Business Accounting: Legal Obligations Complete

Business Accounting: Legal Obligations Complete

Introduction

Accounting is an essential pillar of business management in France. Whether a micro-enterprise, a VSE, an SME or an individual entrepreneur, each structure is subject to strict accounting obligations defined by the Commercial Code, the General Accounting Plan (PCG) and the General Tax Code. These obligations are not limited to simple accounting entry: they include the retention of supporting documents, the keeping of mandatory registers, the issuance of compliant invoices and the production of annual financial statements. This pillar guide details all the applicable rules, the thresholds to be aware of and good practices to legally secure your activity while optimizing your financial management.

1. Mandatory accounting recordsArticle L. 123-12 of the Commercial Code requires all traders to keep three fundamental records: thejournal book ⬥⬥⬥, theledgerand theinventory book(the latter deleted for financial years opened since 2016, but the inventory document remains mandatory). The journal chronologically records all operations affecting the company's assets, while the general ledger records these entries broken down by account.

For micro-entrepreneurs, the regime is simplified: only arevenue bookis required, supplemented by apurchases registerfor sales of goods activities (article 50-0 of the CGI). These registers must be kept without blanking or alteration, and can now be dematerialized in accordance with the decree of March 22, 2017, provided that the authenticity, integrity and readability of the data are guaranteed throughout the legal retention period.

Negligence in keeping these records can lead to a rejection of accounting by the tax administration, with serious consequences: automatic taxation, surcharges and penalties.

2. Invoices and supporting documents: compliance and conservation

Any invoice issued must comply with the mandatory information listed in Article 242 nonies A of Annex II of the CGI and Article L. 441-9 of the Commercial Code: identification of the parties, SIREN number, intra-community VAT number, precise description of the goods or services, rate and amount of VAT, payment terms and late payment penalties.

Any invoice issued must comply with the mandatory information listed in Article 242 nonies A of Annex II of the CGI and Article L. 441-9 of the Commercial Code: identification of the parties, SIREN number, intra-community VAT number, precise description of the goods or services, rate and amount of VAT, payment terms and late payment penalties.Since the Sapin II law (law no. 2016-1691) and as part of the electronic invoicing reform provided for by ordinance no. 2021-1190, French companies will have to gradually switch tomandatory electronic invoicing

via the Chorus Pro platform or partner dematerialization platforms (PDP) between 2026 and 2027.Supporting documents (invoices, contracts, bank statements, delivery notes) must be kept10 yearsfrom the end of the financial year (article L. 123-22 of the Commercial Code), and6 years

for tax documents (article L. 102 B of the LPF). A missing supporting document can invalidate an accounting entry and reduce the deductibility of an expense.

3. Accounting entry and applicable standards

The accounting entry must comply with the General Accounting Plan (ANC regulation no. 2014-03) which defines the nomenclature of accounts and the valuation rules. SMEs exceeding two of the following three thresholds (€4 million balance sheet, €8 million turnover, 50 employees) must produce complete annual accounts: balance sheet, income statement and annex.Listed groups or groups making public offerings apply theIAS/IFRS standards

in accordance with EC Regulation No. 1606/2002. Although VSEs/SMEs are not directly concerned, those operating with international partners or aiming to raise funds must familiarize themselves with it.

The entry must be carried out according to the double entry principle, with a reliable audit trail (article L. 13-0 C of the LPF). The accounting software used must comply with the FEC (Accounting Entries File) format required in the event of a tax audit.

4. Specific obligations according to status⬥⬥⬥ micro-enterprisesbenefit from ultra-simplified accounting but must invoice with the mention “VAT not applicable, art. 293 B of the CGI” below the franchise thresholds. THEindividual entrepreneursin the real regime must keep complete commercial accounts.VSE/SMEcompanies (SARL, SAS) must also submit their annual accounts to the commercial court registry within the month following their approval (article L. 232-23 of the Commercial Code).