ENTREPRENEURSHIP

All about financial statements

Table of contents

What exactly do financial statements mean and what should you disclose in the financial statements? Read more about it here.

Companies such as bvs, nvs and cooperatives have to file financial statements with the Chamber of Commerce every year. But what exactly do financial statements entail and what do you have to show in them?

What is a financial statement?

A financial statement is an overview of the entire financial situation of a company for a given financial year. Depending on the size/qualification of a company, this can be on a commercial or tax basis. With financial statements, a company provides more information on, for example, financial development and the financial position of a company.

If the company is operated in one of the above legal forms, the company is obliged to file financial statements with the Chamber of Commerce. Depending on the classification based on the legal size criteria, the minimum type of financial statements to be filed is determined. For larger companies, the financial statements form part of the annual report, in which the company's annual statements are disclosed.

Good to know: the balance sheet and profit and loss statement is not the same as the financial statements.

What is the difference between a financial statement, balance sheet and profit and loss statement?

As indicated, a balance sheet and profit and loss statement are not the same as financial statements. However, they are part of financial statements. Added to this are the notes to this balance sheet and profit and loss statement.

Every entrepreneur is allowed to prepare their own financial statements. However, they must comply with legal requirements.

The balance sheet

So a balance sheet is part of the financial statements. The balance sheet shows your activa ( assets, debit side) on the left and all your passiva (liabilities, credit side) on the right.

Activa are all the assets of your business, i.e. the premises, inventory, stocks, cash in hand and debtors. Passiva are the things you used to pay for the assets, i.e. your debts to the bank, equity, salaries of your employees and creditors.

Profit and loss statement

A profit and loss statement shows all revenues and expenses incurred by a company from a given period, usually taken over a financial year. The difference between revenues and costs is the profit earned. Or if costs exceeded revenues, the loss incurred.

Whereas the balance sheet and profit and loss statement are part of financial statements, these are also kept during a financial year itself in the case of actively kept accounts. This gives the entrepreneur insight into his figures during the year. Besides the balance sheet and profit and loss statement, financial statements also contain in-depth explanations of these figures. However, it remains a snapshot that is laid down by law.

Legal size creteria

What financial data a company must publish depends on the legal size criteria. Depending on net turnover, assets and the number of employees within the company, it falls into one of four categories with certain obligations. These categories are:

Micro
Small
Medium
Big

Below is an overview with the criteria for each category.

	Value Activa (assets)	Turnover (net)	Employees
Micro	< € 350.000	< € 700.000	< 10
Small	€ 350.000 – € 6.000.000	€ 700.000 – € 12.000.000	10 – 50
Medium	€ 6.000.000 – € 20.000.000	€ 12.000.000 – € 40.000.000	50 – 250
Big	> € 20.000.000	> € 40.000.000	> 250

Compulsory components of financial statements

Component	Micro	Small	Medium	Big
Limited balance sheet	N/A
Abridged balance sheet and notes		N/A
Simplified balance sheet			N/A
Simplified profit and loss account			N/A
Executive report			N/A	N/A
Detailed explanation			N/A	N/A
Auditor’s statement			N/A	N/A
Number of profit shares			N/A	N/A
Statutory regulation and explanation profit appropriation / loss recognition			N/A	N/A
Comprehensive balance sheet				N/A
Comprehensive profit and loss account				N/A
Special rights (regarding management control)				N/A
Branch offices, names and countries				N/A

When do you have to file financial statements?

Financial statements must be filed within 12 months of the end of the financial year. This seems more than enough time. However, there may still be factors influencing this. For example, at the time of incorporation, the company's deadlines for preparing and approving financial statements are often already laid down. In addition, once financial statements have been approved, or determined, they must be filed with the Chamber of Commerce within 8 days.

Also important to note: the financial statements are often also the starting point of the corporate income tax return. Without postponement, these must be received by the Tax Office by 1 June.