For any business the accounting procedure is the same; it is mandatory to keep records whatever the company size is. Although the rules are essentially the same for everyone, there are some disparities between the obligations of small businesses companies compared to those assigned to large.
What are the general obligations?
The requirement is that all businesses must submit a balance sheet to the Tax Office every year for its exercise. The possibility is left to the company to hold his own accounting or to delegate to a third party. If the latter is chosen, the third party must be a registered chartered accountant. For any reason related to time saving or if the accounts of the company is too complex, it is the best to delegate its accounting to a third party.
It is always very difficult for a company to maintain its accounting and cash while fully busy in its business. Because the list of tasks is rather tedious. For example,
- Recording of all transactions;
- Establishment and classification of billings;
- Assessment of the stock and assets through annual inventory;
- Mandatory keeping of a bank account;
- Preparation of annual accounts;
- Archiving of all accounting over 6-10 years;
- Filing annual accounts including balance sheet, income statement and annex, which presents the document and justify the choices made.
What obligations are specific to small businesses?
To simplify things, small structured businesses are able to present only a simplified income statement, showing the income and expenditure. In the case of micro-enterprises, the annex/notes to the financial statements are not needed. To benefit from this simplified presentation, a company must meet at least two of the following conditions:
- a balance sheet of less than EUR 4 million, a turnover of less than EUR 8 million and / or
- a lower number of permanent employees 50 (in France).
In this way, the simplified balance sheet is limited to the following items:
- The fixed assets;
- Current assets (including inventory);
- Capital;
- Revenues and expenses;
- Provisions ;
- Contingent liabilities.
Regarding micro-enterprises, the requirement is reduced further, which is called a lean accounting.
Do not hesitate to consult the government /regulatory bodies’ website to know the details of these rules.
Accounting or not accounting?
In the case of a large company the question does not arise. Because, the balance sheets of large companies are so complex that the presence of a professional accountant to complete the balance sheet is essential. But it is also the case for the majority of small businesses. First, because they allow the trader to get effective working time, and then because a small company does not rule out complex financial arrangements.
There are many software available for Small Business Accounting. Some of them are:
- Xero
- FreshBooks
- Zoho Books
- Intuit QuickBooks Online Plus
- AccountEdge Pro
- GoDaddy Bookkeeping
- FreeAgent
- One Up
- Wave
- Kashoo
Based on the complexity and volume of transactions, and simplicity to use, choose your Small Business Accounting software.
