Accounting and bookkeeping obligations are determined by two separate acts, the Accounting Act and the Bookkeeping Act. In simple terms the former states the types of business entities that are required to produce annual accounts and the obligatory contents of these accounts. The latter states the bookkeeping duties and records. All business entities regulated by the Accounting Act are also obliged to bookkeeping pursuant to the Bookkeeping Act. In fact, all legal entities carrying out business activities or participating in such activities in Norway are obliged to bookkeeping.
Note that accounting and bookkeeping are addressed in a separate guide found in Bedin:
The Accounting Guide.
Statutory bookkeeping obligation
All legal entities (i.e. persons, organisations and enterprises) involved in activities defined as business are obliged to keeping books, pursuant to the Bookkeeping Act. The only condition is that the tax authorities define the activities as business.
Statutory accounting obligation
The obligation applies to:
- All limited and public limited companies (AS and ASA).
- Unlimited companies (ANS and DA) and limited partnerships (e.g. KS) with a few exceptions listed below.
- Cooperatives/part ownerships (BA) provided the annual turnover (sales) exceeds NOK 2 million.
- Building societies, building cooperatives and building partnerships (depending on the number of partners).
- Financial societies.
- Societies/organisations comprising more than 20 man-years or a balance sheet total of more than NOK 20 million.
- Self-employed businesses comprising more than 20 man-years or a balance sheet total of more than NOK 20 million.
- Foreign enterprises carrying out activities or participating in activities within Norway or on the Norwegian continental shelf, and who are subject to Norwegian taxation according to domestic legislation.
The exceptions (bullet 2 above), i.e. legal entities not obliged to keeping accounting records, are as follows:
- Unlimited companies and limited partnerships (not registered as ship-owner partnerships) with
a) an annual turnover of less than NOK 5 million b) a work-force of less than 5 man-years, provided the number of partners does not exceed 5 and none of the partners is an legal entity having limited liability.
- Inter-municipality companies, i.e. companies owned by public partners such as municipalities, county authorities and other inter-municipality companies and as such governed by the Act on Inter-Municipality Companies.
See the Accounting Guide for further information on the reports required by the authorities from legal entities affected by the statutory obligation to keep accounting records.
Simplified accounting rules - small businesses:
Under certain conditions, enterprises obliged to keep accounting records may employ simplified accounting rules. And the primary condition is that they meet the definition of "small businesses".
To be considered a small business within the framework of businesses obliged to accounting, two out of the three following conditions must be met on the date of issue of the balance sheet:
The annual turnover must not exceed NOK 70 million (not including VAT or other indirect taxes
The balance total must represent less than NOK 35 million (i.e. the book value of the accumulated assets)
The average workforce must not exceed 50 man-years
Small businesses may employ simplified accounting rules. For instance, they do not have to prepare the cash flow statement. Also, the requirements regarding the notes to the accounts are less rigid.
In addition, they may employ the Norwegian accounting standards for small businesses – NRS 8. Note that the standard (in Norwegian) is available free of charge from the Norwegian Accounting Standards Board (Norsk regnskapsstiftelse - NRS).