Annual report for micro-entities step by step

Every Estonian company prepares an annual report for each financial year and files it with the Commercial Register, which is run by RIK. For a small OÜ this is a fixed task, and it has a fixed deadline. The report is shorter for a micro-entity, which is a company below certain size limits. This guide explains how to check whether your company is a micro-entity, what the report contains, the six-month deadline and the filing steps.

What the annual report is

The annual report presents the company's financial position and its result for one financial year. It has the balance sheet, which shows what the company owns, owes and holds as equity on the last day of the year. It has the profit and loss statement, which shows the income and expenses of the year and the result. It also has short notes that explain the main figures.

The report is built from the closed books. If the closing is done correctly, the annual report is a matter of arranging the figures in the required format. That is why the closing of the financial year comes first.

Are you a micro-entity?

A micro-entity is a company that stays within the size limits of the Accounting Act. A company counts as a micro-entity when it stays within at least two of three limits in the reporting period: the balance sheet total, the net revenue and the average number of employees. The limits in the figures used by Sapita are a balance sheet total of €450,000, a net revenue of €900,000 and an average of 10 employees.

These figures are the ones the Sapita calculator uses, but they must be checked against the current text of the Accounting Act on Riigi Teataja before you rely on them. The limits change from time to time when the rules are updated, and a company that is close to a limit should check the figures in the year it is near them.

A worked example with round numbers. Your OÜ has a balance sheet total of €300,000, a net revenue of €1,200,000 and six employees on average. It is above the revenue limit, but within the other two. Because it stays within two of the three limits, it qualifies as a micro-entity under the test described above. Confirm the current limits before you use this result.

What the report contains

A micro-entity's report is shorter than a full report. It carries the balance sheet, the profit and loss statement and the notes that the law requires for a micro-entity. Check the notes list on the Riigi Teataja text, because the required items are fixed by law.

The figures are the same as in the books at the closing date. Each balance sheet line is a group of accounts, and the profit and loss lines group the income and expense accounts for the year. Sapita prepares these groupings from the books, so the report uses the same figures as the reports you read during the year.

Two items often need care. The first is the equity section, which shows the share capital, the retained earnings and the result of the year. The second is the liabilities, including any owner loan, which must be shown clearly.

The six-month deadline

The annual report is due six months after the end of the financial year. For a company whose year ends on 31 December, the deadline is 30 June of the following year. Plan the filing in advance, so that the report is not left to the last week.

A company that does not file on time can receive a fine or be struck off the register in serious cases. Filing late is avoidable. Start the closing in the first weeks of the new year, so the report is ready well before the deadline.

Filing in the Commercial Register

The annual report is filed electronically in the Commercial Register, which RIK runs. You need the company's registry code, the approved report and the e-identity of a person who has the right to sign for the company. In the MVP the filing is manual: Sapita prepares the figures, and you file the report yourself through the register's own service.

Keep the filed report and the confirmation with the year's documents. A copy of the signed report and the closing entries should be kept for the period the Accounting Act requires.

Checklist before you file

1. The year's books are closed, and the period is locked.
2. The balance sheet balances, and the result equals the difference in equity.
3. The micro-entity test is recorded with the figures used.
4. The notes match the books and the law.
5. The report is approved by the owners, as your articles require.
6. The filing is made before the six-month deadline, and the confirmation is kept.

Key terms in this guide

• Annual report: the report on the financial year.
• Balance sheet: the company's position on one date.
• Profit and loss: the result of the year.
• Equity: what remains for the owners.
• Share capital: the owners' investment in shares.
• Retained earnings: profits not yet paid out.
• Fiscal year: the twelve months the report covers.
• Asset: something the company owns that has value.
• Liability: an amount the company owes.
• Owner loan: money between the owner and the company.
• RIK: the registry that receives the report.
• Registry code: the company's number in the register.

Sources

• Accounting Act (raamatupidamise seadus), micro-entity criteria and the annual report, Riigi Teataja: riigiteataja.ee
• Centre of Registers and Information Systems (RIK), Commercial Register and filing: rik.ee
• EMTA, business obligations: emta.ee