Annual accounts: what they are and how they are filed

If you are a business owner, have a company, and are involved in business management, you will know that the financial year does not end on the last day of the calendar. The real close takes place when the annual accounts (cuentas anuales) are filed with the Commercial Registry. This process is an important legal obligation that makes the company’s financial health public. What documents make up the annual accounts? How does filing with the Commercial Registry work?

What are annual accounts?

Annual accounts are much more than mere accounting documents; they are a financial X-ray of a company at the close of each financial year. They reveal the company’s financial position and net worth while providing essential information on its capacity to generate resources during the period under review.

Companies must prepare them at the close of the financial year in order to reflect their financial position and the results obtained during the period. These accounts include the balance sheet, the profit and loss account, the statement of changes in equity, the cash flow statement, and the notes to the financial statements (memoria).

What documents make up the annual accounts

• Balance sheet: this document shows the company’s financial position at a given point in time, detailing assets, liabilities, and equity. Assets are classified as current and non-current, as are liabilities, thus providing a clear view of both short-term and long-term resources and obligations.

• Profit and loss account: this reflects income, expenses, and the result for the year, which may be a profit or a loss. This statement shows how the operating, financial, and extraordinary results have been generated. It offers a perspective on the company’s operating performance.

• Statement of changes in equity: this financial statement details the changes in the company’s equity over the financial year, including capital issuances and redemptions, the distribution of dividends, and reserves.

• Cash flow statement: essential for understanding how cash has evolved during the current financial year. It is divided into operating, investing, and financing activities. It provides a clear view of the company’s capacity to “generate cash.”

• Notes to the financial statements: these complement and expand on the information presented in the preceding financial statements. They include details of the company’s accounting policies, the measurement criteria applied, and additional breakdowns of certain line items. They may also include information on the economic context and the risks the company has faced during the period.

Why are annual accounts important?

Annual accounts are fundamental for complying with the legal and tax obligations of visibility and transparency in business. Once filed with the Commercial Registry, they become available to anyone who wishes to consult them.

In this way, they are available to any company or person that is going to deal with our company and wishes to find out beforehand about the state of our financial health.

For example, an investor interested in strengthening the company, a bank from which we are requesting a loan, a supplier or partner with which we are going to sign a strategic alliance, or even a major client wishing to verify whether we are a company it can trust.

Who is required to file annual accounts?

All commercial companies, including limited liability companies (S.L.), public limited companies (S.A.), and partnerships limited by shares (S. Com. por A.), are required to file their annual accounts with the Commercial Registry of the province in which their registered office is located.

This obligation also applies to foreign companies operating in Spain.

How are annual accounts filed?

Before filing its annual accounts, the company must close its accounting year, which usually ends on December 31 of each year. The documents making up the annual accounts must then be prepared: the balance sheet, the profit and loss account, the statement of changes in equity, the cash flow statement, and the notes to the financial statements.

The annual accounts must be approved by the company’s general meeting of shareholders. This step is essential. Without such approval, the accounts cannot be filed.

The law provides that the general meeting must be held within six months following the close of the financial year in order to approve the accounts. In other words, they may be approved up to the end of June of each year.

Once approved, a certificate of the annual accounts including a resolution of the general meeting is required. This certificate must be signed by the company’s director or directors. It is normally signed at the meeting itself.

For filing purposes, it is also necessary to complete the Commercial Registry’s official form, which varies according to the type of company, accompanies the annual accounts, and includes additional information on the company and its management.

The accounts must be filed electronically through the channels established by the Commercial Registry. Filing must be done online, using the digital certificate of the company or of its legal representative.

Lastly, if the Commercial Registry finds errors or inconsistencies in the documentation submitted, it will notify the company so that it can correct them within a specified period.

When are annual accounts filed?

These are the key dates:

• By March 31: preparation of the annual accounts.

• By April 30: legalization of the accounting books.

• By June 30: submission of the annual accounts to the general meeting.

• By July 30: filing of the annual accounts with the Commercial Registry, one month after their approval by the general meeting.

Documentation to be filed with the Commercial Registry

The required documentation includes:

• The annual accounts.

• Certificate of the resolution of the general meeting.

• The management report and the audit report (where applicable).

• Non-financial information statement: if certain requirements are met, there is an obligation to file an additional statement covering environmental, social, and personnel management matters. This is usually limited to large companies.

• Declaration identifying the beneficial owner or owners.