Accounting: what are the compulsory books?
In Spain, legislation requires companies to keep several mandatory books every year.
Specifically, tax, commercial and accounting books must be kept.
In this article, we present each of these, focusing on the obligatory accounting books.
What are they and what regulations cover them? Let's find out!
Commercial Code: Compulsory accounting books
Article 28 of the Commercial Code establishes the obligation to keep two accounting books:
- The Journal.
- The Inventory and Annual Accounts Book.
1. Journal
Also known as the Account Book, this is a document in which all the accounting movements of a company (cash inflows and outflows) are recorded in chronological order.
As its name indicates, the journal entry is a daily entry, and is to be drawn up in a single document for each financial year.
The legislation stipulates that the journal must be kept in the form of accounting entries, which include the following:
- An opening entry (at the beginning of the financial year),
- a closing entry (at the end of the accounting year).
☝️ This ledger is considered to be one of the most important books; it contains the first record of all financial transactions.
2. Inventory and Annual Accounts Ledger
The Inventory and Annual Accounts Ledger monitors and analyses the economic situation of the company at all points in a given accounting period:
- The beginning,
- the course,
- the end.
To do this, it will be necessary to draw up four reports or balance sheets -which will form part of the Inventory and Annual Accounts Book-:
- The company's opening balance sheet, which will show the company's situation at the beginning of the financial year;
- the Trial Balance, drawn up quarterly, which shows the evolution of the company through the trial balances;
- the year-end inventory, which analyses the situation at the end of the accounting year;
- the Annual Accounts, the purpose of which is to set out the financial reality of the company, as well as the results of the financial year.
Likewise, according to article 34 of the Commercial Code, the Annual Accounts shall include 5 financial statements:
- The Balance Sheet (also called Balance Sheet);
- the Profit and Loss Account (also called the Profit and Loss Account).
- the Statement of Changes in Equity for the year;
- the Statement of Cash Flows;
- the Annual Report for the year.
☝️Puedes you can find all the information on the regulations and preparation of the Annual Accounts in the General Accounting Plan.
Compulsory books: regulations
Who must keep them?
The answer to this question is not easy, as the Law details different variations depending on the activity and characteristics of the legal entities:
- Commercial companies: obligation to keep accounts, legalise the accounting books and present the annual accounts.
- Non-commercial companies: no obligations.
- Self-employed under the Normal Direct Estimation Regime: obligation to keep the accounts, but not to legalise the accounting books or to present the Annual Accounts.
- Self-employed under the Simplified Direct Estimation Regime and Modules: no obligations.
What is the registration of the obligatory books?
The Commercial Code (mercantile law) establishes, in article 30, the obligatory registry books. This refers to the legalisation of the obligatory accounting books after each financial year.
The way they are legalised is by registering them in the Commercial Register by telematic means. This must be done on the website registradores.org.
The process must be done within 4 months after the end of the annual financial year.
☝️Es important to be clear about one thing: mismanagement of the accounting books can lead to penalties of varying severity. Be careful! Usually, mistakes or oversights can be avoided with a little dedication and attention.
Is the general ledger compulsory?
The general ledger is one of the voluntary accounting books.
Although its preparation is not compulsory, it is one of the most widely used books due to its great advantages.
Also called General Ledger, it records and classifies economic transactions according to the different accounting accounts of a company.
In practice, we could say that the general ledger provides the same information as the (compulsory) journal, but organised in a different way. The purposes they pursue are also different:
- The first aims to analyse the evolution of the company and the balance;
- The second aims to keep track of the daily activity.
Other compulsory business books
In addition to the accounting books, there are two other groups of books that are compulsory for companies:
- Tax books,
- commercial books.
Compulsory tax books
For companies subject to VAT (Value Added Tax), it is compulsory to keep:
- The book of invoices issued,
- the book of invoices received,
- the book of investment goods,
- The book of intra-community operations (if applicable).
Compulsory commercial ledgers
Compulsory commercial books include:
- The Minutes Book,
- the register of partners for SL and SLL,
- the company register book for SLU,
- the register of registered shares for SA and SAL.
Don't put off until tomorrow what you can do today
As the saying goes, it is better not to postpone tasks that you will have to do anyway. This is the case of the compulsory books.
Now that you know them and know that you must do them without exception, it is better to get organised and get tools that can help you carry out these processes in a less tedious way.
In that sense, having an accounting software is useful to keep your accounts up to date, as well as to automate multiple processes.
The best support for not despairing with the numbers and gaining time to invest in other tasks that will make your business grow!
Ready to take off? 🚀
Article translated from Spanish