Your first annual accounts: where do you start?

Your first annual accounts differ from all the following ones for two reasons: the financial year is often shorter than 12 months, and there is nothing to compare with. Anyone who does not know that starts looking for an error that is not there.

The first financial year is often shorter

If you start in April, your first financial year runs from April up to and including 31 December. You are then comparing a period of nine months with nothing. So put the start and end date of the financial year explicitly in your document; that prevents confusion for everyone who looks at it.

No comparative figures

In the profit and loss account and on the balance sheet the figures of the previous financial year normally appear next to them. In the first year there are none. State that in the notes instead of including a column of zeros: that reads more honestly.

Investments in the first year

Large purchases in your starting year — a car, machines, furnishings — you put on the balance sheet and depreciate from the moment you use them, not from 1 January. If they were bought in December, that year's depreciation is therefore small. More on that is in depreciating a company car.

What starters often forget

• •Private withdrawals and contributions: they belong in your equity, not in the profit and loss account.
• •The VAT balances: what you still have to pay or reclaim appears as a receivable or liability on the balance sheet.
• •The inventory on the balance sheet date: even if it comes from your own living room.
• •Costs you have advanced privately and that are business-related.
• •The end date of your financial year, especially if you did not start on 1 January.

Must you file as a starter already?

For the figures it does not matter: you follow the same route as every other entrepreneur.

Only if you are a legal entity. A sole trader or VOF has no filing obligation with the KVK; you then prepare the annual accounts for yourself, your bank and your tax return. For a BV the usual route applies: prepare, adopt, sign and file — see filing with the KVK.

The general checklist is in everything you need for your annual accounts.