Making the first step into becoming a small business requires that you take on many new responsibilities. Providing exceptional goods and services takes up most of your time during daily operations. Yet the invoicing and bookkeeping aspects cannot be ignored if you wish to stay in compliance by filing annual returns with the Companies Registration Office (CRO).
Your accountant will be able to keep accurate records with the use of reliable accounting software. You are also required to have financial statements in regards to the health of your small business that will be annexed to your annual returns. These statements give an impartial viewpoint of the financial status of your business in regards to profits, losses, and expenses.
What’s required for financial statements?
Most businesses need to include a balance sheet and their profit and loss account. A director’s report and auditor’s report will also be a part of the financial statements as the documents must be presented at the Annual General Meeting (AGM) and signed by the directors. Any business that fails to present financial statements in their annual returns to CRO will face an offence and have the annual return rejected. In accordance to the Companies Act 2014, these offences will be placed on both the business and the officers of the business as everyone will be liable to a fine that will not exceed €5,000.
It’s a lot of information to get in place for your small business, and it can seem daunting. Keep in mind that you may be able to file for small business exemptions in regards to annexing the full requirements of your financial statements. Your small business has to qualify for at least two of the following three conditions: you have less than 50 employees, your balance sheet does not total more than €4.4m, or your turnover does not exceed €8.8m.
Even if you do qualify for the exemptions and can file abridged financial statements, or no financial statements, to the CRO, you should still perform best practises to keep track of the financial health of your small business. Thorough bookkeeping processes allow you to make timely changes to strategies that will help your operations overcome invoicing and cash flow issues. Some simple accounting tips to keep in mind:
- Keep your business accounts and personal accounts separate at all times.
- If you don’t have an accountant, get accounting software that allows you to manage invoicing and accounts receivables. This software will allow you to have accurate records of your finances when the business experiences profits and losses.
- Even if you are an employee of one, set aside a time to reconcile your bookkeeping records regularly. You will have an easier time auditing records when the information is up-to-date.
Avoid the problems that most startups experience when it comes to filing annual returns and financial reports. The moment you consider starting a business should also be the same moment you figure out your accounting strategies. Avoiding financial statement offences will become a good business discipline whereby you will have an easier time meeting all bookkeeping compliance standards.
