Two different laws mediate payments made by legal business entities and those made by natural persons. The Law on Payment Services regulates all transactions made in dinars while the Law on Foreign Exchange Operations oversees foreign currency transactions.

Both natural persons and legal business entities must create a checking account to make payments in dinars. Payments and fund management will take place on that account in accordance with the Law on Payment Services and the bank contract. Business entities and natural persons may have multiple accounts in the same bank or different banks.

Although cash transactions between business entities are meant to be primarily cashless, there are established guidelines for circumstances and methods when cash payments in dinars are accepted. These same guidelines govern both natural persons and legal business entities.

According to the guidelines, there is no limit to cash transactions for both natural persons and business entities. That is to say, cash payments made from a dinar checking account.

Note that while there are no restrictions to access funds in checking accounts, a legitimate basis must exist for this access.

Payments are always made based on original documentation which can be used to ascertain the payment amount, basis for the transaction, and the purpose of the transaction. Therefore, entities must have a valid basis for making cash payments, such as different types of contracts, resolutions, invoices, etc. If the payment amount exceeds 150,000 dinars a day, the original documents must be made available to the bank.

All cash payments received in the course of business must be deposited into a checking account within seven days. On the other hand, cash paid out of a checking account meant to be used for transactions based on some of the documentation mentioned above may remain in the cash register indefinitely and without limit.

Legal entities may use cash from their checking account to pay net salaries, make rent payments, settle small bills and other such transactions.

Cash received from deposits, daily takings, and other sources must be deposited into a checking account within seven days of receipt.

Cash payments are tracked in a petty cash journal. Based on these records, an accountant will create records in the general ledger.

We recommend consulting with your accountant or lawyer before making any cash payments. That way you’ll be aware of any relevant regulations and tax obligations that may arise.

For instance, on the day rent payments are made, the tenant is obliged to pay tax on lease. If your accountant is made aware of the payment ahead of time, they will be able to calculate the tax burden and you will be able to settle your obligatory payment that same day.

Otherwise, if your accountant is not informed about your actions, they won’t be in a position to correctly advise you. You may find yourself in violation of tax codes which, in addition to the default interest, could result in fines as well.

To conclude — founding members of any business legal entity are not free to baselessly dispose of company assets as if they were personal assets. This includes cash withdrawals from business checking accounts that will be used for private transactions. Any cash withdrawal must be properly documented, and the resulting tax obligations must be settled.