Financial statements are prepared when the company’s financial period ends
Once your company’s financial period is over, you should prepare financial statements. The purpose of financial statements is to provide a correct and adequate picture of the company’s operations. The financial statements should be prepared within four months after the end of the financial period.
According to the Finnish Accounting Act, you do not have to draw up financial statements if you are in the micro-enterprise category. A company is deemed to be a micro-enterprise if
- the balance sheet totals are less than €350 000
- the turnover is less than €700 000
- and an average of up to 10 people work in the business during the financial period.
One of the limits mentioned above can be exceeded.
However, it is recommended you consider compiling financial statements, even if it is not mandatory. Financiers, for instance, might require preliminary or confirmed financial statements to be attached in the application for funding.
For micro and small business, the financial statements include the income statement, balance sheet and their notes, which clarify the information provided by the balance sheet. Large companies also produce an annual report detailing, which describes for instance the risks and uncertainties of their operations.
Financial statements should always include a date and a signature. As a private trader, i.e. an entrepreneur, you sign the financial statements yourself. In a limited company and cooperative, the CEO and the Board of Directors approve the financial statements with their signature. In a general partnership and limited partnership, the financial statements are signed by the responsible company partners.
Read more about financial statements (in Finnish) in Taloushallintoliitto’s guide Kirjapidon ABC.