What are your company's accounting obligations? Here's a straightforward explanation!

As a business owner, you have accounting obligations inherent to your company. The law and the Code du Commerce require you to keep your accounts according to certain rules, in order to monitor your company's activity and report on it to the authorities and external partners.

But don't panic, we'll help you make sense of it all in this article! Accounting obligations are first explained, then classified into major families, bearing in mind that they differ according to the size and tax status of the company. Please refer to the relevant section to find out more!

And at the end of the article, we take a look at the famous question of whether or not to use a chartered accountant, and introduce you to some tools you can count on! 😉

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What is an accounting obligation?

Mandatory accounting refers to compliance with specific rules governing bookkeeping.

All companies are concerned by accounting, which must be :

• regular
• accurate
• and representative of the company's reality.

Keeping accounts is a legal obligation, requiring you to:

• chronologically record all transactions affecting your company's assets (purchases, sales, expenses, etc.),
• carry out an inventory at least once a year, to enable you to observe the existence and value of the items making up your assets and liabilities,
• draw up your annual accounts,
• record, archive and retain accounting documents and supporting evidence for a minimum period of 10 years. This is useful in the event of an audit or if you need to prove your figures.

Is bookkeeping compulsory?

Keeping accounts is a legal obligation for most businesses in France. However, there are exceptions and thresholds to be taken into account.

These include micro-businesses, which are not required to keep full accounts.

In addition, the accounting rules and obligations of organizations vary according to :

• their activity or business sector,
• the category to which they belong (BIC, BNC, IS),
• their tax regime, as we shall see below.

Main accounting obligations

Obligations relating to annual accounts

All companies are required to prepare annual financial statements. A copy must then be filed with the Clerk of the Commercial Court.

The annual accounts are drawn up at the end of each financial year and must include :

• The balance sheet: this shows all your company's assets and liabilities. It provides information on :
  • inventories,
  • financial debts,
  • receivables.
    
    
• The income statement: this shows the income and expenses for the year. The difference between these two amounts gives you the profit or loss for the year. It includes, for example, sales, purchases and personnel costs.
  
  
• The general appendix: this is mandatory and provides a better understanding of the company. It includes information to help you understand the income statement and balance sheet.

Bookkeeping obligations

In order to keep track of your company's accounts, you are required to draw up accounting books and keep them up to date. They take the following form:

• The daybook: this keeps you informed of movements affecting your assets. You must record changes from day to day. Every transaction must be accurately recorded.
  
  
• The general ledger: based on the entries in the daybook, but broken down according to the chart of accounts adopted by your company.
  
  
• The inventory book: this is no longer mandatory for fiscal years commencing on January 1, 2016.
  • However, like many business documents, it must be kept for 10 years.
  • As the inventory is still mandatory, we recommend that you draw up an inventory book, to give you a clear picture of your assets and liabilities.

Accounting obligations according to tax regime

Micro-enterprise companies

Micro-enterprises (formerly autoentreprises) are divided into the following categories:

• those in the industrial and commercial profits (BIC) category,
• and those in the non-commercial profits (BNC) category,

whose annual sales threshold is set at :

• 188,700 € for the sale of goods, objects, supplies of foodstuffs to be taken away or consumed on the premises, or the provision of accommodation,
• 77,700 for services and liberal professions.

They are required to keep :

• a receipts ledger, whatever the activity, specifying for each receipt the name of the customer, the amount collected and the date,
• a purchase register, for trading activities.

☝ These companies are not required to keep full accounts. Accounting can therefore be streamlined, but must record all financial movements (income and expenditure) chronologically and in a non-modifiable way.

Companies governed by the "régime réel normal

Businesses subject to the normal actual accounting regime include :

• those in the industrial and commercial profits (BIC) category,
• and those subject to corporate income tax (IS),

with annual sales in excess of :

• 818,000 € for sales of tangible goods, catering or the provision of accommodation,
• 247,000 € for the provision of services.

These companies are required to

• keep full accrual accounts (recording receivables and payables) for the entire financial year, with the preparation of :
  • a balance sheet,
  • an income statement,
  • an appendix,
• draw up a journal and general ledger,
• draw up an annual inventory.

Companies covered by the simplified actual system

Companies governed by the simplified real-estate regime include :

• those in the industrial and commercial profits (BIC) category,
• and those subject to corporate income tax (IS),

with annual sales of less than :

• 818,000 € for trading activities and the provision of accommodation,
• 247,000 € for services.

These companies are required to

• full simplified accounting (commitment accounting, with the option of switching to cash accounting during the year), with the preparation of :
  • a balance sheet,
  • an income statement
  • and notes,
• establish a journal and general ledger,
• draw up a simplified annual inventory.

Companies covered by the controlled declaration system

Companies subject to the controlled declaration regime include the liberal professions (BNC), whose revenues exceed €77,700.

These companies must keep cash accounts for the entire financial year, but may also opt for accrual accounting.

Their obligations:

• simplified accounting,
• declare profits and losses each year,
• keep a journal of business income and expenses,
• keep a fixed assets and depreciation register,
• draw up a balance sheet and income statement (but no legal appendix).

Accounting obligations according to type of organization

Accounting obligations of a merchant

• keep accounts, as a company registered in the Trade and Companies Register (RCS),
• respect the rules of the chart of accounts,
• keep a chronological record of all transactions affecting the company's assets,
• draw up invoices under specific conditions,
• carry out an inventory at least once a year,
• draw up annual accounts at the end of each financial year,
• have a bank account dedicated to the business activity,
• keep accounting documents for at least 10 years after the end of each financial year,
• in certain cases, file annual financial statements with the clerk of the commercial court.

☝ Other, more specific obligations must also be taken into account, depending on the company's size and accounting system. Small and medium-sized companies meeting certain criteria can simplify their accounting presentation, for example.

Accounting obligations of an association

• keep accounts in accordance with the association's chart of accounts,
• draw up annual financial statements.

This is particularly mandatory for associations

• recognized as being of public utility or approved,
• whose economic activity is subject to commercial taxes,
• benefiting from public funding of over 50% of their budget, among others.

For all others, bookkeeping and the preparation of annual financial statements may be chosen when they are not compulsory, and are then included in the association's articles of association.

Accounting requirements for the liberal professions

Accounting requirements for the liberal professions depend on :

• the structure chosen for the practice of the liberal profession,
• the tax system chosen.

They also differ according to whether the profession is practiced :

• as a sole proprietorship,
• as a commercial company (SAS, SASU, SARL, EURL) for unregulated professions,
• as a commercial company and/or as a "société d'exercice libéral" (SEL), for regulated professions.

Is it compulsory to use a chartered accountant?

By law, companies are not obliged to engage the services of a chartered accountant. As a manager, you can decide to do your own bookkeeping.

However, it is strongly recommended that you entrust your bookkeeping to a professional.

A chartered accountant assists you in managing your business, and at all the key stages of its existence (creation, development, modification, etc.), while acting as an advisor.

Using this expert in figures will be invaluable not only for proper bookkeeping, publication of accounts or accurate calculation of your tax liability, but also for secure management of your accounting and tax operations.

💡 To make things easier for you, have you considered an online chartered accountant?

An online solution particularly suited to small businesses, the online chartered accountant combines :

• personalized, regular support from a dedicated expert,
• and access to a secure online space, where you can track the progress of your business.

🛠 For example, Ça Compte Pour Moi supports entrepreneurs in all accounting matters. With unlimited advice, it helps you clarify and meet all your accounting obligations, and ensures you comply with current regulations.

How can accounting obligations be managed more easily?

While accounting obligations may seem burdensome and restrictive, they encourage you to produce documents and figures that make it easier to :

• your sales figures,
• evaluate your assets,
• and the development of your business.

To make sure you comply with your accounting obligations, don't hesitate to call in the experts or use accounting software. There's bound to be a solution to suit your needs.

Sage Business Cloud Compta, for example, is 100% cloud-based software for small and medium-sized businesses. The tool saves you precious time and secures your operations, by automating your processes as far as possible (importing your banking and invoicing data to simplify entry of entries, for example). You'll also benefit from regular platform updates to keep you in line with accounting requirements. Finally, thanks to its collaborative features, you can work more fluidly with your teams and your chartered accountant.

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In a nutshell

There's no escaping it! Even if bookkeeping isn't your cup of tea as an entrepreneur, it's a legal requirement for all businesses (except micro-businesses).

To draw up annual accounts or not? As we've seen, your accounting obligations will depend on the size and type of your organization, the category to which it belongs and its tax regime. If you'd like to find out more, take a look at our other articles on accounting obligations by type of business.

And to take a more relaxed approach to your accounting obligations, why not reverse the point of view? A precise view of the state of your assets is also a way of taking into account the reality of your company's health! 💸