Accounting for small and micro businesses

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

Keeping annual accounts is not only a legal obligation, it enables you to monitor the health of your business by keeping track of receipts and expenses. Companies with limited liability doing business in the EU, whatever the size, have to prepare a set of financial statements and file it with the relevant national business register.

If you are self-employed or if your business is incorporated in a type with unlimited liability, your business is not regulated by EU rules: you should check the rules which have been decided by each Member State.

Simple rules for small businesses

If you are a small company (not more than 50 employees), the financial statements comprise only a balance sheet, a profit and loss account, and a few explanatory notes. A Member State may additionally require an audit and a management report.

Extra-simple rules for micro-companies

Micro-companies are those which have:

• Not more than 10 employees
• Balance sheet total below EUR 350 000
• Net turnover below EUR 700 000

Depending on the Member State where you are located, the extra-simple regime for micro-companies may feature the following:

• Reduced information in the notes to the accounts - any item explained at the foot of the balance sheet need not be explained in the annual report
• Simplified publication of your accounts - they can be sent to a single national authority, such as your tax authority, which publishes them on your behalf
• Simplified layout for the balance sheet and profit & loss statement
• No obligation to calculate year-end accruals and prepayments - except for costs of raw materials and consumables, staff, value adjustments and tax

Even though these simplified rules are permitted by the EU law, not all EU countries apply them.

Dig deeper, country by country: