What is an annual financial statement?
What is an annual financial statement?
The Annual Financial Statement (AFS) is a document that gives accurate and clear information about the accounting of operations performed during the past year. It provides data on the contracts concluded during the year, whether they were profitable for the company and whether the financial year ended at a profit or loss. The AFS shall consist of at least the following elements: balance sheet, profit and loss account (PLA) and appendices.
It is prepared by an accountant with a degree in accounting and economics and experience in the field of accounting of at least 2 years. The accountant who prepares the annual financial statements shall sign it, certifying that the information in it is accurate and correct and meets the approved accounting standards. You can hire a full-time accountant for your company or an accountant under a civil contract.
Each annual financial statement is kept for 10 years and is presented for inspection on request by the NRA. bodies. It is always prepared in Bulgarian, with Arabic numerals and in thousands of levs. Keep your accounting documents, because financial sanctions for the company start from BGN 2 000.
Publication of annual financial statements
Once the company’s accountant has prepared, signed and stamped the AFS, it should be published. The Accounting Act obliges every business owner to publicly disclose his financial results from the past year, and the results are the basis for the calculation of the Profit tax (corporate tax). The corporate tax in Bulgaria is 10% of the profit of the company. If the year was bad and the company is at a loss, no tax is due.
The annual financial statements are published in the Commercial Register and the NGO register on the company’s lot. The terms for this are the following:
- OOD, EOOD, AD, EAD and other legal entities under t the Commercial Act – by June 30 of the following year;
- associations and foundations by June 30 of the following year. This rule came into force on January 1, 2018!
Who must prepare AFS?
Accounting, including the public announcement of the annual financial statements, is mandatory for a number of entities. Accounting is the accounting of all business transactions that result in changes in their property and financial condition, financial results, cash flows and equity of a company. It is mandatory for all registered entities:
- OOD / EOOD (LTD);
- AD / EAD (JSC);;
- General partnership (
GP ), limited partnership (LP ) and partnership limited by shares (PLS ); - Branch of a foreign company;
- Company under the Law on Obligations and Contracts (DZZD);
- Consortium under the CA;
- Trade representation, etc.
Annual financial statements of sole proprietors (ET)that are not subject to independent financial audit are not published. The majority of sole proprietors fall into this category. This is the reason why the annual financial statements of the sole proprietorship remain hidden.
Penalties for not publishing the annual financial statements
If the company fails to publish its annual financial statements, it faces penalties. The Registry Agency provides information to the National Registry Agency (NRA) for the enterprises that have not published the Annual Financial Statements. As a result, the NRA initiates an inspection, establish a violation and impose a penalty. Penalties are imposed simultaneously on the manager and the company and are in the following amounts:
- for the manager – a fine from BGN 200 to BGN 3,000;
- for the company – a penalty in the amount of 0.1 to 0.5 percent of the net sales revenues, but not less than BGN 200.
For repeated violation the penalty is doubled.
Publishing an ANNUAL FINANCIAL STATEMENT takes a little time, but saves a lot of troubles and penalties. To save time and avoid troubles, you can contact our team for publishing your annual financial statements on time!
