Financial statement: a financial summary of the year

The balance sheet shows the financial situation on the day of the financial statement, including such information as the business’s assets and liabilities. The income statement shows how the business’s profit or loss has formed. For comparison, the financial statement also includes figures for the previous financial year.

Notes on the accounts complete the statement, and these documents give an accurate picture of the business’s financial state. The size of your business has an impact on what kind of notes the financial statement should include. Small and micro enterprises need to supply fewer notes than large companies.

Under the Accounting Act, a business must compile a financial statement within four months of the end of the financial year. The business’s officers always sign the financial statement. A financial statement is an important document, which you will need for taxation but also loan and licence applications.

If you are a sole trader, a financial statement is not always compulsory, but in practice you too have to gather all the same data and calculations for your tax return.

When must a financial statement be submitted to the Trade Register?

Most companies need to submit their financial statements to the Trade Register maintained by the Patent and Registration Office. The financial statements in the Trade Register are public.

However, sole traders, partnerships and general partnerships only need to provide financial statements in certain circumstances. Sole traders rarely need to do so.

Audits: who has to do one?

An audit is a statutory duty performed by an auditor whom the business chooses.
It is generally mandatory for all businesses obligated to keep accounts.

An audit report contains a statement on whether the financial statement and possible annual report contain sufficient, accurate information about company operations, and whether the annual report and financial statement contradict each other.

With some exceptions, a business must appoint an auditor if it meets at least two of the following conditions for both the last financial year and the one before that:

• The final sum of the balance sheet exceeds €100,000.
• Turnover exceeds €200,000.
• The company has employed three people on average.

Note, however, that the articles of association may require an audit, even if the conditions above are not met.

A sole trader does not need to hire an auditor. By contrast, audits are obligatory in limited liability companies, limited partnerships, partnerships and cooperatives, if the aforementioned limits are exceeded. An auditor with the HT or KHT qualification must be hired.