When establishing an entity in France, you must adhere to specific accounting rules, and one of the key French requirements is to comply with the Plan Comptable Général (PCG). Unlike other countries where accounting standards may be more flexible, France enforces strict guidelines. This can be challenging, especially if you are accustomed to international accounting frameworks such as IFRS or US GAAP. Don’t worry, Hexagone Advisory is here to help you navigate these accounting obligations stress-free.
Maintaining Accounts in French: A Mandatory Requirement
In France, all accounting transactions must be recorded in French and in compliance with the Plan Comptable Général. This means that even if your parent company operates internationally and uses foreign accounting systems or software, you will need to adapt your processes to meet this requirement. In practice, this involves:
- Journal Book: All company transactions must be recorded chronologically in the journal book, a fundamental document to ensure transparency in your accounts.
- General Ledger: The general ledger organizes all transactions recorded in the journal book by account category, providing a clear view of various transaction types (sales, purchases, salaries, etc.).
- Trial Balance: At the end of each accounting period, the trial balance ensures that accounting entries are balanced by comparing the total debits and credits for all accounts.
- Financial Statements: Annually, you must produce financial statements (balance sheet, income statement, notes) reflecting your company’s financial health in compliance with French standards.
These documents are essential for ensuring financial transparency and compliance with local rules. Hexagone Advisory can assist in managing this documentation, ensuring everything aligns with the PCG, whether for regular bookkeeping or preparing annual reports.
Compliance with IFRS or US GAAP: Harmonizing Standards
If you are an international company, your parent company likely uses international accounting standards such as IFRS (International Financial Reporting Standards) or US GAAP (Generally Accepted Accounting Principles). However, France requires all companies to apply the Plan Comptable Général for their operations in the country.
Harmonizing international accounting practices with local French requirements can be complex. The differences between IFRS, US GAAP, and PCG may be subtle but are crucial for ensuring compliance with your accounts.
For example, IFRS allows for some flexibility in revenue and expense recognition, whereas the PCG imposes stricter rules on the recognition and treatment of assets and liabilities. It is therefore essential to have a seamless transition between these accounting frameworks to ensure that your financial statements comply with both local and international requirements.
This is where Hexagone Advisory comes in. With our expertise, we help you harmonize your accounts, ensuring that your French operations comply with the PCG, while facilitating the consolidation of your financial statements under IFRS or US GAAP for your international headquarters. We ensure that your financial reports are clear and compliant at all levels, avoiding fiscal or administrative complications.
Closing Annual Accounts: A Key Step for Your Business
Every year, all businesses in France are required to close their accounts, a crucial process to report the financial position of the subsidiary. This annual obligation includes preparing and validating financial statements, which must be submitted to tax authorities and, in some cases, made public.
The Steps to Closing Annual Accounts Include:
- Preparation of Financial Statements: At the end of the fiscal year, your company must produce a balance sheet, an income statement, and notes. These documents showcase the financial performance of the past year.
- Publishing Accounts: Once financial statements are prepared, certain companies must publish their accounts with the commercial court registry. This ensures transparency for third parties, partners, and investors.
- Engaging a Statutory Auditor: For companies exceeding certain revenue or employee thresholds, engaging a statutory auditor is mandatory. The auditor validates your accounts and ensures their accuracy. They conduct an audit to confirm that financial statements accurately reflect the company’s reality and comply with French accounting rules.
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Hexagone Advisory: Your Partner for Simplified Accounting Management
With all these accounting obligations, it’s easy to feel overwhelmed, especially if your company is accustomed to different international standards. That’s why Hexagone Advisory is here to support you throughout the year and especially during your annual account closing. We ensure:
- Daily bookkeeping in compliance with the PCG.
- Production of financial statements in accordance with French regulations.
- Coordination with statutory auditors, assisting in document preparation and supporting you throughout the audit.
- Publishing accounts to ensure the required transparency with authorities and third parties.
By entrusting us with your accounting management, you can fully focus on growing your business in France, confident that your accounting obligations are handled meticulously and on time.
Hexagone Advisory simplifies your life by managing all accounting aspects for your subsidiary in France, ensuring a smooth transition between international and French standards. This allows you to focus on what matters most: growing your business, both in France and internationally.
