Guide · Annual close
Guide to preparing the annual accounting close
Straight answer: before closing the financial year, the company should check inventory, banks, customers, suppliers, assets, financing, salaries and any documents still to be delivered. The close does not begin after 31 December: it begins while it is still possible to investigate differences and gather supporting evidence.
This guide is for: companies with organised accounting that want to prepare the annual close gradually.
Why does the close require more than the December paperwork?
Over the year there may be unidentified movements, missing invoices, old balances, contracts never sent or differences between platforms and banks. The close should confirm whether the accounts represent the reality of the company and whether the information needed for the accounting and tax assessment is available.
What should be checked in the banks?
All statements must be complete and the balances reconciled. Transfers between accounts, financing, contributions from shareholders, personal payments and movements without documentation must be explained. Cheques, cards and payment processors may also give rise to amounts in transit.
How do you prepare customer and supplier balances?
Confirm invoices still to be collected, payments not yet matched and old balances. On the supplier side, identify missing documents, credit notes and advances. Incorrect balances can distort the financial position and make collection or payment harder.
Who has to report inventory?
According to the Tax Authority, the obligation covers, in general terms, entities with their head office, permanent establishment or tax domicile in Portugal that have organised accounting and are not under the simplified taxation regime. The inventory must be reported by the end of the month following the last day of the financial year.
Even where there are no goods in stock, it may be necessary to report that fact. The structure and valuation required should be confirmed for the period in question.
How do you carry out an inventory count?
- Set a date and halt or control movements during the count.
- Organise items by location, reference and unit.
- Record the quantities actually present.
- Identify damaged or obsolete goods, or goods belonging to third parties.
- Compare the physical count with the system.
- Keep the count sheets and the explanation of any differences.
Which assets and contracts should be reviewed?
Equipment, vehicles, works, software, financing, leases, insurance, grants and investments should be supported by contracts and invoices. It is also important to identify assets sold, written off or no longer in use.
What should be checked in relation to employees?
Validate pay, allowances, holidays, absences, bonuses, amounts payable and situations that span the year end. Also confirm that all contracts, changes and terminations have been properly reported.
What is the tax file?
The taxpayers covered must keep a tax documentation file for each tax period, organised with the applicable accounting and tax information. It is put together after the close, but depends on the documents and analyses gathered during the year.
Preparation checklist
- Bank statements and reconciliations completed.
- Customer and supplier listings checked.
- Inventory counted, explained and ready to report.
- Contracts, financing and insurance up to date.
- Assets acquired, sold or written off identified.
- Employee records and pay complete.
- Notifications, proceedings and exceptional transactions reported.
- Personal or shareholder movements properly clarified.
Official sources and related content
See the Tax Authority FAQs on inventory reporting and article 130 of the Corporate Income Tax Code, on the tax documentation file.
Read also the monthly documentation checklist.
The close is part of the Certified Accounting service and should be articulated with the document organisation of the client.
Related concepts
Inventory · Depreciation · Accrual · Deferral · Modelo 22 · IES · Tax file