Accounting for small and micro businesses

UK decision to invoke Article 50 of the TEU: More information

You are required by law to keep annual accounts. Limited liability companies of any size doing business in the EU, have to prepare a set of financial statements and file them with the relevant national business register.

If you are self-employed, or if you run an unlimited liability company, such as a sole-proprietorship or a general partnership, your business is not regulated by EU rules. In these cases, you should check the national rules with the authorities in the EU country where your business is established.

Simple rules for small businesses

If you run a small company (not more than 50 employees), in most cases you only need to provide financial statements that consist of a balance sheet, an account of the profits and losses, and basic explanatory notes. Some EU countries may also require an audit and a management report.

Extra-simple rules for micro-companies

A business is considered a micro-company if it complies with at least two of the following criteria over two consecutive years (in some cases EU countries may set lower limits):

• it consists of not more than 10 employees
• has a balance sheet total of less than EUR 350 000
• has a net turnover of less than EUR 700 000

Depending in which EU country your company is established, the extra-simple rules for micro-companies may feature the following:

• Reduced information required in the footnotes to the accounts; any item explained at the foot of the balance sheet won't need to be explained in the annual report
• Simplified publication of your accounts, which only need to be sent to one national authority - such as the tax authority - who will publish them on your behalf
• Simplified layout for the balance sheet and profit and loss statement
• No obligation to calculate year-end accruals and prepayments, except for costs of raw materials and consumables, staff, value adjustments and tax

EU countries currently applying simplified accounting rules