0.3The accounting obligations of a business
The essentials in 30 seconds
- Three areas: keep books (journal, ledger), prepare the annual accounts, keep documents for the legal retention period.
- Scaled requirements: simplified regimes for small entities, full obligations (sometimes audit) for large ones.
- Reflex: know your local regime and rely on a chartered accountant — rigour protects.
Running case — Rachid gets organised before an inspection
Rachid kept his sales in notebooks and his invoices in a pile. His accountant has him list the three areas: record every transaction in the journal, prepare the annual accounts at year-end, file and keep every document. Within a month, the SME moves from pile to binder: Rachid knows his regime and sleeps soundly.
Sequel to cases 0.1–0.2 — Rachid moves from mess to obligations.
1. Three branches of obligations
Every business has accounting obligations depending on its size and form. Three branches: keeping books (recording chronologically — journal, general ledger), preparing the annual accounts (balance sheet, income statement, notes at the year-end closing), and retaining the documents for a legal period.
2. A proportionate level
The level of requirement is proportionate: small structures (sole traders, small entities) often benefit from simplified regimes; larger companies have complete obligations (sometimes an audit by a statutory auditor).
3. Knowing your obligations
These rules vary by country (this guide relies on the French framework), but the principles (books, accounts, retention) are universal.
A manager often relies on a chartered accountant, but must know their obligations to be compliant. Accounting rigour protects the business.
🔎 Concrete example — 🔎 Concrete example — Obligations that vary
Depending on size and form.
Sole trader (micro): register of receipts + invoices retained.
Large company: complete accounts, sometimes an audit (statutory auditor).
→ universal principle, details by country.Result: you place your obligations according to your structure.
Reflex: know your local obligations to avoid sanctions/restatements.
Section vocabulary
- Accounting obligations
- All legal duties on accounting (bookkeeping, annual accounts, retention).
Simple example: Rachid keeps his books, prepares his annual accounts and keeps his documents.
What it is not: keeping accounts “when there is time”, with no books or retention.
Reflex: check your regime with your accountant every year.
- Journal
- Register recording all the business's transactions chronologically.
Simple example: Every sale and purchase of Rachid's SME appears there day by day.
What it is not: an annual summary with no chronological detail.
Reflex: no transaction without a dated trace in the journal.
- Simplified regime
- Lighter accounting obligations for small businesses (cash accounting, simplified accounts).
Simple example: A very small entity keeps a revenue register instead of full accounts.
What it is not: believing simplified means no obligations.
Reflex: identify your regime by size and legal form.
- Document retention
- Duty to keep invoices and accounting documents for a legal period (varies by document/country).
Simple example: Rachid files his invoices by year and archives them properly.
What it is not: throwing invoices away after payment.
Reflex: a retention policy per document type, under local law.
- Legal form
- The business's status (micro, LLC…) which, with size, sets the extent of obligations.
Simple example: Rachid's SME does not have a micro-entity's obligations.
What it is not: applying another country's rules without checking.
Reflex: link size + form = applicable regime.
In practice — In practice — Know your accounting obligations
- Identify the three branches: keep books, prepare the annual accounts, retain the supporting documents.
- Find your regime according to size and legal form (simplified for small structures, complete for larger companies).
- Note the legal retention period for documents (varies by document type and country).
- Know who supports you (chartered accountant) and check that your local obligations are met.
Ready-to-say script — reviewing obligations with your accountant (1 min)
“What exactly is my regime: books to keep, accounts to prepare, retention periods? Show me what is missing from my filing and let's set a date to be compliant this month.”
Say it to your accountant: a concrete diagnosis of regime and documents, with a deadline.
Copy-paste template — obligations checklist
MY SIZE / FORM: _______________ | MY REGIME: _______________
BOOKS KEPT (journal, ledger): _______________
ANNUAL ACCOUNTS (balance sheet, income, notes): _______________
RETENTION (per document type, local period): _______________
MY ACCOUNTANT / DEADLINE: _______________Small business / tight budget
No archive room needed: one binder per year (purchases, sales, bank, tax) plus a backed-up digital copy is enough to start.
Algerian SME
Rachid has his accountant validate the local framework (SCF): books to keep, financial statements to prepare, documents to keep under Algerian rules.
Micro-entity
Revenue register (plus purchases depending on activity) + invoices kept + returns: simplified does not mean no margin tracking.
Growing company
Anticipate the regime change: move to full accounts and possible audit — budget for accounting before the threshold.
✓ Best practices
- Identify your regime (simplified or complete) according to size and form.
- Set up a retention policy by document type.
- Rely on a chartered accountant for your local obligations.
✗ Common pitfalls
- Believing a small structure has no obligations and no bookkeeping at all.
- Not retaining documents (at risk in case of audit/dispute).
- Applying rules from another country without checking local law.
Key takeaways
- Three branches of obligations: keep books, prepare the annual accounts, retain the documents.
- The level of requirement is proportionate to size and legal form (simplified regimes for small structures).
- The rules vary by country; the principles (books, accounts, retention) are universal.
- The manager must know their obligations (often with a chartered accountant) to be compliant.
48h Challenge — apply tomorrow
File 10 loose documents (purchase invoices, sales invoices, statements) by type and year, and ask your accountant what is missing to be compliant.
- I can name the three areas of obligations.
- I can place my regime by size and form.
- I have filed my documents and checked my retention.
Frequently asked questions
Does a micro-business have to keep real accounts?
In general, its obligations are greatly simplified, but not non-existent. In many regimes (like the micro regime in France), you do not keep complete double-entry accounts: a register of receipts is often enough (plus a register of purchases for some activities), you keep the invoices, and you declare your turnover — no balance sheet or income statement. Careful: not having heavy obligations does not exempt you from tracking your figures (margins, cash), nor from meeting the obligations that remain (invoicing, declarations, VAT depending on the thresholds). These rules depend on the country and the precise regime.
How long do you have to keep accounting documents?
It depends on the type of document and the country: the legal periods vary (accounting papers, invoices, tax/social/commercial documents do not always have the same deadlines). In many frameworks, accounting documents are kept for several years (often around 10 years for the books and papers, but check your legislation). The stakes are real: in case of a tax audit or dispute, the company must produce its supporting documents. Good practice: a retention policy by document type according to the legal periods of your country, and proper archiving (increasingly digital — 5.3). When in doubt, the chartered accountant knows the applicable periods.
What are the three areas of basic accounting obligations?