Full accounting of a limited liability company What do you NEED to know?

• 5 November 2024

Full accounting is an accounting system which limited liability companies (sp. z o.o.) must use in Poland. Unlike simplified accounting, full accounting requires detailed and clearly defined recording of all financial operations of the company. If you are wondering what are its benefits, responsibilities and which regulations are related to it, please continue reading.

Full accounting for a limited liability company legal regulations

The regulations comprising the legal basis for full accounting are included in the Accounting Act of 29 September 1994. According to its wording, each and every limited liability company must keep full accounting books from the moment it is incorporated, regardless of the revenue it generates. 

In practice, this translates into detailed documentation and accounting of every transaction. This applies both to transactions related to revenue and expenditure. Please remember – simplified accounting is sufficient for sole traders. In a limited liability company, every penny must be recorded from the very beginning.

Obligations related to full accounting

Full accounting for companies entails specific obligations. These include:

• Transaction recording – All financial activities of a limited liability company or businesses opting for full accounting must be transparent. Therefore, every penny accepted or spent by the company should be properly recorded and documented.
• Financial statements – The balance sheet, profit and loss account, notes and, in the case of companies subject to audit, the cash flow statement and statement of changes in equity, should be submitted to the National Court Register (KRS) and the Tax Office immediately after the end of the financial year (in practice, by 15 July of the given calendar year at the latest). All documents must be submitted electronically. 
• Double entry – In order to keep track of the financial flows of the company, the so-called double entry principle should be applied, the aim of which is to record each operation twice – a credit account and a debit account.

Record-keeping – The retention period for all necessary documents related to the company’s business activities is 5 years. They may be required, for example, in the case of tax audits.

What else should I know about financial statements?

Preparation of detailed financial statements is one of the responsibilities of full accounting. It is good to know that some of these must include a statement of changes in equity, as well as a cash flow statement. This is related to the audit conducted by expert auditors. As we can read in the Accounting Act of 29 September 1994, in Article 64, this provision does not apply to all limited liability companies unless they meet two of the following conditions:

• average annual employment calculated as full time equivalents amounted to no less than 50 people, 
• total balance sheet assets at the end of the financial year amounted to no less than the Polish currency equivalent of EUR 2,500,000, 
• net proceeds from sales of products and goods and from financial operations for the financial year amounted to no less than the Polish currency equivalent of EUR 5,000,000 

It is also worth remembering that according to the law, limited liability companies must prepare their annual financial statements within three months of the end of the financial year, while the filing of the statements with the National Court Register should take place within 15 days of approval by the shareholder meeting. Otherwise, any delay may result in penalties or sanctions being imposed on the company.

Importantly, timely reporting not only avoids unpleasant consequences, but also translates into stakeholder perception of the company. A transparent financial situation builds confidence and a strong position on the market.

Full accounting – advantages

While it may seem that full accounting involves a number of rather demanding obligations, the truth is that the accuracy and transparency we get in return translates into many benefits. This includes financial benefits. 

The detailed recording of transactions enables the financial position of the company to be tracked meticulously. This makes planning the operating strategy for the following years much easier, including the necessary cost and revenue analysis. Only by identifying where the company has to cover costs or has superficially absent revenue sources we can obtain firm foundations for the company’s growth.

If you want to facilitate strategic business decision-making, to make your position credible in the eyes of investors, customers and financial institutions, this accounting system will make it absolutely easier for you.

How much does company accounting cost?

The costs of full accounting and its administration can vary in the case of a limited liability company. The prices vary, depending on the number of documents submitted by the company, its business profile, transaction complexity, employment and on the offer of the accountancy firm itself.

The range of services provided by the accountancy firm, including the ability to provide additional support, tax advice, etc. will affect the final cost. It is worth comparing offers and tailor them to your needs as the priority. A proven, experienced and reliable accountant is essential.

Who can use full accounting?

There are no regulations governing these issue. An entrepreneurs who feels confident enough, can of course manage full accounting in a limited liability company. Most entrepreneurs usually outsource their accounting needs, all their accounts, including full bookkeeping activities, to experienced accountants from the best accounting firms in Poland. 

Does a limited liability company have to use full accounting?

Full accounting is managed under the Accounting Act, which stipulates that every limited liability company is subject to it. There are some simplifications, however. Nevertheless, the transparency of the financial situation of the company guarantees the choice of this form of accounting, which is why it is the only and necessary solution from the moment the company is established.

Full accounting, complete peace of mind

Accounting management in a company can be demanding. Without the right knowledge and experience, it is easy to make mistakes. If you need professional support, contact us and book a free consultation online.

We will take care of your business!