5 things you must know about annual report as an entrepreneur
The deadline for submitting the annual report is approaching fast, which is why we wrote down the major points that every company needs to know about the annual report in Estonia. The annual report can be submitted through the e-Business Register.
1. Every entrepreneur has an obligation to submit an annual report
The Accounting Act states that the purpose of the annual report is to give a true and fair view of the financial position, financial performance and cash flows of the accounting entity. The annual report is mandatory for all Estonian accounting entities, i.e. incl. companies, and the requirements for the form set by law must be observed.
2. The annual report shall be submitted even if no business activity took place during the financial year
The company has no business activities if no transactions took place during the financial year, no changes were made among the shareholders or in equity. This can be stated very easily in the annual report: in the “Breakdown of sales revenue” section, it is necessary to choose either “No economic activity was performed” or “Operating company, but did not gain sales revenue”. The report is based on the assumption that the company will continue to operate and there is no plan to close down the company.
3. The annual report must be submitted in due time each year, i.e. by 30 June at the latest
One financial year lasts 12 months, and the annual report must be submitted to thee e-Business Register six months after the end of the financial year. As a rule, the financial year is the same as the calendar year, so the deadline for submitting the report is the end of June (30 June). If the report is not submitted by the deadline, a public note will be entered in the e-Business Register and a warning will be sent. Failure to do so may result in financial penalties.
4. The annual report is accessible to everyone
The annual report is a public document. Everyone, who are interested in accessing it can do so through the e-Business register. The report is likely to be interesting to investors, partners, clients, competitors, etc. So, it’s important to keep your reports correct if you want your business to be reliable and transparent.
5. A micro or small entrepreneur can prepare an annual report in a simplified form
The financial statement of a micro-enterprise includes a short balance sheet and income statement + notes. Apart from the above list, a small business must submit an activity report as well in its annual report. Micro and small enterprises may, if they wish, prepare a full annual report, which includes a balance sheet, an income statement, an activity report, a cash flow statement, a statement of changes in equity and notes. See the instructions for submitting the annual report of a micro-enterprise here!