Bookkeeping in BiH: Complete Guide for Entrepreneurs (2026)

Everything you need to know about bookkeeping in BiH - VAT, payroll, company formation and the legal framework of FBiH and RS. Practical guide with FAQ.

Quick answer: Bookkeeping in Bosnia and Herzegovina is a legal obligation for every business entity. It covers recording all financial transactions, preparing annual financial statements and staying compliant with the tax rules of FBiH and RS. Without proper bookkeeping you risk penalties from the Tax Administration and the Indirect Taxation Authority (ITA). This guide explains everything a business owner needs to know in 2026.

What Is Bookkeeping and Why It Matters for Your Business

Bookkeeping is the systematic recording of every business transaction: incoming and outgoing invoices, bank statements, cash operations, payroll and fixed assets. In Bosnia and Herzegovina it is not optional. Every legal entity must keep business books and file annual financial statements.

Good bookkeeping is more than compliance. It tells you whether you are actually profitable, which clients pay late, and how much tax you will owe, before the deadline arrives instead of after.

The Legal Obligation

Both entities regulate accounting separately: the Law on Accounting and Auditing of FBiH and the corresponding law of Republika Srpska. Financial statements are prepared in line with International Financial Reporting Standards (IFRS), with simplified rules for smaller entities. Failing to keep books or filing late triggers fines for both the company and the responsible person.

Business Entity Types and Their Accounting Obligations

Limited liability company (d.o.o.) is the most common form. It requires double-entry bookkeeping, annual financial statements and corporate income tax filings.
Sole trader (obrt) has simpler records, but still must track income, expenses and payroll if it employs staff.
Joint-stock company (d.d.) carries the heaviest reporting requirements, including mandatory audit.
Associations and non-profits also file annual statements, even when they run no commercial activity.

If you are choosing a legal form, the accounting burden should be part of the decision, not an afterthought.

VAT in Bosnia and Herzegovina

VAT is regulated at the state level and administered by the Indirect Taxation Authority (ITA/UIO).

The standard VAT rate is 17%. There is a single rate, with no reduced rates.
Registration is mandatory once your turnover in the previous 12 months reaches 100,000 BAM. Voluntary registration below the threshold is possible and often pays off for companies with significant input VAT.
VAT returns are monthly. The return must be filed electronically with the ITA by the 10th of the month for the previous month. A return is due even for months with zero turnover.
VAT refunds are available when input VAT exceeds output VAT, subject to ITA verification.

VAT-registered companies must also keep the KUF (book of incoming invoices) and KIF (book of outgoing invoices) records.

Payroll in Bosnia and Herzegovina

Payroll is one of the most demanding parts of bookkeeping because rates and forms differ between FBiH and RS. In FBiH, for 2026:

Employee contributions: 31% of gross salary (pension 17%, health 12.5%, unemployment 1.5%).
Employer contributions: 5% on gross salary (pension 2.5%, health 2%, unemployment 0.5%), reduced from 10.5% on 1 July 2025.
Income tax: 10% of the tax base, after a personal allowance of 300 BAM per month (higher with dependents).
The minimum net wage in FBiH for 2026 is 1,027 BAM.
Every month the employer files the MIP-1023 form with the FBiH Tax Administration, due by the 15th for the previous month.

You can test any salary scenario with our free gross-net salary calculator for FBiH.

Company Formation in Short

Setting up a d.o.o. in FBiH takes roughly 5 to 7 working days with professional support and involves six steps: choosing the legal form and name, preparing founding documents with a notary, registration at the Municipal Court, registration with the Tax Administration and the ITA, opening a bank account, and registering employees. The minimum founding capital for a d.o.o. is 1,000 BAM. A detailed walkthrough is in our guide to company formation costs in BiH.

Annual Financial Statements

Every legal entity prepares annual statements consisting of the balance sheet, the income statement and the cash flow statement, with notes. In FBiH they are filed with FIA (the Financial Information Agency) at the beginning of the year for the previous year. Medium and large entities are also subject to mandatory audit under the FBiH Law on Accounting and Auditing.

Deadlines matter: late filing means penalties, and banks routinely request the latest filed statements when approving loans.

Tax Reliefs Worth Knowing

Corporate income tax is 10% in both FBiH and RS, one of the lowest rates in Europe.
Reliefs exist for reinvested profit and for employing new workers, under conditions set by the entity laws.
On personal income tax, the personal allowance of 300 BAM per month rises with a dependent spouse and children, which directly reduces the employee's tax.

A good accountant does not just record the past. They plan these reliefs in advance.

Digital vs. Traditional Bookkeeping

Modern bookkeeping in BiH is going digital: electronic fiscalisation, e-filing of VAT and payroll forms, cloud document exchange. For the business owner this means less paper, faster reporting and a permanent digital archive. When choosing an accounting agency, ask how they receive documents. If the answer is "bring the folder once a month", keep looking.

How to Choose an Accounting Agency in Sarajevo

Look for four things: a licence (certified accountants on staff), industry experience, response time, and clear pricing. Indicative monthly prices in Sarajevo:

Business size	Indicative monthly fee
Sole trader	100 to 200 BAM
Small d.o.o. (up to 5 employees)	200 to 500 BAM
Medium d.o.o. (5 to 20 employees)	500 to 1,500 BAM
Larger companies	By agreement

For most small and medium companies, outsourcing to an agency costs significantly less than an in-house accountant, whose salary plus contributions quickly exceed any agency fee.

The Most Common Bookkeeping Mistakes

Cash transactions not recorded in the cash book
Incoming invoices booked late, so VAT deductions are missed
Payroll forms (MIP-1023) filed after the deadline
No reconciliation of balances with customers and suppliers
Missing documentation for expenses, which fails at tax inspection
Ignoring the VAT registration threshold while turnover grows

Every one of these is avoidable with orderly monthly bookkeeping.

FAQ: Bookkeeping in Bosnia

Can a foreign-owned company use a local accounting agency? Yes. Foreign-owned companies routinely outsource bookkeeping, payroll and tax compliance to local agencies. ENS works with foreign clients and reports in English. See our page on accounting services in Bosnia for foreign companies.

Do I need an accountant from day one? Yes. Registrations, the first payroll and VAT decisions all happen in the first weeks of a company's life, and mistakes made then are expensive to fix later.

How much does bookkeeping cost? From around 100 BAM per month for a simple sole trader to 1,500 BAM or more for larger companies, depending on volume, headcount and VAT status.

What documents do I need to keep? All invoices, bank statements, contracts, payroll records and fiscal reports. The safest rule: if money moved, a document must exist.

Bookkeeping in Bosnia and Herzegovina is demanding, but with the right partner it becomes a background process you stop thinking about. If you want your books handled by a licensed accountant and certified auditor, contact ENS for a free consultation.