Limited liability company is one of the commercial companies that are obliged to account in double-entry bookkeeping. The basic duties of this company when keeping accounting according to Act No. 513/1991 Coll. is to account in the system of double-entry bookkeeping about the state and movement of business assets and liabilities, net business assets, about costs, revenues and profit or loss of the company.
Experts from REAL DEAL company have prepared for you article which provides information about basic rules and procedures of accounting in Limited liability company.
The commercial company does not have the option of choosing accounting in the system of single or double entry accounting. It must account in the double-entry bookkeeping system.
Limited liability company must, in particular when accounting in the double-entry bookkeeping system, follow the Measure of the Ministry of Finance of the Slovak Republic No. 23054 / 2002-92, which describes the details of the accounting procedures and the general chart of accounts for entrepreneurs accounting in the double-entry bookkeeping system.
Limited liability company has to follow also Act No. 431/2002 Coll. on accounting as amended and Act No. 595/2003 Coll. on income tax, as amended.
Limited liability company must be according to § 2 par. 5 of the Accounting Act classified into one of three groups: a micro entity, a small entity, or a large entity.
When classified in a size group, it is monitored whether the company meets at least two of the conditions, namely:
- the total amount of assets (i.e. the net asset value from the balance sheet),
- net turnover (i.e. the sum of net revenues achieved from the sale of products, goods and services after deduction of discounts),
- average number of employees during the accounting period.
New Limited liability company can choose the size category at its own discretion, but it must remain in this size group not only in the year of the company’s formation, but also in the year following it.
Classification in a size group influences several factors, such as accounting for deferred income tax (the micro-entity does not account for it), the obligation to account through analytical accounts about the relationships between related entities, etc.
In connection with the use of the account classification for entrepreneurs, it
is necessary to effectively use not only account classes and groups, but also
synthetic and off-balance sheet accounts, which cannot be changed. The accounts
listed in the chart of accounts are used by the business company when the
accounting transaction arises (e.g. sale of goods) to make an accounting entry
in the accounting. Each chart of accounts used by a business company at the
creation of an accounting transaction has its content and can be used only in
some accounting transaction. Through the chart of accounts, the business
company in the double-entry bookkeeping system accounts in particular for: the
state and movement of assets and liabilities, differences between assets and
liabilities, revenues and costs, revenue and expenditure, profit or loss.
Limited liability company keeps accounts in the general ledger, where all
accounting transactions are arranged systematically and in a journal where
accounting transactions are arranged chronologically. After the end of the
accounting period (usually after the end of the calendar year), company is
obliged to prepare financial statements according to the model belonging to the
given size group.