Instructions for preparing financial statements without revenue

How to prepare year-end financial reports when the business has no revenue, regulations on deadline for submitting financial reports, penalties for late submission of financial reports.

Are businesses that do not generate revenue required to prepare and submit financial statements? How should newly established businesses or businesses that do not generate revenue during the year submit financial statements? What issues should businesses pay attention to when preparing financial statements that do not generate revenue? Let’s find out the details with Online Accounting through the article below.

I. Why do businesses still have to submit financial statements even though there is no revenue?

Financial reporting is an important part of a business’s financial management. Even if the business has no revenue generated during an accounting period. Specifically, the submission of financial statements is still very important and mandatory for the following main reasons:

• Preparing financial statements helps tax authorities control and grasp the financial situation, transparency and honesty in the financial statements of enterprises;
• Even without revenue, financial statements still help businesses self-evaluate their financial situation, financial obligations and other important events of the business. At the same time, financial statements also help managers evaluate challenges and opportunities in the business process even without revenue.

Legal basis in Clause 1, Article 10 of Circular 156/2013/TT-BTC, if during the tax period no tax liability arises or the taxpayer is eligible for tax incentives or exemptions, the taxpayer must still submit tax declarations to the tax authority within the prescribed time limit, except in cases where the enterprise has terminated its business operations or temporarily suspended its business operations according to the guidance in Point d, Clause 1 of this Article and the cases in Articles 16, 17 and 18 of Circular 156/2013/TT-BTC.

II. Instructions for preparing financial statements without revenue generation

1. How to prepare financial statements without generating revenue

When preparing financial statements without revenue, businesses need to note the following points:

• Capital contributions (newly established enterprises) are recorded as: Debit accounts 111, 112 / Credit account 411.
  Note: Capital contribution period is 90 days from the date of issuance of the business registration certificate.
• Recording business license tax: If the enterprise is not exempt from business license fee, it must declare and pay business license fee.
  • Accounting for business license tax payable: Debit account 642 / Credit account 3339;
  • Accounting for payment of business license tax: Debit account 3339 / Credit account 111, 112.
• If the business has opened a corporate account:
  • Accounting account maintenance fees: Debit account 642 / Credit account 112;
  • Interest on bank deposits is recorded as: Debit account 112 / Credit account 515.
• Expenses when establishing: purchasing digital signatures, electronic invoices, establishment consulting fees… accounting: Debit account 642 / Credit account 111, 112.

2. Financial reporting records do not generate revenue

Business reports to be submitted at the end of the year include:

Detailed documents for preparing financial statements and personal income tax and corporate income tax finalization declarations are based on submitted monthly or quarterly declarations and the following data:

• Purchase and sales invoices, bank sub-ledger and payroll;
• Quarterly or monthly VAT declaration;
• Corporate income tax settlement is based on business performance report;
• Personal income tax settlement is based on quarterly personal income tax declarations and 12-month payrolls, information on personal tax codes and employee ID cards.

III. Regulations on submitting annual financial reports when no revenue is generated

1. Cases where it is not necessary to submit annual financial statements when there is no revenue

• Micro-enterprises pay corporate income tax calculated as a percentage of revenue from sales of goods and services (based on Article 18 of Circular 132/2018/TT-BTC);
• The business is temporarily suspending operations;
• Enterprises are allowed to combine financial statements (legal basis in Clause 4, Article 12, Accounting Law No. 88/2015/QH13). 

Note:

For enterprises that are allowed to aggregate financial statements, the aggregation is performed as follows:

• In case the first or last annual accounting period is shorter than 90 days, it is allowed to be added to the next annual accounting period or added to the previous annual accounting period to calculate into one annual accounting period;
• The first or last annual accounting period must be less than 15 months.

2. Deadline for submitting financial reports

The deadline for submitting a business’s financial report is no later than 90 days from the end of the fiscal year.

3. Penalty for violating the deadline for submitting annual financial statements according to regulations

Pursuant to Article 12 of Decree 41/2018/ND-CP, the penalty for enterprises violating the deadline for submitting financial reports is specifically prescribed as follows:

• Enterprises that publicly disclose annual financial reports less than 3 months later than the prescribed deadline → Fine from 5,000,000 – 10,000,000 VND;
• Enterprises that publicly disclose annual financial reports 3 months or more later than the prescribed deadline → Fine from 10,000,000 – 20,000,000 VND;
• Enterprises do not publicly disclose annual financial reports as prescribed → Fine from 40,000,000 – 50,000,000 VND.

IV. Frequently asked questions when preparing financial statements without revenue

1. Do businesses that have temporarily suspended business for less than a year and have not generated revenue have to submit financial reports?

Yes. Enterprises that temporarily suspend business for less than a year must still submit tax declarations for the resumption period and annual financial statements.

2. For newly established enterprises within the year of less than 90 days, when is the deadline for submitting the consolidated financial statements?

For example, the deadline for submitting financial statements for 2024 is March 31, 2024, so businesses should submit an official dispatch requesting to merge financial statements before this date.