Annual financial statements

Qualified annual financial statements for transparency and a basis for decision-making

The preparation of annual financial statements is the supreme discipline of any tax consultant or auditor, because a great deal depends on the compilation of the net assets, financial position and results of operations.

Preparation of the commercial balance sheet

The commercial balance sheet consists of a balance sheet, profit and loss account and, if necessary, notes.

Preparation of notes

Depending on the size and legal form of the company, the notes are an integral part of the annual financial statements. Under certain circumstances, the notes must be published in the electronic Federal Gazette as an integral part of the annual financial statements (if necessary, with the use of disclosure exemptions).

Support with the preparation of a management report

A management report must be prepared in particular by medium-sized and large corporations within the meaning of Section 267 HGB. The precise requirements for the preparation of a management report are set out in Section 289 HGB and DRS 20. DRS 20 specifies the principles for group management reporting. The Institute of Public Auditors in Germany is of the opinion that these principles should also be applied to management reporting in the annual financial statements (not just the consolidated financial statements).

Preparation of the tax balance sheet

As a rule, a reconciliation is made from the commercial balance sheet to the tax-relevant profit. If there are particularly large differences between the tax balance sheet and the commercial balance sheet in an annual financial statement, it may be advisable to prepare a separate tax balance sheet.

Publication of the annual financial statements in the company register

It is not mandatory to publish the complete annual financial statements. There are numerous simplifications for the publication of annual financial statements. For example, small corporations do not need to publish a profit and loss account. Medium-sized corporations can, for example, make use of a simplified balance sheet structure.

Preparation of income statement in accordance with § 4 para. 3 EStG

Self-employed persons and tradespeople who are not required to prepare a balance sheet may calculate their profit using a cash basis. Profit is determined here based on cash flows, i.e. income and expenditure.