All businesses registered with the Trade and Companies Register (RCS) must keep accounts. Depending on the legal category and tax options chosen by the entrepreneur for his structure, cash or commitment accounting must be set up. The accounts may be kept by the companies themselves, or they may be entrusted to a chartered accountant who is a member of the Ordre des experts-comptables.

In addition, innovative solutions, such as the one offered by Azopio, put digital technologies at the service of businesses and their accountants to simplify and automate bookkeeping, enabling them to offer a less expensive service and real-time management of the day-to-day running of the business.

What is cash accounting?

Cash accounting involves keeping accounts based on bank transactions. All you have to do is analyse the bank statements/transactions you receive every month, without forgetting to attach the supporting documents (customer invoices, supplier invoices, bills, etc.).

Although this method is simple, it does not allow you to track the payment of invoices. In addition, cash accounting is restricted to companies whose legal status is that of a sole trader and which have opted for the following tax treatment (depending on their category, as explained below):

• Non-commercial profits (BNC) under the controlled declaration regime,
• particularly for the liberal professions.
• Non-trading companies subject to income tax (Impôt sur le Revenu), in particular non-trading property companies (SCI).

What is accrual accounting?

Commitment accounting is a method of recording transactions affecting a company’s assets and liabilities as soon as they are acquired (income) or incurred (liabilities), rather than on the basis of bank transactions. Income must therefore be recognised when it is legally acquired and expenditure when it is incurred, even if it has not been paid.

Revenue must therefore be recognised when it has been legally acquired and expenditure when it has been incurred, even if it has not been paid.

This method is more restrictive, because it requires a bank reconciliation, among other things, but it nevertheless allows very precise monitoring of a company’s receivables and payables. Commitment accounting is also compulsory for :

• Commercial companies (EURL, SASU, SARL, SAS, SA, etc.),
• Associations and works councils with resources in excess of €153,000
• Companies subject to the BIC tax regime (Bénéfices Industriels et Commerciaux)

Conclusion

Whether your company keeps cash or accrual accounts, it still faces common problems. Thanks to simple, intuitive and inexpensive digital tools such as Azopio, you can now automate time-consuming tasks:

• Centralisation of accounting documents: Customer invoices, supplier invoices and bills arrive in different ways (paper, email, website) but must be kept (digitally or on paper). It is important to keep all accounting documents, as they will help to justify the accuracy of the summary accounting documents (balance sheet, profit and loss account). Failure to produce these documents to the tax authorities could invalidate the accounts and lead to criminal penalties of up to €500,000 and 5 years’ imprisonment;
• Automated retrieval of bank flows and accounting documents: it is much easier to associate invoices and supporting documents with the corresponding bank transaction
• In the case of commitment accounting, real-time monitoring of your receivables and payables

Azopio makes it easy for anyone to prepare your company’s commitment or cash flow accounts, whether they are managed in-house or in collaboration with an accountancy firm.