By WeLex, your efficient accountant in Marbella.
After the start of a new year, it is normal to wipe the sheets clean, but in accounting, this is not possible. Although the accounting year ends – as a general rule, on December 31 – in Spain it is not until July, with the filing of the company tax, when we can finally erase the finished year.
Therefore, the accountant of your company in Spain should work hard at the end of each finantial year in order to start the procedure to close the accountancy books. In general, it is appropriate to point out the existence of three stages of great complexity and precision that constitute the phases of accounting closing and fiscal closure. These are:
1º Accounting closing.
2º Presentation of accountancy books and annual accounts in the Mercantile Register.
3º Presentation of Spanish company tax form.
To better understand its performance today, we are going to focus on accounting closing, and, in subsequent blogs, we will be looking more closely at the presentation of accountancy books and annual accounts in the Mercantile Register and the presentation of company tax.
Accounting closing in Spain
The accounting closing takes place on December 31, except in particular cases, and could be created or modified after that date, but never exceeding the period of presentation of accountancy books and annual accounts (April of the following year). Theoretically, the accounting closing helps us to obtain the losses or benefits of a company, but, in practice, it is a stage of revision, detection of errors, and adjustments.
In order to better understand this stage, we would like to demonstrate the different steps that our tax advisory takes to present an accounting closing that helps the clients to understand, with greater accuracy, the real situation of the company at the end of the year.
Here we show the different steps that must be taken into consideration for the accounting closing of a company:
- Review of the opening entry of the previous year.
- Verify that the cash and bank match the existing balance as of December 31.
- Stock inventory.
- Amortise the fixed assets.
- Reclassify debt.
- Accruals and deferred expenses.
- Valuate financial assets.
- Obtain profit and loss.
- Make the closing entry (December 31) and opening entry (January 1).
Once these steps are completed, the partners and administrators of the Spanish company will be able to obtain the different accounting books – profit and loss account, balance sheet, and trial balance – that will help them to understand the situation of their accounts in greater depth and, in this way, make better decisions. It should be noted that these accounting books must be presented at the Mercantile Registry; this would include the second stage discussed in the introduction and which will be discussed in subsequent blogs.
If you are interested in knowing the real finantial status of your company in Spain– the profits, losses and status of each individual debtor and creditor – do not hesitate to contact WeLex, your efficient accountant in Marbella. We will be happy to assist you!