → Projects → [select a project]":
The profitability table shows a grand total for revenues and costs of each project. For Core and other investment projects, there are obviously no revenues, only costs. A breakdown of costs can be accessed from the "Expenses" tab.
2.15. Starting a project in FreeAgent
When creating a new project record in FreeAgent, adhere to the following hints:
Project currency. For the project's currency, select EUR, even if the currency used in the project's contract, budget or payments is a different one. Since EUR is necessarily our accounting currency and our only bank account currency, this yields the least confusion about and risk of currency conversion losses / gains. Our budget template (see: Creating and managing a budget) and cashflow prediction spreadsheet (the "Magic Spreadsheet") is already capable to handle this even when the project's contract and payments are made using a different currency. See also the additional hints below.
Adjusting the budget. For projects where the contract and payments are in EUR, the budget is a fixed EUR figure and never changes. Enter it as it is into FreeAgent. For projects in a different currency, the budget in EUR is only known after the client paid the last invoice. Before that, it is only an estimate based on past and current exchange rates. Our Budget Template spreadsheet calculates these estimates, but is not yet perfect in getting the right sum in the end. For per-project profitability estimations (the only purpose of the "budget" figure in FreeAgent), these estimates are good enough though. So enter the estimate from the Budget Template spreadsheet when creating the project record in FreeAgent, and correct it at the end of the project, and that's it.
Managing currency conversion gains / losses. Since we write our invoices in the contract's currency (for example USD) and use them to explain associated incoming EUR transactions in FreeAgent, there is no need to account for any forex conversion gain or loss using the dedicated FreeAgent feature. That's because FreeAgent is not aware of any difference in EUR between the invoiced amount at invoice date and payment date. So, nothing special here.
2.16. Managing FreeAgent contacts
Contacts are external people and organisations that the company does business with – like clients and subcontractors, but not employees. However, since directors and other people paid for contract work in Edgeryders OÜ are paid on invoice rather than as employees, they are technically also "external people" and we create contact records for them.
The important things to know about contacts are:
FreeAgent needs a contact as references for each invoice / bill we send or receive. Upon creating a new invoice or bill you are prompted to enter the contact it goes to (if it is an invoice) or comes from (if it is a bill).
When entering a contact, always mark correctly the field "country". This affects the VAT calculations.
The FreeAgent manual contains a detailed introduction to contacts.
2.17. Recording multi-annual grants
Some grants are paid to us in advance (for example those for EU Horizon 2020 projects). It is possible that the project that the grant relates to extends over the financial year in which the payment is made.
If the payment is recorded as grant Income, it arbitrarily inflates profits for the first year covered by the grant and depresses them for the other years. In Estonia, this has no implications on corporation tax and liquidity (since tax is only paid on distributed profits, not on retained profits). But since it's a distortion, we better account for it differently:
The principle is that, in each financial year, you should only record an amount of grant income equal to the money you spent on that project in the same year (plus the marginality, if any).
Example: Edgeryders receives in March 2016 full payment for a grant of 10,000 EUR. Half of it is to be spent in the same financial year; the other half is to be spend in the next financial year.
When the incoming payment of 10,000 shows up in the "banking" section of FreeAgent, explain it (the full amount) as "Other Money In → Receipt into Contra Account". The contra account is a sort of fund: you take the cash (only accounting wise, of course, the money actually stays in the account).
When you spend the first 5,000 money, create two manual banking transaction. The first one is "Other Money Out → Payment from Contra Account", for 5,000. This takes 5,000 EUR out of the contra account and puts it back in the bank account (accounting wise!). Call it something like "[project name] Revenue from contra account".
Next, create a second manual banking transaction for 5,000 EUR. Classify it as "Other Money In → Grant Income". Call it something like "FYE 2016 income component for [project name]".
At this point, you have 5,000 in the contra account; 5,000 recorded as grant income for the current financial year (FYE 2016); 5,000 of costs related to the project for the same financial year (not mentioned in the example, assumed to happen between 1 and 2). The income of 5,000 is counted into profits, but not the rest.
When the next financial year comes and you spend the second 5,000, repeat 2 and 3.
At this point, you have emptied the grant income. You also have 5,000 recorded as grant income for the second financial year; and 5,000 worth of costs for the second financial year.
2.18. Checking FreeAgent data for consistency
When tidying up records for making a VAT return or yearly return, here are some ways to check for internal consistency, allowing to spot incomplete / erroneous data in FreeAgent:
"Balance Owed" is zero or positive for all users. A negative balance would indicate overpayment, or payment for expenses where the receipts have not yet been entered into FreeAgent.
Balance of the virtual conversion accounts is zero. Refers to the "Bill / Expense Payments (GBP)" and "Invoice Receipts (GBP)" accounts. For each payment into these accounts, there has to be a payment of the same amount on the same day out of these accounts, serving the purpose of converting the currency of accounting to allow us accounting for EUR payments in GBP within FreeAgent. So if the balance is non-zero, there is either a mistake, or these accounts have been misused.
3. Other processes
For identification. To sign forms for (legal, financial, ...) identification purposes, the signature of one director is enough. This applies where a form says "signature of authorized representative".
For contracts. In legal terms, each director has full representation powers. Any limitation to this must be made part of our own rules and encoded in our Articles of association.
Company seal. It is no longer necessary for Estonian corporations to have a seal and we do not have one.
Digital signature. Directors of Edgeryders OÜ must be e-residents of Estonia. This allows them to digitally sign documents and contracts using the facilities provided by the e-residents scheme.
3.2. Estonian Statistical Service "E-Stat"
The company is registered with E-Stat, the portal of the Estonian statistical service. This is compulsory. @alberto is formally accredited as the party responsible for providing information to Statistics Estonia.
3.3. Participating in EU funded research
Edgeryders OÜ is registered on the European Union's Beneficiary Register as of March 20th, 2017.
Contact person: Alberto Cottica
LEAR: not yet appointed
3.4. Managing an Edgeryders project
This is treated in its own topic here:
3.5. Working with project journals
This is covered in its own topic:
3.6. Producing an Edgeryders report
This is covered in its own topic:
3.7. Joining the Edgeryders management board
This is covered in its own topic:
3.8. Using edgeryders.eu e-mail addresses
This is covered in its own topic:
3.9. Setting up an Estonian Osaühing (OÜ) company using E-ID
We have treated this in detail in its own topic, see below. It also covers the process to change our articles of association any time after setting up such a company.
3.10. Setting up an Estonian one-person company using E-ID
Noemi describes this in detail in its own topic:
3.11. Accessing Edgeryders accounts on third-party platforms
Information about how to access the various social media etc. accounts registered for Edgeryders OÜ is contained in its own, access protected topic here:
"Login Credentials for Edgeryders Accounts"