Accounting and Taxation: Key Concepts and Practices

Accounting Books

Accounting books chronologically record all the financial transactions that take place in a company.

Inventory Book and Financial Statements

1. Initial assessment
2. Quarterly balance sheets of amounts and balances of checking
3. Annual accounts

Minute Books

Required if it is a company.

Generally Accepted Accounting Principles and Standards

1. Code of remaining trade and commercial law, SME PGC
2. PGC
3. Its sectoral adjustments
4. Standards development on what has been established
5. Other standards of Spanish law

Annual Accounts

1. Balance Sheet: The company's financial situation at a certain financial close.
2. Income Statement: The company's performance during an exercise, the result of its activity.
3. Statement of Changes in Net Worth: Changes in the composition of the company's net worth from one year to another.
4. Notes: Quantitative and qualitative information relevant to decision-making, not included in previous statements.

Taxation

Direct Taxation

Levied directly on individuals or companies that obtain a benefit or have it:

1. IRPF (Personal Income Tax): Tax on earned income of individuals from their work.
2. IS (Corporate Income Tax): Tax on profits earned by trading companies.
3. IAE (Tax on Economic Activities): Paid in respect of the exercise of business, professional, or artistic activities.

Indirect Taxation

Taxes paid when a product or service is used:

1. ITP (Property Transfer Tax): Tax when buying any particular good.
2. VAT (Value Added Tax): Tax paid in most economic transactions.
3. IE (Special Taxes): Specific taxes on consumer products.

Elements of Tax Law

• Taxable Event: The event envisaged by law, which occurs when a set of situations arise to which the tax standard applies.
• Tax Base: The amount on which the tax rate is applied.
• Net Tax Base: The quantity that is subtracted from the tax base, amounts that the law allows for each tax.
• Tax Rate: The percentage applied to the net tax base or tax base.
• Tax Fee: The result applied to the base tax type and could be the amount entered if there were no bonuses to deduct or add surcharges.
• Tax Debt: The final amount to be paid.
• Taxpayer: The person or entity on which the tax is levied.
• Taxable Person: The natural or legal person who must comply with tax obligations, both material and formal.