Understanding Annual Accounts and Who Must Submit Them

Understanding annual accounts, Learn what they are, who must submit them, and why they are essential for transparency and market confidence. Essential info for businesses in Lanzarote Spain.

Understanding annual accounts is vital for any business owner – here’s the perfect guide for you as a business owner in Lanzarote

Understanding Annual Accounts – what are they?

Annual accounts are a set of financial documents that summarize a company’s financial health at the end of the fiscal year. They provide a clear picture of the company’s economic and asset situation, helping to ensure transparency and accountability. The main components of annual accounts include:

  1. Balance Sheet:
    • Shows the company’s assets, liabilities, and equity at a specific date.
  2. Profit and Loss Account:
  3. Details the company’s income and expenses over the year, revealing the profit or loss.
  4. Statement of Changes in Equity:
  5. Reports the changes in the company’s equity throughout the year.
  6. Statement of Cash Flows:
  7. Shows cash inflows and outflows, detailing movements of cash and cash equivalents.
  8. Annual Report:
  9. Provides explanations and additional context for the figures in the other documents.

Who Is Required to Submit Annual Accounts?

In Spain, the following types of companies are required to submit annual accounts:

  • Public Limited Companies (S.A.)
  • Limited Liability Companies (S.L.)
  • Partnerships and Limited Partnerships in certain cases
  • Cooperative companies
  • Branches of foreign companies
  • Companies in formation (if they have started activities)

Submission Process

The company’s directors must prepare the annual accounts, which the general meeting of partners or shareholders must approve. After approval, the accounts must be filed with the Companies Register corresponding to the company’s registered office within one month of approval, and no later than six months after the end of the financial year.

Other entities, such as foundations and associations, might also be required to file annual accounts depending on specific legal requirements.

Submitting annual accounts is vital for maintaining transparency and building trust in the market, allowing investors, creditors, and public administrations to understand the company’s financial situation.

By understanding this and staying informed, you can better navigate the business world. If you need more information, feel free to contact us at Rosenov & Quintero.

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Understanding annual accounts
Understanding annual accounts

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