What is annual financial statement closing? Why does the company prohibit it from being thrown away?

If you have registered a company or limited partnership, your "absolutely unavoidable" legal duty is to close your annual financial statements. Many newly established companies, or those in their first year without revenue, mistakenly believe that "if there's no revenue, there's no need to submit financial statements," which is a huge misconception and can lead to fines in the tens of thousands of baht! Today, Lamour Accounting will explain the importance of closing your financial statements.

What is financial statement closing?

Financial statement closing is the process of summarizing all of a company's operating results for a year (typically January 1st – December 31st) to create accounting reports (such as the income statement and balance sheet). These reports must be audited and certified by a Certified Public Accountant (CPA) and then submitted to two main agencies: the Department of Business Development (DBD) and the Revenue Department.

Why do we need to close the books? Can't we avoid submitting them?

Let me answer this directly: “Absolutely not.” Even if your company has just been registered and hasn't started doing business at all, the law requires you to submit “blank financial statements.” If you ignore this and fail to close and submit your financial statements by the deadline (usually by the end of May of the following year), you will face summonses and fines as follows:

• Fines from the Department of Business Development (DBD).
• Criminal fines from the Revenue Department.
• If a company is left inactive for a long time, it may be removed from the register by the registrar (status as inactive), which will cause significant problems if it wants to resume business.

The benefits of preparing financial statements go beyond just avoiding fines.

Closing financial statements accurately and precisely is not just for government submission, but is the "compass" for the business owner:

• It reveals the company's true profit and loss.
• It can be used as proof of creditworthiness when applying for a loan from a bank or finding investors.
• Helps in planning tax savings in the coming years.

Accounting services and annual financial statement preparation by Lamour Accounting.

Don't let year-end closing be a headache. Lamour Accounting Co., Ltd. provides comprehensive monthly accounting services, financial statement closing, and tax management. We work to professional accounting standards to ensure your financial statements are accurate, transparent, and ready for business planning.

Preparing to close your annual accounts or need to set up a new accounting system?

We offer free consultations! Contact our experts via LINE at @Lamouraccounting or visit our page Contact Us for more details.