Preparing the annual report: what must be included and how do you do it?
The annual report is the annual financial overview of your business. Learn what it must contain, who must prepare it and how to do it efficiently.
What is the annual report?
The annual report is the financial report of your business for a financial year (usually 1 January to 31 December). It consists of three parts: the balance sheet (assets and liabilities at a specific moment), the profit and loss statement (revenues and costs over the entire year) and for a BV (private limited company) also notes. For sole traders and general partnerships an annual report is not required, but you do need to file an income tax return. BVs are legally required to prepare an annual report and publish it with the KvK (Chamber of Commerce) within twelve months. Most self-employed BVs fall into the 'micro' category and only need to publish a condensed balance sheet. With Giroo you automatically generate the balance sheet and P&L from your bookkeeping.
Components of the annual report
1. Balance sheet
The balance sheet shows the financial position at a specific moment (31 December):
Assets:
- Fixed assets (machinery, fixtures, car)
- Current assets (receivables, inventory, bank)
Liabilities + equity:
- Equity (what you have contributed yourself + accumulated profit)
- Long-term liabilities (loans > 1 year)
- Current liabilities (accounts payable, tax liabilities)
2. Profit and loss statement
Shows the revenues and costs over the entire financial year. See our article on the profit and loss statement for more detail.
3. Notes
For a BV notes are required in which you further explain the figures.
Who must prepare an annual report?
| Legal form | Required? | Publication? |
|---|---|---|
| Sole trader / self-employed | No (but income tax return required) | No |
| General partnership | No (but income tax return per partner) | No |
| BV (private limited company) | Yes | Yes (with KvK) |
| NV (public limited company) | Yes | Yes |
Micro, small, medium or large?
The size of your BV determines how much you must publish. Most self-employed BVs fall under micro (balance sheet total < € 350,000, revenue < € 700,000, < 10 employees) and only need to publish a condensed balance sheet.
Steps for preparation
1. Close your bookkeeping
Make sure all postings for the financial year are complete:
- All invoices posted
- Bank statements processed
- Depreciation posted
- Provisions made
Also read our article on bookkeeping for beginners if you are just starting your bookkeeping. Don't forget that you must retain your records for at least 7 years.
2. Make closing entries
- Prepaid costs — costs that fall in the next year
- Amounts still to be received — revenue already delivered but not yet invoiced
- Depreciation — reduction in value of fixed assets
- Provisions — expected costs not yet invoiced
3. Compile the annual report
Generate the balance sheet and profit and loss statement from your accounting software.
4. Check and have approved
Have your accountant check the annual report. For a BV: have the shareholders approve the annual report.
5. Publish (if required)
BVs must publish the annual report with the KvK within 12 months of the financial year.
The annual report with Giroo
Giroo automatically generates your balance sheet and profit and loss statement from your bookkeeping. You can compare periods, export to PDF or Excel, and share with your accountant.