Main Accounting Requirements And Records In Italy
What is the purpose of keeping a precise and organized accounting in your company?
Accounting plays a key role in managing your business as it allows you to constantly control your economic and financial situation.
To make a general picture that respects itself has the right and obligation keep a proper accounting. The reasons are relatively simple:
- it is a right because through accounting records a company is always in control of revenue and expenditure trends and it has a final report at the end of each year;
- it is an obligation because it is imposed by the law. Every company indeed should show its activities and performance to third parties.
HOW DOES ACCOUNTING WORK IN ITALY?
The mandatory accounting records which every entrepreneur should keep in Italy are:
- The general journal – collection of all the operations carried out during the course of the business organized according to the chronological record of transactions;
- The inventory book – collection of all the assets and liabilities of the company with also the profits and losses;
- VAT registers;
- The register of depreciable assets – it contains information on the company's assets including immovable properties (land, sheds, equipment, etc. ) or (trademarks, patents, etc.) and the movable proprieties defined in the public registers of the same company;
- The general ledger – of all the operations carried out during the course of the business organized according to the double-entry criterion: recorded per account using a chronological order.
The entrepreneur should also keep all the other required records respecting the specific economic-sector and the business-size, such as for example:
- the cashbook – it is not a mandatory register but is a tool used by companies to facilitate their accounting;
- the warehouse book – collection of all the in-coming and out-coming goods – it is required only for large enterprises;
- the register of receipts – it is required only for professional activities.
In addition to the above listed accounting requirements, the limited companies should also keep the following registers:
- the company books, the shareholders' book, the book of meetings and resolutions of the managing board. Moreover, on the basis of their organization, it can be required the book of obligations, of the board of directors and of the board of statutory auditors.
These accounting requirements and records, defined by the Italian Civil Code art.2220, should be kept for at least 10 years from the date of the last recording, even if meanwhile the company has ceased to work and exist. Once this period has passed, nobody can dispute the absence of these accounting documents to the entrepreneur.
Companies that work in Italy are obliged to comply with the accounting requirements contained in the Italian Civil Code (https://www.brocardi.it/codice-civile/) and the accounting standards issued by OIC (Italian Organism of Accounting),(https://www.fondazioneoic.eu/?lang=en) which integrate those contained in the Civil Code.
OIC is an Organization founded in 2001 and composed by various bodies. It has the role of issuing the national accounting standards for the preparation of financial statements of all the Italian companies. OIC cooperates with many international bodies such as AISB (https://www.iasplus.com/en/resources/ifrsf/iasb-ifrs-ic/iasb) or IFRS (https://www.ifrs.org/), providing in this way support to Italian companies to comply also to international standards too.
Now we will shortly describe the 2 main types of accounting-standards actually in force within the Italian fiscal legislation. Here below the specific subjects included in the Ordinary or Simplified accounting type.
ORDINARY ACCOUNTING (art. 13 of D.P.R. 600/73):
It is required by the law for all the companies with revenues above €400,000 for service-activities and €700,000 for products/goods.
What are the companies included within this type of Ordinary accounting standard?
- Corporation (srl, spa, sapa) ;
- Cooperative societies
- Mutual insurance societies;
- Consortiums / insurance companies or unrecognized organizations;
- Public and private bodies operating for commercial purposes with residency in Italy.
SIMPLIFIED ACCOUNTING (art. 18 of DPR n.600/73):
It is required by the law for all the companies with revenues above €400,000 for services-activities and €700,000 for products/goods.
What are the companies included within this type of Simplified accounting standard?
- Individual companies;
- Partnership (ss, sas, snc).