Due to the current COVID-19 health crisis, the deadlines for the deposit of the annual accounts and the presentation of account books were interrupted until the State of Alarm ended. However, through Royal Decree-Law 19/2020, of May 26, they have been restarted. That is why below we show you how you must legalize these books to later present them before the Mercantile Registry.
1. What are the Annual Accounts?
Annual Accounts are those documents that collect the financial information of a company. These are made up of different documents such as:
- Balance sheet.
- The profit and loss account.
- The statement of changes in equity.
- Statement of cash flows.
- The memory.
Annual Accounts must be presented every twelve months, except in specific cases such as the dissolution of the company, and they must be signed by an administrator who is responsible for the veracity of the data they include.
These make it possible to evaluate, in a global way, the state of the company and also the evolution it has undergone in the last year.
Also, by using your Annual Accounts, you will also be able to compare yourself with your competitors and get an idea of where you stand within the sector.
2. Who is required to present the Annual Accounts?
Companies must submit their Annual Accounts to the Mercantile Registry once a year. These companies are:
- Public Limited Companies (“Sociedades Anónimas”).
- Limited Liability Companies (“Sociedades de Responsabilidad Limitada”).
- Foreign companies with a branch in Spain.
- Limited or General Partnerships.
- Pension funds.
- Any worker who is required to publish their Annual Accounts.
3. New terms for the presentation of Account Books
Based on Royal Decree-Law 19/2020, of May 26th, the deadlines for the presentation of account books are as follows:
- Account formulation deadline: September 1st, 2020
- Account books legalization deadline: October 1st, 2020
- Account approval deadline: November 1st, 2020
- Account deposit Deadline: December 1st, 2020
4. What documents make up the Annual Accounts?
Annual Accounts are made up of different documentation such as:
4.1. Balance sheet
Balance sheets, within the Annual Accounts, are documents in which two types of information are provided:
- Assets: everything that makes up the company’s equity and collection rights. These are the assets of the company.
- Obligations: payments or debts with suppliers, credit institutions, or third parties. This forms part of the liability, which also includes the company’s own funds.
If you subtract these figures and get a positive result, then you have more than you owe (ideal situation). But if, on the contrary, it is negative, you owe more than what you have.
4.2. Profit and loss account
A profit and loss account provides information on the economic result of the company during that year.
And, how is it obtained? You only need to calculate the difference between the income obtained by the activity and the expenses borne.
In your earnings, you must include sales or services, subsidies, and financial income…
In your losses or expenses, you should include purchases, personnel expenses, the acquisition of supplies, and bank expenses…
4.3. The statement of changes in net equity
Shareholders’ equity includes capital increases, dividends distribution, the results of previous years, reserves, grants, correction of mistakes, etc.
It is an item that reflects the operations that occur during the year, but that does not influence the result of the same.
4.4. Statement of cash flows
This document is one of the basic financial statements and reports on variations and cash movements.
In other words, it shows the cash that has been generated and used in the company’s operating, investing, or financing activities.
4.5. The memory
Basically, the memory is a report that completes, extends, and comments on the content of the rest of the documents that make up the Annual Accounts.
This provides additional information about the company.
5. Types of Annual Accounts
The General Accounting Plan establishes four types of Annual Account models, depending on the greater or lesser degree of information they contain and the company size. These are:
5.1. Ordinary Annual Accounts
All companies must present their Annual Accounts, except in these three cases that we will explain below.
In the Annual Accounts it is mandatory to present the five aforementioned documents:
- Balance sheet.
- The profit and loss account.
- The statement of changes in equity.
- Statement of cash flows.
- The memory.
5.2. Abbreviated Annual Accounts
Abbreviated Annual Accounts differ from the ordinary ones, mainly due to their simplicity.
These have a simpler format in which you have to add less information. In fact, in this case, you only have to present:
- Abbreviated Balance Sheet.
- Abbreviated profit and loss account.
- Abbreviated memory.
5.3. SME Annual Accounts
An SME can decide whether to present its Annual Accounts in the ordinary model, a specific version for SMEs or, if it meets the requirements, the abbreviated version of the annual accounts.
5.4. Microenterprise Annual Accounts
Microenterprises can also apply certain criteria in their Annual Accounts, and their version is even more simplified. To be eligible for these models, you must meet some specific requirements.
6. How to present the Annual Accounts?
The deadline is one month from the time they are approved at the Ordinary General Shareholders’ Meeting, which must be held within six months following the end of the fiscal year.
In general, as in most companies the fiscal year coincides with the calendar year, the maximum term will be June 30th of the following year.
6.1. On paper
As it has been always done: the traditional way. For this it will be necessary to go to the Mercantile Registry with the application form, the certification of approval of accounts and all the documents duly completed.
All the forms that must be filled in are available on the website of the College of Registrars.
6.2. On CD or DVD
Another option is to present a file stored on a digital means such as a CD or a DVD. It must contain:
- Instance of presentation (in triplicate).
- Certification of approval of accounts.
- Signed fingerprint certificate.
- CD or DVD containing the Zip file with all the other documentation to be deposited.
6.3. Online
The fastest and most comfortable way to present your Annual Accounts is online. In this case, you will need to send the Annual Accounts in digital format to the website of the College of Registrars.
To do this, you need to be registered and have a digital certificate.
7. Late submissions
What happens if, for some reason, you cannot submit your Annual Accounts on the established dates?
Well, do not worry because as long as you present all the documents before the end of the year, you will not receive any penalty.
8. What happens if there are errors once the Annual Accounts are submitted?
In the event that, once submitted, you realize that there is a mistake in your Annual Accounts, you can correct them; although the process will be different depending on the channel you have used to present them.
- On paper or CD/DVD: you must go to the Mercantile Registry Office with the receipt of the presentation and remove the folders with the errors.
- Online: all you have to do is upload again the correct documents.
To modify the Annual Accounts, you must have the approval of the General Meeting of the company.
Keep in mind that the Annual Accounts are fundamental documents for your company since they give you a point of reference on how your business evolves. Do them every year and analyze them in detail to obtain conclusions that allow you to continue growing at a good pace.
Any doubts?
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