Accounting and Financial Statements
First of all - it is advisable to use professional accountants and accounting companies in doing your business’s accounting activities. Since accounting is a field of operation that requires a vast amount of up-to-date information on taxation, employer payments etc. you should consider hiring an expert to do Your calculating. Professional accountants may alsotake care of payroll computation and payroll accounting and help in cash-flow planning. Most of accounting firms can also guide You through establishment procedures when starting a company, as well as all obligatory reporting issues such as tax reports etc.
You can search for Authorized Accounting Firms in Finland from here.
All companies are obliged to keep accounts. Day-to-day accounting is based on documents born from business. This is why You as an entrepreneur are obliged to keep and store all accounting records - meaning invoices, receipts, payslips etc proofs of transactions, also with the authorities and other officials. There are also rules and regulations to how long You must store the records. Ask more details from Your accountant.Accounting can be done single-entry or double-entry. Entrepreneur professionals may use single-entry bookkeeping if they so wish. This is essentially the recording of just the business's income and expenditure. All other forms of enterprise must use double-entry book- keeping. This means that every business transaction is recorded in two accounts, i.e. in a debit account and a credit account.
A business's accounting period is normally 12 months. The first accounting period may be longer than 12 months but can never exceed 18 months. Also, the first accounting period may be shorter than 12 months. Also, a business's accounting period does not have to be a calendar year, unless you are a entrepreneur professional using single-entry bookkeeping.
Financial statements and annual report are created after the end of company’s accounting period. Financial statements for a small business include a profit and loss account, a balance sheet and the notes to the financial statements. All these documents should be according to formal requirements of the Finnish Accounting Act, the Finnish Accounting Decree and Community Law. The board of a company or co-operative, the active partners of a partnership or a sole trader accept the financial statements and annual report with their signatures. If the business has an auditor, (s)he will check the bookkeeping and the governance of the company, and (s)he will write an auditor's report.
In a limited company, the shareholders ratify the financial statements and annual report in the general meeting or with a written document. In a co-operative, the members ratify the financial statements and annual report in the general meeting or with a written document. In a partnership, a formal meeting is not required, as the financial statements are signed by the active partners. The same applies to sole traders.
Obligation to submit the financial statements for publishing by the Trade Register varies by type of business. The Tax Administration forwards the financial statements (with the enclosures) submitted by organisations using the tax return form 6 B to the Trade Register. Please note that you have to fill them in either in Finnish or in Swedish. All financial statements submitted to the PRH are public documents, and can be purchased on Virre Information Service (Financial statements search).
Businesses which must always submit their financial statements to the Trade Register:
• limited liability companies and public limited companies
• co-operatives and co-operative banks
• insurance companies, mutual insurance companies, and corresponding public companies
• insurance associations
• savings banks
• mortgage societies
• European economic interest groupings and European companies
Businesses which have to submit their financial statements to the Trade Register, if certain requirements under the law are met:
• private traders
• general partnerships, and limited partnerships
• non-profit associations, and economic associations
• branches (They normally have to file their financial statements.)
These companies submit, when necessary, their financial statements directly to the Trade Register.
Read more about the financial statements from Patent and Register Office’s webpage.
General partnerships, limited partnerships, limited companies and co-operatives are required to have regular audits. Sole traders and entrepreneur professionals do not need to appoint an auditor.
According to the Finnish Audit Act, an auditor does not need to be appointed in small businesses, if only one of the following has been fulflled in the last accounting period and the period that immediately preceded it:
1) the total sum of the balance sheet exceeds EUR 100,000
2) net sales or the corresponding income figure exceeds EUR 200,000 or
3) on average, there are more than three employees.
A provision concerning the use of an auditor can be included in the articles of association, regulations or memorandum of association for a new enterprise, even when the law does not require the use of an auditor. However, if you do not wish to appoint an auditor, there is no point in including provisions about the use of an auditor.
Read more from the pages of Ministry of the Economy and Employment.