Accounting principles for French businesses
In France, accounting has very strict rules and norms. It’s important to follow these rules, as not doing so would put you at odds with the law. It’s almost never recommenced to try to take care of your accounting by yourself but in case you ever need to, here are the main accounting principles you must never forget:
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Continuation of operations
Basically, this means that when you make your balance sheet, you consider that the company will still operate in the coming years.
This is because sometimes, accounting is planned over several years; this is the case for the depreciation of goods, for example.
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Independence of fiscal year
This means that bills need to be associated to a fiscal year, no matter when they were filed. Here, the point is to make sure that bills are never counted twice in accounting.
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Historic costs
This prevents you from ever re-evaluating an asset: whenever you write one of the company’s assets in its balance sheet, its value is the same as the one you originally bought it for. Instead, there’s a separate category on your balance sheet dedicated to the depreciation of goods.
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Prudence
In effect, this means that you should always write potential losses on your balance sheet, even if they come into effect after the end of the fiscal year.
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Methods consistency
This states that if the company ever makes a choice in its accounting, it has to make that same choice for every following fiscal year.
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Non-compensation
You have to count your balance sheet (assets and liabilities) and profit and loss account (gains and expenses) separately.
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Intangibility of the opening accoun
Basically, this means that at the beginning of the fiscal year, your balance sheet should be the same as at the end of the previous fiscal year.
As you can see, there are quite a few principles in accounting, and truth be told, there are even a couple more! All of these rules make it pretty much mandatory for any company to have a dedicated chartered accountant, as doing all of this yourself is very risky.
And of course, this is especially true if you don’t have perfect knowledge of the French language and legal system!
