What is a Financial Statement?
A Financial statement is a formal record of the financial activities of a business, person, or other entity. It presents the significant results of operations and the financial position of a company.
Who shall have the duty to keep accounts?
The following shall have the duty to keep accounts, as well as to provide the bookkeeping for its business operations according to the details, rules and procedures prescribed by the Accounting Act:
- Registered Partnership
- Public Limited Company
- Limited Company established under a Thai law,
- A Juristic Person established under a foreign law engaging in a business in Thailand
- A Joint Venture under the Revenue Code
All companies in Thailand has to prepare and comply with the following:
- Monthly Financial Reports (Balance Sheet, Profit & Loss Statement)
- Withholding Corporate Income Tax Return (PND 3, 53)
- Withholding Income Tax Remittance Return (PND 54)
- Half-year Corporate Income Tax Return (PND 51)
- Value Added Tax Return (PP 30)
- Annual Corporate Income Tax Return (PND 50)
- Annual Financial Statement
- Accounting Transactions Record
Failure to provide bookkeeping or comply with the regulations shall be liable to penalty.
What is a Balance Sheet?
A Balance Sheet is a financial statement that summarizes a company’s assets, liabilities and shareholders’ equity at a specific period. It is called a balance sheet because the two sides balance out. A company has to pay for all the things it has (assets) by either borrowing money (liabilities) or getting it from shareholders (equity). Consequently, these three segments give investors an idea about what the company owns and owes, as well as the amount invested by the shareholders.
Why do we need a Balance Sheet?
We can use this report to get a complete picture of the financial results and position of a business on the last date of the financial year. A balance sheet records the flow of money in a business and it shows the accounting value of all the company’s assets, liabilities and equity at one time. Therefore, this may lead to conclusions about the entity’s liquidity. We use these especially relevant data to compute the key indicators that show the company’s ability to meet its obligations.
When must we make and submit a Balance Sheet?
The submission of financial statements shall be according to the rules and procedures prescribed by the Directors-General of the Revenue Department and the Department of Business Development.
Companies must prepare and submit the balance sheets at least once every twelve months. Such twelve-month period constitutes the company’s accounting period or financial year. A newly established company should close accounts within 12 months from its registration. It is important that a qualified external auditor certifies the accounts and the officer must file with the Revenue Department and Department of Business Development every year.
One or more auditors must examine the balance sheets and then submit for adoption to a general meeting within four months after its date. The officer must give a copy to every person entered in the register of shareholders at least three days before the general meeting and copies must also be kept open at the offices of the company during the same period for inspection by the shareholders.
Moreover, if the accounts or the relevant documents are lost or damaged, the person having the duty to keep accounts shall notify the Chief Accounts Inspector or the Accounts Inspector, according to the rules and procedures prescribed by the Director-General. The responsible officer must then report within fifteen days from the date of knowledge thereof, or the date such loss or damage ought to have been known.
What happens upon failure to submit the audited financial statement on time?
Companies must comply within 150 days after the end of its accounting period. Otherwise, the company shall be liable to penalty and/or fine which may also be applicable to its responsible officer.
Can a company change its year-cycle of account?
A company may change its accounting period by getting a written approval from the Revenue Department’s Chief Accounts Inspector. The company must submit Form SorBorChor 4 together with other documents specified in the mentioned form.
Please See Related FAQ under Accounting