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18.01.2023

Informational newsletter | January 2023

5 key figures from the annual settlement that you should keep an eye out for

Do you sit and scratch your head over the annual accounts? It is useful to understand what the numbers are trying to tell you, as they tell you about the company's situation and development over the past year. These numbers can be used further and are input on how you should allocate your resources to achieve a better result. We have extracted five key figures that are useful to keep an eye on.

Solvency ratio

Does your company have a high solvency ratio? So good! The higher your degree - the better your company is able to suffer a bigger loss (should it occur) and not as much to risk going bankrupt. But is it really considered a high solvency ratio? 10 per cent can generally be regarded as satisfactory, 20 per cent as good and anything above 40 per cent as very good solvency. If your company manages to build up such a percentage (40), then there is little cause for concern.

The profitability

When starting a company, the goal (for most) is to become profitable in the long term. This can take time and there are several reasons for this. It can cover everything from maturity to which investments are made to realize the future ambitions. Regardless of these factors, it is important not to let this record go into oblivion. It may be that there are some points that need to be adjusted along the way.

In the annual accounts, you will find three good pointers on how the profitability of your company has been in the past year:

By calculating the net profit (income minus costs) you find out the profitability. Then you know how much your company has earned during the year
You can also calculate profitability based on the ratio between net profit and equity or net profit and turnover. The figures you get indicate how profitable the company is in relation to turnover or equity.
To understand the profitability picture even more. it may be appropriate to look at factors related to loans and depreciation on assets. It costs money to make money and it is important to have good cost control (less costs than income).

This way you can gain a better understanding of your company's profitability, if it is to survive in the longer term. A growth of a couple of percent is recommended for a healthy weight.

Debt ratio

When we are in the middle of costs anyway, we can move on to the debt ratio. Debt ratio describes how much of assets are financed with debt in relation to equity. The more that is financed with debt, the higher the assumed risk. Therefore, the companies should work to keep the rate down in order to achieve solvency. A rule of thumb can be to keep the debt ratio at 2 or lower.

Rate of return

The rate of return is a key key figure. It illustrates the company's ability to earn interest on the total capital – equity and debt capital (debt), and tells how much return you get on the total capital. It should be at least equal to the debt interest, but preferably higher.

Which factors can affect the return? In general, it is said that the higher the risk, the higher the potential return, but it can be difficult to generalize which factors can influence the most. Some factors that can influence are risk level, investment liquidity and time horizon.

Coverage contribution

The company's contribution margin says something about the profitability of the product/service you offer, and must be able to cover fixed expenses such as wages, rent, electricity and the like that do not change significantly in the short term. So if the contribution margin is greater than the fixed costs, yes, your company is making a profit. Hurray!

What other key figures are there? Although we have chosen to spotlight five specific ones in this post, we have created a complete list of key figures that you should follow in their entirety:

Profit margin
Rate of return
Return on equity
Degree of coverage
Zero turnover
Customers' turnover rate
The suppliers' turnover rate
Inventory turnover rate
Solvency ratio
Liquidity ratio

Deadlines and to-do list for the annual accounts in 2023

The year 2023 is underway, and it is time to think about the annual settlement for the past year. It is important that your company adheres to the deadlines that apply. Here are the deadlines in 2022 for the annual accounts for 2023, and a to-do list for what needs to be done.

These companies must submit annual accounts and annual reports

Businesses subject to accounting must prepare annual accounts and annual reports in accordance with the Accounting Act. Who is liable for accounting depends on the form and size of the company, and this is determined based on threshold values in the Accounting Act.

Companies that must submit annual accounts, among other things

All limited companies (both AS and ASA)
Responsible company (ANS/DA) with more than 5 million income, 5 full-time employees or 5 participants
Sole proprietorships with a value over NOK 20 million
All condominiums
Associations which during the year have had assets with a value of more than 20 million, or the number of employees which on average is more than 20 full-time employees
Foundations

You can find the full list of companies subject to accounting on the Brønnøysund register's pages.

What must be checked before submission?

For all businesses

Salary: Salary for December 2022 must be reported to the A report in the first week of January 2023. So this is a point that should already be in order. If there is a payment to employees who have not yet been included in the salary cycle, it is important that you inform your accountant about this ASAP.
Benefits in kind: Provide information on any benefits in kind that have not been reported throughout the year. This applies both to business relationships and your own employer. Examples of such benefits are; shares, interest benefits for reasonable loans, rights of use, services or other types of benefits. This applies regardless of whether the service is made available to the recipient free of charge or at a reduced price.
Cash settlement: This must have been done no later than 31.12. Remember the attestation of the person who carried out the settlement.
Cash balance: Deadline 31.12. If you operate in the merchandise trade, it is important to attach vouchers and gift cards as well.
Item count with valuation divided between current and outdated goods: In the documentation, there must be a specified statement of the type, quantity and value of the goods for EACH individual item (as well as a summation column for the specific values). It must also be stated who has reviewed the count with a date in the count list. ATTENTION! Do you have items stored elsewhere? Remember to write these down as well, but on a separate list. Deadline 31.12.
Performed, not invoiced work: Inventory assessment for performed, not invoiced work per 31.12 must be prepared. This list shall contain all work with materials delivered in 2022, and which will not be invoiced until 2023.
Loss on accounts receivable: Send a list of these to your accountant. At the end of the year, an assessment of trade receivables with a risk of loss must be documented.
Goods/services - private withdrawals: Have you not been informed about private withdrawals for goods and services? Send this to your accountant as soon as possible. This applies to owners, participants and senior staff.
Company car: Do you use a company car? The car's mileage, type, registration number and model must be submitted by 31 December.
Rented and/or leased operating assets: Make a complete list of these and deliver to your accountant.
Purchase and sale of operating assets: Prepare a specification for this and provide information on any indication of impairment.
OTP agreement: Remember to register regularly so you stay up-to-date on employee information and salary basis with the insurance companies. In 2021, it was required to state in the A report for employers with whom they have entered into an occupational pension.

If you have other types of accounting vouchers to be included in the accounts for 2022, you must deliver them as soon as possible.

For sole traders

Salary income: Send the compilation statement of salary income you have had alongside your business activities.
Private car used for work: Do you use your own car in the industry? Submit travel bills and always update the driving record.
Travel expenses home/place of work: If you have a journey of more than 2.5 km to your permanent place of work, this must be stated. Documentation on tolls and/or ferries must also be attached if it is used as a basis for a right to a deduction for this. Talk to your accountant about which amount limit applies to this point.
Commuter allowance: Check and calculate whether you are entitled to it here
Purchases and sales - private assets: Must be informed about to the accountant together with a copy of the insurance policy if possible.
Pension insurance: The premium for your own pension insurance must be documented. Do you not have pension insurance? The deadline for entering into an agreement on pension insurance is the end of March of the year following the income year.
Childcare, marital status and distribution of business income with spouse: Must be documented.

For stock-based companies

Agreements between the company and shareholder: Agreements between shareholder(s) and the company, specifying which benefits are provided by the parties, as well as the duration of the agreement must be stated.
Information for the shareholder register statement. Any changes in the number of shares, premium or share capital must be reported. The shareholder register statement must be ready for submission on 31 January.
Approved distribution of dividends: This includes additional dividends and extraordinary dividends. Any repayment of previously paid-in capital and loans granted via subsidiaries must also be entered.

Has the stock-based company changed owners until 2022? Then there is quite a lot to be included:

Name, address and social security number
Number of shares
Date of transfer
Agreed price
Whether the shares have been transferred as an inheritance, gift, gift sale or sale at assumed market price
Whether the transfer has taken place to employees of the company

Deadlines for the annual accounts

The deadline for submitting the annual accounts and annual report is six months after the end of the financial year. This means that companies with a regular accounting year have until 30 June 2023 to complete their annual accounts.

30 June is also the same deadline for the general meeting to consider the annual accounts and the annual report. For companies with an audit obligation, the accounts must be completed before this deadline.

Deadline for submission to the Accounting Register

The deadline for preparing annual accounts for 2022 is 30 June 2023, when it will be processed by the general meeting. One month later, on 31 July, the deadline for submission falls.

Tax deadlines

Enterprises and traders are obliged to submit a tax return and business statement. For limited companies, this can be delivered electronically from the accounting system. The deadline for submitting tax returns and business statements for companies and entrepreneurs is 31 May.

Companies can apply for deferred delivery of the tax return until 30 June. Contact us at Accountor if you need help and advice in regarding this.

Other deadlines

The deadline for delivery of the shareholder register application is 31 January, both for delivery electronically and on paper
VAT notification for small businesses with an annual term has a deadline for delivery and payment of 10 March
In ordinary years (where we do not have exceptional situations due to the corona pandemic), accountants and auditors have a deadline to apply for deferred delivery of tax returns for their clients on 31 May. They can have the submission deadline postponed until 30 June