Checklist for the Annual Financial Statements: What You Need to Know

Do you want to prepare your annual financial statements for your tax adviser? Or are you simply looking to understand the topic better? This checklist explains what goes into annual financial statements!

The term "annual financial statements" refers to the correct closing of the accounts for a financial year. The precise scope of work depends on your status as a business owner:

- For freelancers (members of the liberal professions) and sole traders running a small business (Kleingewerbe), it is sufficient to determine profit using a cash-basis income statement (EUER — Einnahmenüberschussrechnung). If you are a trader, it is best to ask your Guhr Steuerberatung adviser which commercial and tax law rules apply to your business!

- Most traders and limited companies are subject to the obligation to prepare a balance sheet. The annual financial statements comprise the balance sheet and the profit and loss account. Depending on the legal form and volume of business, additional obligations may apply.

Both forms of annual financial statements require various fundamental preparatory steps. These include ensuring that your bookkeeping for the financial year is complete. Whether you use a simple record of income and expenditure or double-entry bookkeeping: you must record all transactions in your financial accounts!

In addition, the legislature requires you to retain supporting documents. Keep all receipts and documents — whether in paper or digital form — in an orderly manner. Do you lack the resources for bookkeeping? Outsource it to Guhr Steuerberatung!

With double-entry bookkeeping, the preparatory steps go considerably further. It is important, for example, that you close all sub-accounts and main accounts in the bookkeeping system. This is followed by the complex process of preparing the balance sheet.

Double-entry bookkeeping, a balance sheet, and a profit and loss account: if you are one of the self-employed individuals or business owners subject to the balance sheet obligation, you are faced with a multifaceted and demanding task.

This annual financial statements checklist sets out the key steps:

- Stock-take (Inventur): In the stock-take, you establish the actual state of your assets. As a retailer, for example, you record your stock of goods. The stock-take covers many other areas as well, such as office equipment, the vehicle fleet, and cash tills.

- Creditworthiness assessment of debtors: Most companies have outstanding receivables. If the probability that debtors will settle these receivables decreases, you must make an individual or general value adjustment.

- Depreciation: Your fixed assets lose value over time. The useful life of the various asset items plays a central role here. Determine the precise figures yourself or leave this to your tax advisers!

- Accruals-based profit calculation: The annual financial statements should provide a well-founded picture of the respective financial year. This requires you to allocate income and expenditure to the correct financial years as precisely as possible. Accruals and deferrals (Rechnungsabgrenzungsposten) and the setting up of provisions (Rückstellungen) are invaluable tools here.

- Setting up reserves: As part of the annual financial statements, you also establish any statutory reserves required by law. At the same time, you have the option of including voluntary reserves in the balance sheet. Seek advice from your Guhr tax experts!

Preparing the annual financial statements demands time, experience, and expertise. By entrusting this task to your Guhr Steuerberatung, you relieve yourself of a considerable burden. You can also outsource your ongoing bookkeeping to your tax advisers. Put together a tailored service package with your Guhr Steuerberatung!