Smaller businesses benefit from changes in the Finnish accounting legislation

In case you weren’t already aware of it, Finland has modified its accounting legislation. These modifications came into effect 1 January 2016.

According to the ProCountor’s blog post the reason for the modifications was a directive given by Council of the European Union and the European Parliament in 2013. Because lightening administrative duties of the small- and middle sized businesses is the aim of the directive, EU wants to support them instead of the larger companies.

But what are these modifications in Finnish accounting legislation and how are they beneficial to small companies?

Suomen Tilintarkastajat ry’s web site informs that changes have been in the contents of Accounting Act and Accounting Ordinance. In addition, Finland’s Council of State has given a new ordinance which explains what information small- and micro companies have to give in their financial statements. Regulations that are included in these abovementioned legislation have to be applied to the accounting periods that begin 1 January 2016 or later.

The same ProCountor’s blog post explains that some of the changes came straight from the directive, but others have been decided on the national level. Firstly, a new category of businesses called micro businesses has been added in the legislation. Furthermore, the definition boundaries of a small business has been extended significantly.

The financial statements code has also been renewed because of legislation changes, according to article in the Saldo. Preparing financial statements is no longer required of entrepreneurs and self-employed persons until they have exceeded at least two of the limits of a micro business.

In practice this means, according to Relipe Oy blog post, it’s the financial statement documents which contain profit and loss account, balance sheet and notes to the profit and loss account and balance that are not needed. But they still have to be able give accurate information about their business by keeping their bookkeeping in order.

The article in Saldo also clarifies that both micro businesses and small businesses will prepare their financial statements according to the regulations in the Small and Micro Business Ordinance. The ordinance contains different regulations for both micro businesses and small businesses. For example a small business does not need to prepare annual report unless it’s needed for giving an accurate and sufficient picture of the company. On the other hand, micro businesses are relieved from preparing annual reports.

If a limited liability company is considered to be either small a business or a micro business, then according to an article by Taloushallinnonalan Tradenomit ry, it’s relieved from preparing consolidated financial statement.

Because of the legislation changes, according to ProCountor’s blog post, it’s no longer required to print the financial staments and bind them into a balance sheet book. The modified legislation requires only a record of the bookkeeping material and the financial statements. This means that it doesn’t matter if a business uses traditional or electronical methods to do its bookkeeping, the regulations are now the same for both. Also if the bookkeeping material is stored electronically and it can be accessed from Finland without any delays, there are no restrictions about where in the world the storage is placed physically.

In my opinion, these changes in the accounting legislation will do what they are meant to do and in the future small businesses won’t have use so much time and money in their administrative duties. And because the legislation is now technology neutral, I would like to see that these businesses will start using electronic financial administration. Then the amount of paper in the offices will decrease and it doesn’t take up so much of the office space, which is only a good thing!

Sources:

Kuittinen, Jasmin 2016. Kirjanpitolaki uudistui. ProCountorin Blogi. Published 14.1.2016 http://blog.procountor.com/kirjanpitolaki-uudistui. Accessed 12.10.2016

Ojala, Markku 2016. Uusi laki toi mukanaan uudet tilinpäätökset. Saldo. 01/2016. Taloushallintoliitto. https://issuu.com/mcipress/docs/saldo012016/15?e=2237972/32489720.Accessed 12.10.2016

Sirkiä, Johanna 2016. Uusi kirjanpitolaki vähentää tilinpäätösvelvollisuuksia 1.1.2016 alkaen. Relipe Oy. Published 13.1.2016.http://relipe.fi/uusi-kirjanpitolaki-vahentaa-tilinpaatosvelvollisuuksia-1-1-2016-alkaen/. Accessed 12.10.2016

Suomen Tilintarkastajat ry 2016. Kirjanpitolainsäädännön uudistus. Updated 15.3.2016. http://www.suomentilintarkastajat.fi/yhdistys/edunvalvontaa-ja-saantelyhankkeita/kirjanpitolainsaadannon-uudistus. Accessed 12.10.2016

Taloushallinnon tradenomit ry 2016. Uusi kirjapitolaki – tiivistelmä olennaisimmista muutoksista. Published 15.01.2016. http://www.taloushallintoalantradenomit.fi/uutiset.html?36890. Accessed 12.10.2016

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