Filing the annual report

Every spring the same question comes up: has the annual report been filed yet, or is the deadline still ahead? I wrote earlier about what an annual report says about a company. Here I focus on the practical side: who has to file the report, what the deadline is, and how filing works in the e-Business Register.

Who has to file an annual report

Under the Accounting Act, every legal person registered in Estonia, public or private, and every sole proprietor has to keep books. In practice that means an annual report must be prepared and filed by:

• all companies – private limited companies (OÜ), public limited companies, general and limited partnerships;
• non-profits (MTÜ);
• foundations (SA).

The obligation applies whether or not the company did anything during the year – even a dormant company has to file. What differs is the size of the report, not the duty to file: a micro or small company may prepare an abridged annual report, with at least a balance sheet and an income statement plus notes, while a larger company must also include a cash flow statement and a statement of changes in equity.

Deadline: six months after year-end

Under the Commercial Code, the management board must submit the approved annual report to the Business Register no later than six months after the end of the financial year. If your financial year is the calendar year (1 January – 31 December), the report must be in the Business Register by 30 June.

If your financial year is different (say 1 July – 30 June), the deadline moves with it – the six months always count from the end of your financial year, not from the calendar year. Before filing, the shareholders or members must approve the report; if the company has an auditor or a supervisory board, the auditor’s report and the supervisory board’s opinion go in as well.

When to start on the report

Six months sounds like a lot, but do not leave the report to the last month. Before filing, the general ledger balances need to be checked and reconciled, balance confirmations requested, year-end entries made, and earlier tax returns corrected if need be. If the company has an auditor, add the time it takes to work with them and put the materials together. It makes sense to plan all of this in January–February, not May.

How to file

The annual report is filed online through the e-Business Register portal, in its e-reporting environment. There are two ways:

1. Enter the data in the portal – you fill in the report forms directly (balance sheet, income statement, notes, and so on).
2. Upload an XBRL file – if your accounting software (Merit Aktiva, for example) can export the report as XBRL, the data goes in as a file, with no manual entry.

The report can be signed digitally, or signed on paper and then scanned and uploaded. A digital signature is not required, but it is the fastest way.

What goes into the report

The annual report consists of the main statements and the notes. A full report includes:

• balance sheet – assets, liabilities and equity at the balance sheet date;
• income statement – the year’s revenue, expenses and profit or loss;
• cash flow statement and statement of changes in equity (in a full report);
• notes – accounting policies and further detail on the balance sheet and income statement lines;
• management report – management’s overview of the company’s operations, development and significant events during the year (a micro company preparing an abridged report may leave the management report out).

Micro and small companies may prepare an abridged annual report with at least a balance sheet and income statement plus notes. That is the main difference in the size of the report, and so in the time it takes to prepare.

Audit or review – does your company need one?

Some companies must have an auditor audit or review the report before it is approved. Which thresholds apply to your company is covered in a separate post: audit and review thresholds. If an audit is required, book it with plenty of lead time, because the auditor’s report is filed together with the annual report.

What happens if the report is filed late

A late report does not go unnoticed. The registrar can demand that it be filed and, if the company keeps failing to file, strike it off the register. What is certain is that a report left unfiled for a long time makes banking, bidding for public contracts and earning the trust of business partners harder. So keep an eye on the deadline even when the company has little going on.

How AR Tähelend can help

We prepare annual reports both for our ongoing clients and for companies whose books are kept elsewhere – for those we need a general ledger extract and the receipts and invoices. The annual report is billed under our annual report preparation service at an hourly rate: €55 + VAT an hour. For a small business the report usually takes 2–4 hours, so €75–160 + VAT; a bigger report (balance confirmations, reconciliations, corrections) takes 8–16 hours. Ask for a quote and we will give you an exact price based on your company’s figures.

Sources

• Commercial Code § 179 – approval and filing of the annual report with the Business Register within 6 months
• Accounting Act § 2 (accounting obligation), § 3 (definitions of micro, small and medium-sized undertakings), § 14–§ 15 (preparation and composition of the annual report)
• RIK e-Business Register – filing the annual report (in Estonian)