Every company must submit a report to the business register six months after the end of the financial year—even if there is no active business activity. The report’s Timely submission is important for both the entrepreneur and the state.
Report Submission and Action Timing
The report should be submitted to the commercial register within six months after the financial year ends, typically by June 30 for Estonian companies whose financial year aligns with the calendar year. It’s advisable to start preparing the report early to account for any new events or transactions, ideally two months before the deadline. Our accountant is already handling annual reports to ensure readiness. It’s crucial to note that the report must be submitted even if there has been no activity. Additionally, legal entities can conduct electronic meetings for annual report approval, easing decision-making for those in different locations.
Report Type and Detail Level
The Accounting Act categorizes entrepreneurs into four groups by size: micro, small, medium, and large. Each group has minimum reporting requirements. However, entrepreneurs can opt for a more detailed report format, especially if they have stakeholders interested in the annual report. Reports must be in Estonian and the official currency of Estonia, with accuracy levels specified for numerical indicators (e.g., euros, thousands of euros).
A micro-entrepreneur is a limited company meeting specific criteria on the balance sheet day of the reporting year: total assets up to 175,000 euros, liabilities not exceeding equity, one shareholder who is also a board member, and sales revenue up to 50,000 euros. Depending on their activity, micro-entrepreneurs must submit an abbreviated balance sheet, profit and loss statement, and possibly up to three appendices. Micro-entrepreneurs typically submit concise annual reports with limited information.
A small enterprise is a business with certain thresholds on the balance sheet day: total assets of 4,000,000 euros, sales revenue of 8,000,000 euros, and an average of 50 employees during the reporting year. They must submit an abbreviated annual report, following Estonian financial reporting standards, comprising a detailed balance sheet, profit and loss statement, and up to 9 appendices. Additionally, a small entrepreneur must prepare an activity report.
A medium-sized enterprise is a business whose indicators can exceed the following conditions on the balance sheet date of the reporting year: total assets of 20,000,000 euros, sales revenue of 40,000,000 euros, An average number of employees of 250 during the reporting year.
A large enterprise is a business whose indicators on the balance sheet date of the reporting year exceed the following conditions: total assets of 20,000,000 euros, sales revenue of 40,000,000 euros. The average number of employees during the reporting year of 250 people.
Medium and large enterprises must submit a full report, adhering to the financial reporting standard they apply. Typically, this includes an activity report and an accounting report comprising main reports such as the balance sheet, income statement, cash flow statement, and statement of changes in equity, along with appendices.
Who can read the report and who can write it?
Submission of the annual report is mandatory, but it is not only known to the state – it is a public document that anyone from the Business Register can obtain.
If you submit a report on time and it is meaningful, it gives a good signal to a potential business partner that you are a reliable entrepreneur. Of course, the readership does not have to be limited to commercial companies: for example, online shopping has become customary these days, but before making a purchase, you should ensure the merchant’s reliability. As an official public document, the annual report provides the strongest assurance for this. Therefore, it is worth thinking about the client when preparing reports.
What accounting data is required for the report?
The basis for preparing the financial year report is the transactions that have occurred during the financial year and are recorded in the accounts. At this point, it is important to consider whether all the transactions you sent to our accountant are reflected in your company’s accounting and whether all basic documents and checks have been entered.
Therefore, the preparations described above are part of your company’s continuous accounting and have already been checked by us; if you have the monthly package and it is done and it is in order, then as a rule, you do not need to prepare the annual report before putting together the annual report.
What exactly needs to be done?
The management board submits the approved financial year report, together with the profit distribution or loss coverage proposal, sales revenue distribution, and the sworn auditor’s report, if the audit is mandatory, to the commercial register within six months of the end of the financial year. Compiling and submitting the financial year report includes six stages in summary:
- preparation of your company’s annual accounting report by an ex accountant;
- Compilation of an activity report by you as a partner;
- approval of the annual report;
- auditor control if necessary;
- drawing up a proposal for the distribution of profit for the financial year and deciding to distribute profit or cover losses;
- submitting the annual report for approval;
- And we were finally filing in the business register.
Depending on the company’s size, the fourth stage is sometimes irrelevant – smaller companies do not need to hire an auditor. If the board member is also the owner, there is no need to do anything additional in the third stage either.
Why is it important to report on time?
The annual report must be submitted on time. This shows partners and customers that the company is competitive, has a reliable reputation, and presents its activities correctly.
The Estonian state ensures the transparency of the economic environment for the effective aggregation of forecasts and statistics. It is very important to have the correct data for each company, whether it is small or large, to have a correct overall picture of the economy.