German Accounting Q&A
What is bookkeeping?
Bookkeeping is the factually organised and complete recording of all business transactions of a business on the basis of receipts.
Who is obliged to keep accounts?
Every businessperson (a limited liability company or a corporation is always a businessperson) is obliged to keep books and to use them to record their commercial transactions and the position of their assets in accordance with the principles of proper accounting.
What is required for bookkeeping?
Every activity that changes the company’s assets and liabilities, leads to cash receipts or cash payments, represents a loss of value (expense) or an increase in value (income) is a business transaction. Each business transaction must be based on a document that provides information on the transaction, date and amount. Payments are recorded via the bank account linked to the accounting software. All other documents (such as incoming invoices and outgoing invoices) are imported into the accounting software in digital form.
What are financial statements?
The annual financial statements consist of a balance sheet and a profit and loss account. Some companies must add notes to the annual financial statements. The balance sheet is a summarised comparison of assets and liabilities in the form of accounts. The profit and loss statement is a summarised list of the profit and loss accounts. The profit and loss accounts are sub-accounts of the capital account. The balance sheet and income statement are therefore fundamentally interrelated.
What publicity obligations exist?
The annual financial statements must be published in the company register and can be viewed by anyone. Micro-corporations only have to file the balance sheet.
What deadlines must be observed?
The annual financial statements must be prepared by the legal representatives in the first three months of the financial year for the previous financial year. Small corporations have six months to do so.
The annual financial statements must be adopted within the first six months of the year following the balance sheet date. Small corporations have eleven months to do so.
They must be published in the company register no later than one year after the balance sheet date.
The tax returns of corporations must be submitted no later than seven months after the end of the calendar year. In the case of tax representation (e.g. by us), the deadline is extended to February of the following year.
Which tax returns are required for the company?
Corporations must submit a corporation tax return, a trade tax return and, as a rule, a VAT return. In addition, the annual financial statements must be submitted to the tax office in the form of an electronic balance sheet.