The accounting obligation is the obligation of a company to have to draw up a balance sheet. Not every company is to create a balance must: it depends on the legal form of the company, from sales and activity of the company on whether it is required to draw up a balance sheet.
Accounting obligation, what is it?
According to deluxesurveillance, the accounting obligation is laid down in the Commercial Code (Section 266 HGB), in tax laws and in the Balance Sheet Modernization Act. Different requirements apply to the balance sheet, depending on the legal form and the size of the company. The accounting obligation is the obligation of a company to have to prepare annual financial statements consisting of a balance sheet, profit and loss account and possibly an appendix with explanations. The annual financial statements must also contain all assets, debts, prepaid expenses and expenses and income of the company, unless otherwise stipulated by law. An annual financial software can assist you in the preparation.
The requirements for a proper balance sheet are laid down in the Commercial Code. In tax law and in practice, special regulations apply to the determination of profits, so a tax balance must also be drawn up in some cases. Current efforts at EU level provide for simplifications for smaller GmbHs and GmbH & Co. KG.
Who has an accounting obligation?
The accounting requirement depends on the legal form and size of the company . The law distinguishes the legal forms
- Sole traders and freelancers
- Partnerships with unlimited liability to which the general partnership (OHG) , the civil law (GbR) and the partner company (PPA) include
- Legal forms with limited liability such as the limited liability company ( GmbH ), the limited liability company ( UG ) and the GmbH & Co. KG .
Freelancers such as doctors, tax consultants, lawyers, journalists or management consultants are generally not subject to accounting requirements. You do not have to draw up a balance sheet, you just have to submit an income and surplus account to the tax office as part of your tax return .
As a sole trader fully liable merchants and small businesses apply. They must be accounted for if the annual turnover is more than 600,000 euros or the annual profit is more than 60,000 euros . The accounting obligation is mainly based on the applicable tax laws. If the tax office does not require the submission of a balance sheet, it is sufficient to prepare an income-surplus-account.
Partnerships, to which the OHG and the limited partnership (KG) belong, are subject to accounting. However, you are not obliged to publish the balance sheet or the profit and loss calculation in the Federal Gazette.
Forms of company with limited liability such as GmbH, GmbH & Co. KG and Limited are obliged to draw up a balance sheet, because the legislature wants to better protect creditors from these limited liability companies. Strict accounting rules apply to these companies. The balance sheet must be published in the Federal Gazette, explanations are required for the balance sheet and the profit and loss account . Depending on the size of the company, the balance sheet must be certified by an auditing company.
Accounting obligation: creation of a balance sheet
How is a balance sheet structured? A balance sheet is a financial statement based on a company’s inventory. This inventory is recorded as part of an inventory (counting, weighing, measuring). The balance sheet shows the amount of (fixed) assets and debts (total liabilities) in the company on a key date. This key date is the end of a financial year. Depending on when business activity started, a financial year can also end in the middle of the calendar year. The values that were set as of the balance sheet date naturally change during ongoing business activity.
If a position in the balance sheet changes, this leads to a change in at least one other position. This is the principle of double-entry bookkeeping : no entry without an offsetting entry . The balance sheet shows the relationship between the assets and liabilities of a company at the beginning and the end of a financial year. It is a bilateral account, on the left side are the assets as forms of asset and asset accumulation of a company, on the right side are the liabilities as sources of wealth and capital building of a company.
The assets represent the use of funds and investments of a company, a distinction is made between fixed assets and current assets . The liabilities provide information about the source of funds and financing of the company, they are divided into equity and debt . Both sides of the balance sheet must be balanced, assets and liabilities must be the same amount. This is where the name “balance sheet” comes from – the values have to be balanced.
In addition to fixed and current assets, active deferred income is one of the assets. In addition to equity and debt capital, liabilities include deferred income. While the assets represent the pure assets of a company, the liabilities include not only equity but also debts as outside capital. The prepaid expenses, as they are listed under assets and liabilities, include prepayments in the old year for expenses and income in the new year. How extensive a balance sheet has to be, depends on the size of a corporation.
The Chamber of Industry and Commerce has a leaflet on the subject of accounting and accounting obligations for trades people which also explains some important points.
With a balance sheet template, you can enter the numbers in the prepared document and update them if necessary. This saves time and you can be sure that all mandatory information is included in the balance sheet.
The balance sheet analysis for companies with an accounting obligation
Of course, drawing up a balance sheet mainly serves to meet legal standards. But accounting also has a practical value: stakeholders can use a balance sheet analysis to get an impression of the company’s success and the development of a corporation . There are different approaches to performing a balance sheet analysis for companies that are required to report. Depending on the question:
- Balance reading
- Time comparison
- Key figures
be important. Simply reading the balance sheet gives an impression of the funding and liabilities of a company. In a time comparison, outsiders can immediately see how the company’s assets are developing. If you determine key figures , then you can put certain parameters in relation and thus get even more detailed insights. Internal restructuring can also be seen on the balance sheet. For example, it is easy to see when a company is parting with buildings. For example, the consolidation course of a department store chain can be made clear via the balance sheet: Fixed assets in the form of land are falling.