Cooperatives are classified as micro-enterprises if only one of the following limits is exceeded:
- Turnover of €700,000;
- Balance sheet total €300,000;
- More than 10 employees on average.
The financial statements and the cooperative’s tax declaration are always submitted for each financial year.
All costs and revenues, loans, salaries and money transfers are allocated or recorded in the accounting and all supporting documents (= receipts and invoices) have to be originals. When an invoice or a receipt has been digitalized and saved into the software, it becomes an original document, and the paper document can be destroyed.
The two most important accounting reports are the profit-and-loss statement and the balance sheet. The first will summarize the revenue and the expenditure during a specific period of calculation, and the result of the cooperative during the same period, which can be positive (the cooperative generated surplus) or negative (the cooperative made a loss). The balance sheet always indicates the asset position on a specific day, i.e. how much the cooperative has investments, assets, stocks, accounts receivable, money, as well as capital and debts.
In its financial statements, the cooperative must use either expense classification “by nature” or “by function.” In general, accounting software uses classification by nature for the loss-and-profit statement.
LOSS-AND-PROFIT STATEMENT
NET SALES
Variation in stocks of finished goods and work in progress
Capitalized production
Other operating results
Materials and services
Expenditure on materials, equipment and goods
External services
Staff costs
Wages and salaries
Pension contributions
Other statutory non-wage labor costs
Depreciation and value write-downs
Other operating costs
OPERATING PROFIT (LOSS)
Financial revenues and costs
PROFIT (LOSS) BEFORE APPROPRIATIONS AND TAXES
Appropriations
Income taxes
Other necessary taxes
SURPLUS (LOSS) OF THE FINANCIAL YEAR
The turnover consists of the cooperative sales without value added tax. When invoicing, the cooperative adds that VAT in its sales invoices according to the Value Added Tax Act.
Other operating results are different kinds of subsidies, lease income and other extraordinary results not explicitly being part of the cooperative’s line of business.
The purchases include all goods and product purchase in order to generate the results, and the changes in stocks. The purchases also include subcontracting related to sales.
Staff costs include, beside wages and salaries, all statutory non-wage labor costs (pension contributions and other insurance fees).
Depreciations are entries of expenditure for factors of production purchased for a long term (buildings, lands, real estate, machinery, equipment etc.). First, the purchase is carried on the corresponding account in the balance sheet. Once activated, this purchase price is reduced with a write-down called depreciation in the profit-and-loss statement of the accounting. The Act on the Taxation of Business Income (EVL) stipulates the maximal depreciation values for each asset item. Purchases of machinery and equipment can be written down during their period of utilization as expenditure with the procedure of declining-balance depreciation, which means that in the end of each year, 25 % of the book value existing at the end of previous year is carried as costs in the accounting. Small purchases of machinery and equipment (less than €850 or used less than 3 years) can be recorded as costs directly during the current year.
Other operating costs are other staff costs (like occupational health services), rents, telecommunication costs, travel costs, marketing and PR costs, plus administrative costs.
BALANCE SHEET
The balance sheets indicates where the assets of the cooperative come from and where they are committed on a certain date.
| ASSETS | CAPITAL, RESERVES AND LIABILITIES |
| Non-current assets | Capital and reserves |
| – Intangible assets | – Cooperative share capital |
| – Tangible assets | – Other reserves (e.g. legal reserve) |
| – Investments | Retained earnings/loss |
| Profit (loss) for the financial year | |
| Operating capital | Creditors |
| – Stocks | – Non-current liabilities |
| – Debtors / short and long-term assets | – Current liabilities |
| Financial securities | |
| Cash at bank and in hand |
The non-current assets show how much money is committed in tangible (e.g. machinery) and intangible (e.g. IT licenses) goods. The cooperative can also have investments, e.g. ownerships of other cooperatives or businesses.
The operating capital groups the value of the stocks, i.e. value of the inventory, and receivables and long-term assets. Additionally, it shows the value of financial securities and the balance of the bank account and the money in cash.
The capital, reserves and liabilities side of the balance sheet is composted of capital and reserves and creditors. Capital and reserves covers the contributions (share capital) and profit from the current and previous financial years. Creditors mean the debt of the cooperative liable to other parties. Long-term debts are the ones that mature in more than one year, short-term debts cover trade creditors, tax in default and holiday pay debt.