- Accounting is the process that collects, processes, and reports a business's financial data.
- Every for-profit economic unit with a permanent establishment in Albania is legally required to maintain it, in accordance with Law No. 25/2018.
- The main branches are financial accounting, managerial accounting, and cost accounting.
- The standards are issued by the National Council of Accountancy through the 15 respective National Standards.
Accounting is the process of collecting, processing, and reporting a business's financial data. It serves managers in making decisions, investors in assessing the company's condition, and tax authorities in verifying fiscal obligations.
As a field, it encompasses several branches that cover different objectives within the same business. The difference between them lies not in the figures they use, but in who reads them and what decisions they support.
Read also: What is financial accounting and what are the main statements?.
Who must keep accounting records in Albania?
Law No. 25/2018 “On Accounting and Financial Statements” imposes this obligation on every profit-seeking economic unit with a permanent establishment in Albania, regardless of its legal form. This includes trading companies, such as LLCs. and joint-stock companies, as well as natural persons trading as merchants, i.e., almost every business registered in the country.
Nonprofit organizations are also subject to the same law, except in cases where they have special legal provisions for their financial statements. Outside this scope are general government institutions, which follow other budgetary rules. The level of obligation varies according to business size, as we explain in Business categories and the corresponding standards.
Legal responsibility for the accuracy of the data always remains with the company's administrator, even when this work is handled by an external office.
The main types of accounting
Within the same business, it is divided into several branches, each with its own purpose.
- Financial accounting, that is, official reporting to banks, suppliers, and the government, in accordance with approved standards.
- Managerial accounting, that is, internal reports that help managers with daily decisions.
- Cost accounting, that is, the calculation of the actual cost of a product or service, useful for pricing and profit.
How it differs from an audit
It records and reports financial data, while auditing verifies it. Internal auditing is carried out by the company's own staff to check the accuracy of the records and compliance with internal procedures. External auditing is carried out by independent auditors or requested by investors themselves to provide assurance on the reliability of the financial statements. It is different from tax audits, which are conducted by the tax administration on a business's tax obligations.
How is accounting standardized in Albania?
Law No. 25/2018 charges the National Council of Accounting with the approval of National Accounting Standards, a total of 15 standards, which are applied by the majority of Albanian businesses.
Larger businesses, or those with foreign ownership or that are publicly traded, can report under the International Financial Reporting Standards (IFRS). Even the national standards are built on the IFRS foundation for SMEs, so the reporting logic remains the same.
Every time there is a tax or financial change that affects your business, we notify you directly by email with a practical explanation.
Send me free notificationsFrequently asked questions
Is every business required to keep accounting records in Albania?
Yes, every economic unit registered in Albania for profit-making purposes has this obligation, regardless of size or legal form.
What is the difference between financial accounting and managerial accounting?
The first is addressed to parties outside the business and follows mandatory standards. The second serves internal management and has no prescribed forms.
Is it the same thing as auditing?
No. It produces the financial data, while the audit checks this data for accuracy and reliability.
How much does accounting service cost for a small business?
It depends on the type of business, the number of employees, and the volume of documents. We explain the prices and the factors that influence them. How much does accounting services cost in Albania?.
Can the business administrator handle it on their own?
Legally, yes, if they have the necessary knowledge and the time required. In practice, most small businesses entrust this work to an in-house accountant or an external firm, precisely to avoid mistakes and fines.
If you want an outsourced economist who keeps this work in order every month, we do exactly that, with a package tailored to your business.
