Annual accounts and accounting books are fundamental documents for any company as they reflect its financial, economic and heritage situation in a given period. That is why it is essential to know everything you need to know in order to comply with legal obligations and to have adequate financial management.
In this article, we explain everything you need to know about annual accounts and accounting books, from their definition to the form of presentation and legalisation.
What are the annual accounts and accounting books?
Annual accounts and accounting books are accounting documents that record all economic and financial transactions in a company for a given period. These documents reflect the financial, financial and economic situation of the company, and are necessary to comply with fiscal and commercial obligations.
The main documents that make up these are:
- The daily book: where all the company’s accounting operations are recorded, ordered chronologically.
- The ledger: where the company’s accounts are grouped, reflecting the company’s balances.
- The balance sheet: which reflects the company’s assets situation at a particular time.
- The loss and profit account: which reflects the company’s revenue and expenses in a given period.
- The status of changes in net assets: showing the evolution of the net assets of the company in a given period.
- The state of cash flows: reflecting cash flows generated and used by the company in a given period.
Why are annual accounts and accounting books important?
They are important for several reasons:
- They are necessary to comply with fiscal and commercial obligations.
- They provide insight into the financial, economic and heritage situation of the company at a particular time.
- They help financial decision-making as they provide information on the company’s income, expenditure and profitability.
- They are a useful tool for the financial management of the company, as they enable rigorous control of accounting transactions.
What are the deadlines for submitting annual accounts and accounting books?
Businesses have a maximum period of 3 months from the end of the financial year to present them on the Register of Trades. The financial year usually coincides with the calendar year, but it can be different if it is established in the company statutes.
In the case of companies with a different fiscal year, the period begins to count from the end of this exercise. In both cases, if the company does not submit its accounts within three months, it will incur a financial sanction. The amount of this sanction is established in the Trade Code and is based on the amount of capital or revenue.
How are the annual accounts and accounting books presented?
Annual accounts and accounting books are presented in the Mercantile Register in a standardised format established by mercantile regulations. These documents must be accompanied by a number of documents, such as the balance sheet, the management report and the proposal to implement the result.
In addition, the annual accounts must be approved by the General Board of Accionists or by the company’s administrative body before their presentation in the Mercantile Register.
What are the consequences of not presenting annual accounts and accounting books?
Failure to submit annual accounts and accounting books within the established deadline may lead to economic sanctions and the impossibility of carrying out certain operations, such as applying for subsidies or taking part in public tenders. Furthermore, the lack of transparency in the financial management of the company may adversely affect its reputation and credibility.
Furthermore, not submitting accounts in time may make it impossible to access funding, as banks and other lenders usually require up-to-date financial information before granting credit. Furthermore, if the company has shareholders or investors, they may lose confidence in the company’s management and take legal action. Finally, in some cases it could lead to criminal proceedings for fraud or money laundering.
In conclusion, annual accounts and accounting books are fundamental documents for any company as they reflect its financial, economic and heritage situation in a given period. It is important to know what is necessary about annual accounts and accounting books in order to meet legal obligations and have adequate financial management.
In this article, we have explained what are, why they are important, the deadlines for their submission and the consequences of not submitting them. Remember that good financial management is key to the success of your company, and annual accounts and accounting books are a fundamental tool for this.
Our team will advise you on everything you need to know about annual accounts and accounting books. We can assist you in drawing up financial statements and annual accounts, understanding the accounting concepts and principles and complying with the tax obligations of companies and others. Contact us today for a first query. We hope to be able to help him with all his accounting needs.