Bookkeeping in Malta: what the law requires, and who should do it

The short answer

Bookkeeping is the day-to-day recording of every sale, purchase, payment and bank movement in your business. Maltese law does not say who has to do it, but it does say what records must exist and how they must be kept. Every business needs proper records of its income and expenses, and the practical standard is to keep them for 10 years.

You can keep the books yourself, employ someone, or outsource them. Outsourced monthly bookkeeping in Malta starts from €150 a month for a sole trader or micro company, and €250 a month for a small VAT-registered company, depending on how much there is to record.

What bookkeeping actually is

Bookkeeping is the recording stage. Every transaction is entered, classified and matched to its evidence: sales invoices you issue, supplier bills you receive, payments, receipts, and every line on your bank statement. The output is a clean set of books from which the reports are drawn.

It is easy to confuse three jobs, and each one depends on the one before it:

• Bookkeeping records what happened, every month, with evidence behind each entry.
• Accounting turns those records into reports: the profit and loss account, the balance sheet, the VAT position, and the year-end financial statements.
• Compliance uses the reports to file: VAT returns, the annual tax return, payroll submissions and social security.

If the bookkeeping is behind, every later step is late too. That is why the cheapest quote is often the one that leaves out the bookkeeping altogether.

What the law requires

Malta's rules require proper records of every transaction: what you sold, what you bought, what you paid and what you received, with the evidence behind each entry. A company's records must give a true and fair picture of its affairs, and invoices must be kept in the form in which they were issued, whether paper or electronic.

The practical standard is to keep all of it for 10 years. The obligations differ between VAT, companies and trading, and 10 years covers all of them, so you never have to work out which period applies.

What good monthly bookkeeping looks like

Most problems start with a month that was never closed. A workable monthly routine covers the same few things each time:

• Every sales invoice issued in the month, with the date and the customer.
• Every supplier bill received, entered and filed against the right category.
• Every bank line matched to an invoice, a bill or a transfer. Nothing left in a suspense account.
• Receipts and cash payments recorded and filed with the matching entry.
• Payroll entered, with the employer's social security recorded.
• Debtors and creditors reviewed: who owes you, and whom you owe.
• The VAT position for the period known before the return is due, not discovered on the deadline day.

When this runs every month, the quarterly VAT return takes an hour instead of a weekend, and the year-end accounts are a summary rather than a rescue.

Doing it yourself, employing someone or outsourcing

There are three realistic routes. Each one suits a different stage of business.

Whichever you choose, the rule is the same: someone should be responsible for the books, and that person should be able to produce the evidence behind any entry.

What bookkeeping costs in Malta

My own bookkeeping fees are built from the number of entries to record each month. An entry is an invoice or bill, plus the matching bank line if you have a bank account to reconcile. So a bank account doubles the count. The rate per entry falls as the volume grows:

A worked example: a business sends and receives 60 documents a month and has a bank account. That is 60 documents plus 60 bank lines, so 120 entries. The first 100 cost €1.50 each (€150), and the next 20 cost €1.20 each (€24). Bookkeeping alone comes to €174 a month. The minimum monthly fee is €150 for a sole trader or micro company, and €250 for a limited company.

VAT returns, payroll, annual accounts and management accounts are priced separately, so the full monthly figure depends on what you need. The fee calculator shows each line with its workings.

Common mistakes

• Leaving the bank unreconciled. A bank line you cannot explain three months later is expensive to chase.
• Invoicing late. Sales that are not invoiced are not in the books, and customers pay later when the invoice is late.
• Mixing personal and business money. It makes both sets of records harder to defend.
• Keeping receipts in a shoebox. Evidence that cannot be found when the MTCA asks for it might as well not exist.
• Leaving VAT to the deadline. A return prepared the day it is due is where mistakes are made.
• Not keeping stock records. Without them, the profit figure is a guess.

Is your bookkeeping in good shape?

Answer these five questions honestly. Two or more "no" answers mean the books are costing you time, money or both.

1. Is your bank account reconciled to the last calendar month?
2. Could you find the invoice behind any entry from last quarter within five minutes?
3. Do you know your VAT position today, not just on the return date?
4. Do you know which customers owe you money and for how long?
5. Could a new accountant take over the books from your records without a month of catch-up?

If the answer to any of them is no, the cause is almost always the monthly routine, not the software or the amount of work.

Frequently asked questions

Is bookkeeping the same as accounting?

No. Bookkeeping records each transaction with its evidence. Accounting turns those records into reports, such as the profit and loss account and the balance sheet. Compliance uses the reports for returns and filings.

Does the law say I must use an accountant to keep my books?

The law sets out which records must exist and how long they must be kept. It does not require a particular person to keep them. You can do the bookkeeping yourself, employ someone or outsource it.

How long must I keep my records in Malta?

Keep them for 10 years. That covers every obligation, so you never have to work out which period applies to which record.

Can I keep my records on software instead of paper?

Yes, but the records must be complete and retrievable, and invoices must be kept in the form in which they were sent or made available. Export and back up the data regularly so nothing is lost if a subscription lapses.

How much does outsourced bookkeeping cost?

My fees start from €150 a month for a sole trader or micro company, and from €250 for a small VAT-registered company. The price depends on the number of entries each month, which includes matching bank lines. Use the fee calculator for an indicative figure.

What if my books are already behind?

Catch-up work is charged separately, at €50 an hour, with an estimate agreed before starting. Once the books are up to date, the routine monthly fee covers them.