Transferwise biz - how to handle multiple currencies in terms of accounting?

[JamesDonkey]

How to handle multiple currencies in terms of accounting and taxes? Should I always convert all the payments, in- and outcoming, to the main currency according to the jurisdiction of my company? Or should I use them as they happen to be?

 

[Larin]

How to handle multiple currencies in terms of accounting and taxes? Should I always convert all the payments, in- and outcoming, to the main currency according to the jurisdiction of my company? Or should I use them as they happen to be?

Generally, it will all be converted into a single currency (usually the currency of the country where you do your reporting) and you will take profit/loss on the conversions. Xero supports multiple currencies, as should your local accountant.

 

[JamesDonkey]

"will be converted" -- by whom?


I've never converted it and have withdrawn my salary multiple times.

 

[Larin]

"will be converted" -- by whom?


I've never converted it and have withdrawn my salary multiple times.

By you, or whomever runs accounting for your company. The conversion doesn’t have to be an actual conversion, but you would use the rate for that day to do it. Again, this is for accounting and tax purposes, what you do with the cash may be different.

So for example, on June 1 you invoiced 10k EUR, but live in the UK, so technically, you’ve invoiced £xxx pounds which is what you’d report on your cash-flow statement.

I see your question now, the answer is, you can whatever you want with the cash, but for tax and accounting purposes you will want to convert the amounts into a single currency on paper.

 

[JamesDonkey]

I see your question now, the answer is, you can whatever you want with the cash, but for tax and accounting purposes you will want to convert the amounts into a single currency on paper.

I have to, or I'd want to? Is that for the sake of convinience only? And hence optional?

I have UK llp/ltd, and I could use other currencies too when doing taxes? Or pounds only?

 

[Larin]

I have to, or I'd want to? Is that for the sake of convinience only? And hence optional?

I have UK llp/ltd, and I could use other currencies too when doing taxes? Or pounds only?

I am not a qualified accountant, so take everything I say with a huge grain of salt.

When I ran a UK company we did all of our reporting in pounds. Just briefly looking at HMRC's website they do provide a guide on how to do currency conversion for VAT (Transactions in foreign currencies and VAT), so I'd image the same applies to your filings. Could you do annual accounts for a UK company in EUR? I do not know. But, if you do receive income in multiple currencies, you will probably have to convert them all into one.

Again, just to be clear, that does not mean you have to actually convert them in the real world (using Wise or something). You can keep the money in whichever currencies you want. The above is for reporting only.