Business advisory for sustainable growth

Big decisions, made on the numbers

Growing a business takes more than hard work — it takes decisions grounded in figures. Fryti Audit stands beside you at the moments when you have to decide: how to structure the company, where to invest, how to finance growth and how to keep cash flow under control.

The work starts from your own books, from the returns filed with TAK and from actual bank turnover. When advice rests on the same data reported to the institutions, it holds up in front of a bank, in front of an investor, and during a tax audit. For monthly accounting clients, advisory work is part of the relationship rather than a separate engagement; if you want to know in advance what this costs for your business and how we arrive at the price, we explain it openly, factor by factor.

What the service covers

• Choosing the legal form and registering the business with KBRA
• Assessing the tax regime and planning around the thresholds
• Business plans and financial projections for loans and grants
• Annual budgeting, forecasting and cash flow
• Cost–benefit analysis for new investments and projects
• Setting prices, margins and the break-even point
• Management reporting for banks, investors and donors
• Financial structuring and restructuring

Sole proprietorship or LLC

This is the first question of every new venture, and the decision that is hardest to correct later. The difference is not the name on the certificate but three things: who answers for the debts, how profit is taxed, and how much administration the chosen form demands.

In a sole proprietorship there is no separation between business assets and personal assets — the owner answers with their own property. In an LLC the company is a separate legal person and liability is limited, except where the owner gives a personal guarantee, which banks frequently require on a first loan.

On tax, it is the thresholds that are most often confused, because there are three different ones: for the simplified regime the threshold for a sole proprietorship is EUR 50,000 of annual turnover and for a company EUR 30,000, while the VAT registration threshold is also EUR 30,000 — an entirely separate requirement, and the same for both forms.

Under the simplified regime, tax is charged on gross income: 3% for trade, transport and agriculture, 9% for services, crafts and the professions, with a minimum of EUR 37.50 per quarter. It suits a business with high margins and few costs, but it is expensive where material costs are large, because none of them are deductible. Taxation on real profit also brings quarterly advance instalments — 15 April, 15 July, 15 October and 15 January — which you will find in the tax deadline calendar.

When moving to an LLC is worth it

The signals are clear: when the other side requires a legal person, or when you are bidding for tenders; when you take on a partner or an investor; when the activity carries risk towards third parties; when real costs exceed what the simplified regime recognises; or when you plan to sell the business one day, because shares in a company can be transferred while a sole proprietorship cannot.

On the other hand, the move brings full books, a regular salary for the owner and heavier reporting — which is why we run the calculation on your own figures before any registration is changed. Whatever the form, every employee's salary must be paid through a licensed financial institution and not in cash (Article 6 of Law No. 08/L-257).

Cash flow — why even profitable businesses close

Profit and cash are not the same thing. A business can close the year with a profit in its financial statements and still have nothing to pay wages with, because the profit is sitting in unpaid invoices and in stock in the warehouse. This is the most common difficulty for fast-growing businesses: the more they sell, the more cash is locked into the cycle.

The cycle is measured simply — how many days goods sit in stock, plus how many days customers take to pay, minus how many days the supplier gives you. Shortening it rarely calls for a loan; it calls for payment terms written into the contract, invoicing on the day of delivery, chasing debts by their age, and renegotiating terms with suppliers. Tax obligations belong in the same plan, because VAT is declared by the 20th and wages by the 15th, whether or not the customer has paid you. That is why we build a weekly cash projection for the quarter ahead: when it shows a week that comes up short, there is still time to act.

Budgeting and forecasting

A budget is not a formality but an internal agreement on where the money is allowed to go. We build it on historical data, split into fixed and variable costs, and then compare it regularly against what is actually achieved. If the margin falls two months running, the reason has to be found while it is still small — in supplier prices, in discounts given, in stock losses, or in jobs invoiced below cost. We take that comparison further with financial analysis of the key indicators.

Prices and margins

Many businesses set a price by adding a percentage to cost, then wonder why the profit does not appear. Mark-up on cost and margin on the sale are not the same figure: if goods that cost you one hundred are sold for one hundred and twenty-five, the mark-up is twenty-five per cent, but the margin on revenue is twenty. Once rent, wages, transport and stock losses come out of that margin, the real room narrows fast.

So we treat pricing with figures: the full unit cost including its share of fixed costs, the break-even point, and how far volume has to rise to make up for a price cut. For VAT-registered businesses there is also the difference between the price with and without VAT, which, on sales to the final consumer, changes the comparison with competitors outside VAT entirely.

When the bank asks for financial statements — what it really looks at

In a loan application, financial statements are read as a risk assessment. The analyst looks at whether cash flow is enough to cover the instalment alongside existing obligations, how much of the owner's own capital there is compared with debt, whether income is stable across the years, how dependent the business is on a single buyer, and how old the receivables are.

What spoils applications most often is inconsistency — turnover in the financial statements that does not match the VAT returns or the bank turnover. When the figures do not agree with one another, the credibility of the whole file falls, however good the project may be. That is why preparation starts by reconciling the books with what has been declared to TAK, and only then comes the debt service projection. For larger amounts, statements certified by an independent auditor are often required; we make clear before the work starts when a review engagement is enough and when a full audit is needed.

Reporting for donors and foreign-funded projects

Non-governmental organisations and businesses implementing donor projects place one further demand on accounting: money is tracked by project and by budget line, not only by type of expense. That means a separate code for each project, allocation of salaries by time worked, procurement documentation that follows the donor's own rules, and evidence kept in the form required for verification. The report compares the approved budget against actual spending and calls for an explanation of variances, while spending outside the budget lines risks being classified as ineligible. We set the structure up at the start of the project, while it can still be built correctly.

A fast-growing business — the thresholds ahead of you

• The VAT threshold — registration takes effect from the day the EUR 30,000 threshold is crossed, not from the day of the application; if you are close to it, the guide to VAT registration will settle it quickly.
• Leaving the simplified regime — above the threshold you move to full books and to tax on real profit, which calls for preparation in advance rather than improvisation in March.
• New hires — every employee brings a payroll, pension contributions of 5% from the employee and 5% from the employer, and a monthly filing by the 15th.
• Company size classification — above the micro-entity limits, the obligation to have a review engagement or an audit arises; check your category with the KCFR company size calculator.
• Related parties — transactions with sister companies or with companies under common ownership are subject to the arm's length principle and require transfer pricing documentation.

For new businesses

Opening your first business? We take you through it in the right order: the legal form, registration with KBRA, the fiscal number from TAK, the decision on VAT and your first hire — the steps and documents are also set out in the guide to business registration. Three practical things matter in the early months: a bank account separate from your personal one, an opening budget showing how much cash is needed until the first receipt comes in, and a simple system for keeping invoices. From there, our monthly accounting keeps everything in order, while tax obligations are handled under tax advisory.