Fiscal year, fiscal year and short fiscal year
By the way, a distinction is made between a business year and a business year. The names refer to the same thing, but the term business year is used in HBG and the business year in tax law.
The financial year is precisely numbered in Section 240 (2) HGB as 12 months. A year actually always has 12 months, so it is perhaps surprising at first that the HGB explicitly mentions it. This is because there is an exception to this. Because if you start your business in the middle or towards the end of the calendar year, you have until December 31st. no more than 12 months. What is left is your short fiscal year. Your first financial year is a little shorter than the following, which then start on January 1st.
However, your fiscal year or fiscal year can also differ for other reasons, for example if you work in agriculture. Because then you are bound to other processes for seasonal reasons. However, because you belong to a foreign company, you can also be subject to other financial years that apply there.
If you have to permanently adjust your financial year to other times, then it is imperative that you apply for this to the tax office and that you agree to it!
Appendix and explanations
There is also an appendix to the annual financial statements, which consists of various additional explanations. Section 284 of the German Commercial Code explains it as follows:
“The notes are to include those details that are prescribed for the individual items on the balance sheet or the profit and loss account; they are to be presented in the order of the individual items on the balance sheet and profit and loss account. In the appendix, information must also be given that was not included in the balance sheet or in the profit and loss account when exercising an option. ”
Section 285 of the German Commercial Code (HGB) explains all of the items that need to be included and Section 286 of the German Commercial Code (HGB) lists all of the items that you do not have to take into account. Section 288 of the German Commercial Code explains all exceptions for small and medium-sized corporations.
Balance sheet analysis
As mentioned briefly above, your creditors are very interested in your balance sheet because they can then see exactly how your company is doing. And of course the tax office would like to know how your assets are doing. Last but not least, you want to know yourself how you did at the end of the year and the best way to do that is with a balance sheet analysis.
There are many business indicators that you can use for analysis (quantitative balance sheet analysis). There are also different requirements and methods. It all depends on what you want to find out and evaluate. For example, you can do an analysis of the balance sheet to see how you have done compared to the previous year.
The year-end analysis includes:
- Qualitative balance sheet analysis
- Check accounting
- Check additional information
- Syntactic Analysis
- Semantic analysis
- Processing measures to improve profitability
- Quantitative balance sheet analysis (profitability analysis, liquidity analysis, asset and financing analysis as well as result analysis)
The disadvantage or limit of the analysis is the problem that it is old data from the past year, which does not allow any conclusions to be drawn about your current, current status. Data from your current bookkeeping is completely missing.
Assessment of the balance sheet
There is a certain leeway in the evaluation, which results from the evaluation option. Because according to the much-cited HGB, the principle of reasonable commercial judgment applies. And this is the case with two variants. This allows you to choose between the method option and the valuation option.
The method option allows you to choose between different valuation and depreciation methods. The valuation option allows you to choose between different valuation approaches for the appreciation and depreciation of assets. So that decides on the value of the items.
We have already touched on all relevant regulations in a few places, you can find them in §§ 240, 252 – 256 HGB. It is important for you that there are also individual regulations for assets and debts. You have to decide after the first evaluation (entrance evaluation) and the subsequent follow-up evaluations. This results from Section 253 of the German Commercial Code (HGB), according to which you estimate the acquisition and production costs less the scheduled depreciation . Liabilities at their repayment amount.
For all documents that arise in the company, there are statutory retention periods according to the HGB and the tax code (AO). This also includes the balance sheet. According to § 257 HGB and § 147 AO there are two important deadlines for you:
- 10 years apply to the storage of trading books, opening balances, annual financial statements and inventories, among other things.
- 6 years apply to your correspondence and all other documents.
What the tax office is interested in
The tax office is of course always interested in your money. In the case of the e-balance sheet , however, it is important that you have correctly stated all acquisition costs and production costs and have also calculated the correct depreciation and investments.
IFRS accounting in Germany
At the end you should definitely have heard the term IFRS or “International Financial Reporting Standards”. These are “international accounting rules for companies”. Most companies use these regulations to compete internationally.
Because these IFRS regulations are even mandatory for capital market-oriented companies in particular! (according to EU regulation no. 1606/2002 (so-called IAS regulation) and since 2009 also for companies that are still in the process of admission to securities trading, § 264 d HGB).
However, you are even allowed to voluntarily prepare your consolidated financial statements in accordance with the rules of Section 315a of the German Commercial Code (HGB). The rules also do not compete with the individual legal provisions of the federal states. They are only intended to facilitate the global comparison of companies and to improve the protection of investors in these capital market companies. They also help – or have set themselves the goal of facilitating cross-border transactions and international IPOs.
If you play in this league, then you cannot avoid drawing up your balance sheet according to these guidelines.