Business development and management solutions in Spain

Accounting considerations

In view of the many and changing accounting and tax laws, many small companies use local accounting firms (gestores) to prepare their books and tax returns. The 'gestor' will quite often handle labour aspects as well.
Accounting books and records should be kept according to the general accounting code (CGC) which defines codes for all accounts. Although there are advantages in using these codes, this is not obligatory. Companies can choose their year end, but again most companies close at the end of December in view of the advantages in doing so (see annual declaration below). Accounting documents have to be kept a minimum of five years.
Companies officially have to present the bound accounting books for 'legalisation' each year, a process which was made redundant by audit legislation, but which is still technically required. This often means that a separate set of abbreviated hand written books must be kept.
Annual accounts must be prepared according to a standard format and presented to the mercantile registry within 7 months of the year end. Some companies do not comply with this requirement and prefer to risk a possible fine, although it should be pointed out that the mercantile registry will not allow other documents, deeds, signing powers etc. to be registered if accounts are not up to date.
Audits are required for most companies, the only exception being small companies who do not meet the minimum requirements. The audit profession is relatively young as legislation was only introduced in the last 20 years or so, and is largely dominated by the big international companies. The accounts must present a true reflection (imagen fiel), similar to US and UK requirements.

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