Key takeaways
- The balance sheet is a snapshot of net worth at a date: assets (what the company owns) always equal liabilities and equity (how it is financed).
- The income statement covers the whole financial year and sets income against expenses to arrive at the result.
- Together with the notes, these two documents form the annual accounts, filed with the Central Balance Sheet Office of the National Bank of Belgium.
- The model to file (micro, abbreviated or full) depends on the size of the company, measured against three criteria.
Two documents, two distinct questions
Every Belgian SME keeps accounts, and once a year it publishes their summary. That summary rests on two documents that are often confused: the balance sheet and the income statement. Understanding what each one measures keeps you from reading one figure for another, and from misjudging the health of your business.
The distinction fits in a sentence. The balance sheet answers "what is the company worth at a given moment?". The income statement answers "what did it earn or lose over the year?". One describes a state at a date, the other an activity over a period. This article details the structure of each, what links them, and the filing obligation that frames them in Belgium, governed by the Code of Companies and Associations (CSA).
The balance sheet: net worth at the closing date
The balance sheet presents, at the close of the financial year, what the company owns and how it is financed. It reads as two columns whose totals are, by construction, always equal: assets on one side, liabilities and equity on the other. That equality is no coincidence: anything recorded as an asset had to be financed, by own funds or by debt, both of which sit on the liabilities side.
Assets read from the most durable to the most liquid. At the top, fixed assets: items meant to serve the activity for the long term. Below, current assets: what is meant to turn over in the short term. Liabilities follow the same logic of where resources come from: equity first, then provisions, then debts.
The main headings of the balance sheet
Fixed assets (assets)
Durable items: buildings, equipment, furniture, participations, intangible assets.
Current assets (assets)
What turns over in the short term: inventory, trade receivables, short-term investments and cash.
Equity (liabilities side)
The shareholders' contributions and the accumulated profits not distributed.
Provisions (liabilities side)
Probable or certain charges whose amount or timing is still uncertain at closing.
Debts (liabilities side)
What the company owes: suppliers, credit institutions, tax, payroll and social debts.
The order and content of these headings are not a matter of choice: they follow the standardised minimum chart of accounts, which we detail in The PCMN, the standardised minimum chart of accounts. It is this shared reference that makes two balance sheets comparable from one company to another.
The income statement: the activity of the year
Where the balance sheet freezes a state, the income statement retraces a movement. It gathers all the income for the year (mainly turnover, but also financial and exceptional income) and all the expenses (purchases, services and other goods, staff costs, depreciation, financial charges, taxes). The difference between the two gives the result for the year: a profit if positive, a loss if negative.
The income statement does not add everything up in a single lump. It distinguishes several levels of result — operating, financial, pre-tax — to show where performance really comes from. A company can post a net profit thanks to an exceptional item while losing money on its ordinary activity; only this breakdown reveals it. These income and expense items sit in classes 6 and 7 of the chart of accounts.
Balance sheet and income statement: what separates them and what links them
The two documents do not replace one another; they illuminate each other. The table below places each role.
| Balance sheet | Income statement | |
|---|---|---|
| What it measures | Net worth: what the company owns and owes | Activity: income and expenses |
| Period covered | A specific date, the year-end close | The whole financial year |
| Question it answers | What is the company worth at this moment? | Did it earn or lose money? |
| Nature of the amounts | Balances (stocks) | Flows accumulated over the year |
The link between the two is direct. The result for the year, calculated at the bottom of the income statement, flows up into the equity on the balance sheet: a retained profit increases own funds, a loss reduces them. That is why one cannot be read without the other. To turn these documents into management decisions, see The key financial indicators to track for an SME.
Annual accounts and the filing obligation
The balance sheet and the income statement do not travel alone. Together with the notes — which explain and complete the figures — they form the annual accounts. Most legal entities must file them with the Central Balance Sheet Office of the National Bank of Belgium, where they become public.
The timetable is framed by the CSA. The accounts must be approved by the general meeting, then filed within 30 days of that approval and, in any event, at the latest seven months after the close of the financial year (art. 3:10 and 3:12 of the CSA). Late filing exposes the company to increased filing fees.
- 1
Close of the financial year
Closing dateThe closing date fixes the moment at which the balance sheet is photographed.
- 2
Drawing up the annual accounts
The management body draws up the balance sheet, the income statement and the notes.
- 3
Approval by the general meeting
≤ 6 monthsThe ordinary general meeting approves the accounts, in principle within six months of the close.
- 4
Filing with the Central Balance Sheet Office
≤ 7 monthsWithin 30 days of approval and at the latest seven months after the close.
Which model, depending on company size
Annual accounts are not all filed in the same form. The National Bank of Belgium publishes three standardised models — micro-model, abbreviated model and full model — and the applicable one depends on the size of the company. That size is measured against three criteria, assessed at the closing date: the balance sheet total, the annual net turnover excluding VAT and the average number of employees.
| Micro-company | Small company | Large company | |
|---|---|---|---|
| Balance sheet total (threshold) | ≤ €450,000 | ≤ €6,000,000 | Above the thresholds |
| Net turnover (threshold) | ≤ €900,000 | ≤ €11,250,000 | Above the thresholds |
| Employees (annual average) | ≤ 10 | ≤ 50 | Above the thresholds |
| Annual-accounts model | Micro-model | Abbreviated model | Full model |
Two useful points. First, crossing a threshold only has an effect if it is confirmed over two consecutive financial years: an isolated overshoot does not change the category. Second, a small company may always choose to file a more detailed model than the required minimum. The micro-model and the abbreviated model simply ask for less information than the full model reserved for large companies.
Bookkeeping that feeds your annual accounts without re-keying
YouInv structures your invoices and payments to give your accountant a clean base, ready for the balance sheet and the income statement.
What to take away for running your SME
The balance sheet and the income statement are not two interchangeable administrative formalities: they are two steering instruments. The balance sheet tells you whether your business is sound — enough own funds, cash that covers short-term debts. The income statement tells you whether your activity is profitable, and where value is created or destroyed. Reading them together, during the year and not only at closing, turns a filing obligation into a decision-making tool.
Further reading
- The PCMN, the standardised minimum chart of accounts: the reference that structures the balance sheet and the income statement.
- The key financial indicators to track for an SME: reading your accounts to decide.
- Automating an SME's bookkeeping: gaining reliability on the data that feeds your annual accounts.
The reference sources are authoritative: the Central Balance Sheet Office of the National Bank of Belgium for filing and models, and the Accounting Standards Commission for interpreting the size criteria.
What is the difference between the balance sheet and the income statement?
The balance sheet is a snapshot of the business's net worth at a specific date: it lists what the company owns (assets) and how it is financed (liabilities and equity). The income statement covers the whole financial year: it sets income against expenses to arrive at a profit or a loss. The first measures a state, the second an activity.
What does the balance sheet of an SME contain?
The balance sheet has two money columns that are always equal. Assets group fixed assets (durable items) and current assets (inventory, receivables, cash). Liabilities group equity, provisions and debts. Assets and liabilities are balanced by construction.
Must a Belgian SME file its annual accounts?
Yes. Most legal entities must file their annual accounts with the Central Balance Sheet Office of the National Bank of Belgium, within 30 days of their approval by the general meeting and at the latest seven months after the close of the financial year.
Which annual-accounts model applies to my company?
The model depends on the size of the company. A micro-company files a micro-model, a small company an abbreviated model, and a large company the full model. The category is determined from three criteria: balance sheet total, net turnover and number of employees.
Are the balance sheet and the income statement linked?
Yes. The result for the year calculated by the income statement (income minus expenses) flows into the equity shown on the balance sheet. Together with the notes, the two documents form a coherent whole: the annual accounts.
