Among the array of obligations that regulations impose on entrepreneurs, the need to prepare financial statement definitely stands out. It’s a document that may seem complicated to many. Especially, if you plan to open LLC, which we wrote here about, this article is must read for you.
So, let’s see what it consists of and what it actually looks like, providing the very most important information on a platter.
What exactly is this statement?
A financial statement is a document that presents the finances of a company, containing information about its assets and incomes. It contains data from a specific period, usually a year. The key principle of its preparation is the credibility and reliability of the data, but there are other rules to follow.
And what does it consist of?
In order for the statement to serve its purpose, it must not lack any key data.
The introduction to the financial statement must include:
- The name and address of the company,
- the period covered by the statement,
- the date of the document,
- clear information on whether the financial statement contain aggregate data if the enterprise consists of multiple business units,
- information about the planned continuation of the business, and any threats to it,
- description of the principles and methods used in the preparation of the statement. Including the valuation of assets and measurement of the financial result.
The above are the basic requirements for a statement to be valid. However, its core is the balance sheet and profit and loss account (P&L).
Let’s talk about the aforementioned balance sheet
The balance sheet is a complete list of its assets, receivables, liabilities and funds. Must be prepared as of the closing date of the year.
Assets primarily include:
- fixed assets such as buildings, vehicles, machinery, equipment,
- intangible assets, such as licenses, patents, copyrights, know-how,
- money and securities,
- receivables and short- and long-term investments,
- shares or stocks in other companies.
Liabilities and funds, on the other hand, include:
- capitals and funds, including profit or loss,
- short- and long-term liabilities.
The second most important: profit and loss account.
P&L is a complete presentation of a company’s revenues and expenses for the year for which it is prepared. Thanks to P&L, we know what financial result was achieved.
The balance sheet and P&L are mandatory for any company that must submit financial statement. In addition to these two components, there are also documents such as a cash flow and a statement of changes in equity. However, they are not required for micro companies (up to 2 million EUR of revenue per year), of which there are by far the largest number. Therefore, we will skip them in this article.
Okay, but actually who must and who not?
Financial statement must be prepared by the following companies:
- All capital companies (LLC, joint-stock, simple joint-stock), limited partnership and limited joint-stock partnership,
- A general partnership in which a legal entity is a partner,
- Other companies that exceeded 2 million EUR of revenue in the previous year,
- Other companies that have decided to keep full accounting ledgers instead of simplified ledgers.
Be timely…
The entire financial statement “adventure” is divided into three stages, which, with deadlines, are as follows:
- Preparation of the statement and its signatures. Signatures from the person preparing the report and representing the company are required – deadline of 31st March,
- Approval of the statement by shareholders – deadline of 30th June,
- Submission of the statement to the court registry (KRS) – the deadline is 15 days since the date of approval (item 2).
Importantly, the financial statement must be prepared, signed and filed electronically. Of course, you can also prepare it for yourself in paper form. However, such statement cannot be submitted to the KRS. It will therefore remain just for your purposes.
So in conclusion. What happens if you fail to meet this obligation?
The obligation to submit financial statement is taken seriously. Delay in submitting this document can result in the following consequences:
- prison sentence (up to 24 months),
- fine,
- coercive proceedings (summons to file a statement within 7 days under penalty of a fine or dissolution of the company),
- Dissolution of the company and deletion from the National Court Register,
- probation supervision.
The consequences of not filing a statement or not doing it on time can be really serious. Therefore, it is better not to take this duty lightly and ensure that everything is done correctly and on time. Confidence in the fulfillment of this, as well as other obligations, is guaranteed by a professional and reliable accounting office.
So, to sum up
Despite this wealth of information, we hope the entry has lightened the subject somewhat. Our goal was as important as the subject of this article itself. Understanding this “mechanism” is really of considerable value to any entrepreneur.
If the responsibilities described above apply to your company, don’t act alone. Preparing the statement in accordance with the regulations is a challenge that requires a lot of knowledge and experience. Be calm and confident and leave it all to us. We will do everything right, and you can focus on developing your own business.
