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Accounting and Registration Obligations

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Records required

The trade standard states that the following accounting books must be maintained: 

  • Inventory Book and Annual Accounts: the first page must be the detailed opening balance sheet of the company. The trial balance will be redacted quarterly, at least. The closing inventory at the end of the fiscal year and the annual accounts shall also be entered.

  • Journal: this will record the operations relating to the business's activity on a day-to-day basis. However, the combined entry of all the totals of operations for periods of no longer than a quarter will be valid, if its detail appears in other concordant books or registers, in accordance with the nature of the activity in question. 

Article 27 of the Code of Commerce establishes that businesspersons will present the books that they are obliged to keep to the Trade Register in the place of their registered office, so that, before their use, diligence is included on the first folio of each, and the Register's stamp is included on every page of each book. In the event of a change of address, the legalisation carried out by the original Registry shall remain fully valid.

However, accounting records and entries may be made following any suitable procedure on sheets that must then be correspondingly bound to create the required accounting books, which must be legalised within four months from the close of the fiscal year.

At fiscal year-end, the businessperson must elaborate the company's annual accounts, which must be redacted clearly and show a faithful image of the business's assets, financial situation and profits and losses, in accordance with legal dispositions. For this purpose, when accounting for operations, the business must refer to its economic reality, and not just its legal form.

The Annual Accounts, governed by article 34 of the Code of Commerce, will include the following documents, which comprise a unit:

  • Balance Sheet , which will separately show assets, liabilities and net worth. Assets shall include, and distinguish between, fixed or non-current assets and current assets. Liabilities shall distinguish between non-current liabilities and current liabilities. The net worth must differentiate between the equity of the remaining items that comprise it, at least.

  • Profit and loss account , which will record the results of the year, duly separating the income and expenses attributable to it, and distinguishing the operating results from those that are not.

  • Statement reflecting changes in net worth for fiscal year , which will have two parts. The first part will exclusively reflect income and expenses generated by the company's activity during the fiscal year, distinguishing between those recognised in the profit and loss account and those directly recorded in the net worth. The second will contain all of the changes to net worth, including those deriving from transactions carried out with partners or owners of the company who are acting in said capacity. It will also detail adjustments to net wealth due to changes in account criteria and error correction.

  • Cash flow statement will show, duly ordered and grouped by categories or types of activities, the collections and payments made by the company, in order to report on the cash movements produced in the year. 

  • Report , will complete, expand and comment on the information contained in the other documents that make up the annual accounts.

The Third part of the General Chart of Accounts, approved by Royal Decree 1514/2007, of 16 November, contains the rules for elaborating Annual Accounts.