Chile Business Accounting & Commercial Documents: Key Rules

Mandatory Accounting Books and Correspondence

1. What mandatory accounting and correspondence must a merchant keep?
Article 25. Merchants must keep the following accounts and correspondence:

• Journal;
• Ledger accounts (cuentas corrientes);
• Balance book;
• Letter book (copiador de cartas).

How long must business books be kept?

2. Until what point must merchants keep their books?
According to Article 44 of the Commercial Code, merchants must keep their books until the liquidation of all their business is concluded. In the case of the SII, business books must be retained for the entire lifetime of the business.

Key Commercial Instruments

Bill of Exchange (Letra de Cambio)

3. Concept of bill of exchange:
A bill of exchange is a credit instrument that obliges the drawee to pay a certain and determinable sum of money at the time fixed for presentation, either at sight or at a future date, to the beneficiary or to the holder, in accordance with the terms stated in the document.

Promissory Note (Pagaré)

4. Concept of promissory note:
A promissory note is a document to order or nominative issued by a bank, certifying that it has received a certain amount of money from the policyholder, which may be claimed by the beneficiary at any time. A promissory note is similar to a check, with the advantage that the recipient does not need to verify the existence of funds.

Sales Invoice (Factura)

5. Concept of sales invoice:
An invoice is a tax document issued by taxpayers subject to the Sales and Services Tax (IVA) for the sale of tangible movable goods and/or the provision of services, whether taxed or exempt, carried out with any natural or legal person who acquires goods for use, consumption or enjoyment, or who receives a service from the provider.

Copies of an Invoice

6. How many copies of an invoice must be issued, and who keeps each one?
An invoice has four copies:

• Original: held by the client;
• Duplicate (SII internal tax): held by the company;
• Triplicate (tax control): held by the client;
• Quadruplicate (executive control): remains in the company, and may be held by the client.

Sales and Services Receipt (Boleta)

7. Concept of sales and services receipt (Boleta):
The minimum amount required for issuing a receipt (Boleta) is $180. Sales declarations below the minimum maintain the same determination procedure. In the case of issuing a receipt for a daily total of sales below the minimum, the added value must be recorded in the sales book, along with the daily sales. At the end of the period, the total of receipts issued must be declared in the new Form No. 29, registered on line 5, Codes 110 and 111.

Sales receipts must be presented in two copies:

• Seller's original;
• Buyer's copy.

Receipt for Services (Boleta de Honorarios)

8. Concept of EES receipt:
Regarding EES treatments: EES is the remuneration of independent workers who are not under labor subordination and who do not meet predetermined schedules.

Payment Order (Orden de Pago)

9. Concept of payment order:
A payment order is a document issued by the drawer, subject to the provisions of the Commercial Code, requiring payment of a certain and determinable sum in pesos to the beneficiary, to order, or to the bearer, who must sign it, with endorsements and other guarantees if applicable. The parties involved in the creation of the payment order are reduced to a single subscriber, who confirms the document and signs it. The subscriber is then the creditor and is forced to pay accordingly.

10. Requirements for a valid payment order:
For a payment order to have legal validity, it must meet the following requirements:

• Insert the name of the document;
• A certain sum of money to be paid in pesos or foreign currency;
• The date of payment;
• The name of the person to whom payment must be made or to whose order it must be made;
• The date and place of signing;
• The signature of the person issuing the document (the payer);
• Indication of the due date; if none is stated, it is considered payable at sight;
• The content of the payment;
• The signatory. The signatory assumes the same liability as the drawer, and the books issued and paid;
• The place of issue. If no place is indicated, the place of issue is considered to be where the signer's name appears;
• The drawer. Ensure the possibility of paying this drawer, and that the applicable rules of exchange are followed.

Nominative Check (Cheque Nominativo)

11. Concept of nominative check:
A nominative check is one drawn in the name of a specific person or to order, and can only be collected by the named person, unless it is deposited in a bank account in that person's name.

Debit Note (Nota de Débito)

12. Debit note: A debit note is a document issued subsequently to an invoice, amending the amounts shown on the invoice by increasing them.

A debit note increases the amounts of the invoice for the following reasons:

• An increase in the prices indicated on the invoice;
• Collection of any amount where an error was not included in the invoice;
• Charges for interest and late payment arrears on the invoice;
• For any other reason that increases the invoice amounts.

Fourth Copy of an Invoice

13. What is the fourth copy of an invoice?
The executive control copy remains with the company, as does the client's copy. Regularly, or with difficulty, the client may make a cash payment with a copy, so that the provider can otherwise enforce collection.

Quote (Cotización)

14. Quote: A quote is the document used in the negotiation and purchasing process.

There is also a nominal quote for workers whose amounts are entered under social security contributions. This type of contribution is received as a provisional quote in the worker's name, usually monthly, as a fraction of salary or wages.

* Employee or deposited by the employer (through withholding) in a social security system. In this case, the contributions go to the individual account of the worker in the AFP.

Purchase Order (Orden de Compra)

15. What is a purchase order?
A purchase order is a document similar to a note, used to buy goods when a specific supplier is located in the locality, or when suppliers do not offer the product. The formal purchasing department uses it to request goods. It must be clear and specific, as requested.

Guide (Guía de Despacho)

16. What is a dispatch guide?
In the required item No. 55 of Form No. 825, documents are mandatory when goods are transferred and do not constitute a sale.

Order Check (Cheque a la Orden)

17. What is an order check?
The document contains the name and beneficiary, but it may be expressly transferred, as indicated by the order clause. Deleting the clause makes it bearer, allowing circulation through endorsement and transfer.

Requirements for Issuing a Sales Receipt

18. What requirements are needed for issuing a sales receipt?
In general terms, receipts must be issued as follows:

• For sales of tangible movable goods, receipts must be issued at the time of delivery of the goods, whether physical or symbolic;
• For services, receipts must be issued at the time of payment for the service.

Taxes Declared on Form No. 29

19. What taxes are declared on Form No. 29?
The taxes declared on Form No. 29 are the main tax obligations, which are intended to meet the tax liability. Taxes must be paid on capital increases or decreases, and on changes in shareholders.

Cash Payments and Internal Control

20. How should a company make cash payments? What legal characteristics are relevant for internal control?
(Hint: a nominative check indicates the name and RUT of the person to whom the check is granted, along with the invoice number issued.)

Cash payments made by the company must be carried out through a nominative check, and must include the following legal characteristics for internal control:

• Name of the person to whom the check is granted;
• RUT of the person to whom the check is granted;
• Number of the invoice issued for the check.