Explanation8 september 20265 min lezen

Bookkeeping and annual accounts: the difference

In this article

The difference in one table
Why the one cannot do without the other
Where the annual accounts are more than your records
What you outsource to whom

Bookkeeping you do all year round: processing invoices, reconciling the bank, recording receipts. The annual accounts you prepare once a year: then you turn all those entries into a balance sheet, a profit and loss account and notes.

The difference in one table

Kolom	Bookkeeping	Annual accounts
Frequency	Continuous, daily or monthly	Once per financial year
What it is	Recording transactions	Report on the financial year
Result	Up-to-date records	Balance sheet, profit and loss account and notes
Who does it	You or your bookkeeper	You, your accountant or a combination

Why the one cannot do without the other

Preparing annual accounts from records that are not correct always produces correction work. Conversely, neat records have little value if you never take the step to annual accounts: you then miss the overview of your equity and the substantiation of your profit.

Do the monthly closing

Reconcile your bank every month and check whether your records are correct. Your annual accounts are then a formality at the end of the year instead of a clean-up job.

Where the annual accounts are more than your records

Valuation: you determine the value of business assets and inventories according to fixed rules.
Depreciation: you spread the cost of a business asset over the years you use it.
Reconciliation: you check whether equity ties to the result.
Notes: you explain what lies behind the amounts.

What you outsource to whom

Do you want to do it yourself? Then preparing annual accounts with software is the route in which you take the figures from your package.

Many entrepreneurs outsource the bookkeeping and prepare the annual accounts themselves, or the other way round. There is no wrong order: look at where your time is, where you want certainty and what you want to get to know yourself. An overview of the routes is in having annual accounts prepared.

Frequently asked questions

Do I have to be able to do bookkeeping as an entrepreneur?

You must keep records from which your equity and result appear — you may also have that done. Understanding the figures yourself is sensible, though: the responsibility remains yours.

How often must I update my records?

There is no legal frequency, but updating monthly prevents you from starting the end of the year with a backlog. For the VAT return you need your records per period anyway.