The process of closing accounts takes place at the end of a fiscal period (usually annually) to close out financial operations and prepare the company's financial statements. This process is fundamental to ensuring legal compliance, financial transparency and informed decision-making.
In a nutshell, it consists of:
- Review and reconciliation:
- Ensure that all transactions for the period have been recorded correctly
- Reconciling bank accounts, debtors, creditors and other inventories with the accounting records
- Accounting adjustments:
- Recognise expenses and income not yet recorded (e.g. accruals and deferrals)
- Carry out depreciation, analyse impairments and other necessary adjustments
- Clearance of results:
- Calculate the profit or loss for the year, transferring income and expenses to the profit and loss account
- Closing accounts:
- Close the temporary accounts (income, expenses) and prepare the final balance sheet, including the profit and loss account and the balance sheet
- Preparation of financial statements:
- Prepare the main reports: Balance Sheet, Profit and Loss Account, Cash Flows and other Reports , in accordance with applicable legislation.
- Compliance with tax and legal obligations:
- Calculating and declaring taxes due
- Submit mandatory reports to the competent authorities
This process requires care to avoid mistakes and ensure that the company's financial situation is accurately represented. For this reason, it is often carried out by accountants or financial specialists. At Fénix Horizonte we can help you every step of the way, always guaranteeing maximum rigour and compliance with deadlines.