There are many things that you need to be aware of as an entrepreneur. This is especially true for young founders who have a lot to learn in the first few years of their business. Not only in the course of business, but also with questions about taxes and annual financial statements. The balance sheet date also plays an important role for you.
What is the balance sheet date?
In accounting, the last day of a financial year is the balance sheet date. As a rule, this is the day you prepare the annual financial statements for your company. Usually this is at the end of a calendar year, but it doesn’t have to be. The figures that are available on this day represent the basis for your balance sheet . You can also choose the balance sheet date for a different day, but you must then note that this day will also be retained later.
When is the balance sheet date?
As an entrepreneur, for legal reasons, you are free to choose your deadline. In many cases this is always on December 31, the last day of a calendar year. But as already mentioned, this is not mandatory for you. There are some companies, especially smaller ones, that choose to go on another day. It is important that you choose your balance sheet date so that it is a favorable day for you. It is important for you to know, however, that once you have chosen a key date, it will also be binding for you in the following years and that you must keep this date. In the case of corporations, on the other hand, there may be exceptions, especially if there are subsidiaries with different balance sheet dates. Here it is possible to adjust this day to the balance sheet date of the parent company.
When does a fiscal year end?
If your company is registered in the commercial register , the financial year can differ from the calendar year. For this reason, the business year is also referred to as the business year. But you should note that this financial year must also be a period of twelve months. If your financial year differs from the calendar year, you must clarify this with the tax office according to § 4a EStG. For all other traders, the financial year is always the calendar year. But there is a law that allows you to set a different fiscal year. An example of this is a company in the agricultural sector. For companies in this sector, a fiscal year usually doesn’t start until May 1st or even July 1st.
How long is a fiscal year?
As a rule, a financial year always lasts a full twelve months. But here too there are exceptions. These appear especially when you have founded a new company or have dissolved a company. Here the legislator speaks of the so-called short fiscal year. This particular financial year may be less than twelve months, but in no case more months. In the short fiscal year, for example when you set up on August 1st, you first create your opening balance sheet. However, you want your financial year to be identical to the calendar year in the future and start on January 1st. But you have to specify this for your trade. If you have done this, your first year as an entrepreneur becomes the short financial year and begins with the establishment in August and ends on December 31st. of the same year. This is regulated by law in Section 240, Paragraph 2, Clause 2 of the German Commercial Code (HGB).
Definition of the balance sheet date
How is the determination of the financial year regulated by law?
By law, you can choose a fiscal year that differs from the calendar year and thus also a different balance sheet date. However, this always requires the approval of the tax office. Another prerequisite for consent is that you have operational and organizational reasons for doing so. However, you cannot change this at will. The legislator lays down the principle that there is balance sheet continuity and that there must be transparency and clarity in the accounting periods. But there are definitely reasons that make it necessary to postpone the financial year.
|When it makes sense to reschedule the financial year|
|If a company belongs to a group, the financial year is used as an accounting policy instrument and adjusted to the financial year of the group parent.|
|Postponing the fiscal year also makes sense if, for example, there is always necessary maintenance work in production over the course of a year. In this case, production is always stopped. In this case, an inventory can then also be carried out more easily.|
|It makes sense to adjust the fiscal year to seasonal circumstances.|
What is the difference between the reference date principle and the increase in value principle?
In proper bookkeeping , the key date principle is one of the principles anchored there. The key date principle states that all assets that are available on the key date must be accounted for and valued. However, this only applies to the existing goods. This is based on the value relationships on the reference date. This is also regulated by law under Section 252 Paragraph 1 No. 3 HGB and Section 201 Paragraph 2 Item 3 UGB.
According to the reference date principle, the so-called “value-based” facts may not be taken into account. The value-based facts are facts that only arose after the balance sheet date and thus before the balance sheet was drawn up. They were therefore not available on the reporting date. These facts are applied in the value appreciation principle. Simply put, this means that all things that happened in the old year, but only become known in the following year, before the balance sheet is drawn up.
- Things happened before the balance sheet date
- became known but only after the balance sheet date,
- become known before the balance sheet is drawn up
- but still have to be taken into account in the old year.
A distinction is made between two facts in the case of the value increase principle.
- Value enhancing fact = happens before the balance sheet date, but only becomes known afterwards and must be included before the balance sheet is drawn up. The value-enhancing fact must still be taken into account in the old year.
- Value-based fact = occurs after the balance sheet date and is therefore only known afterwards. A value-based fact may no longer be taken into account in the balance sheet for the old year.