Leasing vs renting for equipment: key differences
In leasing you acquire an asset with a purchase option at the end, with specific accounting and tax effects. Renting includes maintenance
What are financial covenants?
Covenants are commitments, usually between a bank and a company, to maintain certain ratios and limits in your financing contracts
What is CCR and why does it matter?
The CCR, Risk Information Center of the Bank of Spain, records your debts and guarantees with financial institutions.
How to use confirming to obtain discounts?
Confirming, or supplier advance payment, allows the bank to pay your suppliers earlier while you settle at maturity.
What is the debt service coverage ratio?
The debt service coverage ratio compares operating cash flow with the installments and interest payable in the period.
When am I required to audit the annual accounts?
When during two consecutive years you meet at least two of these three limits: assets exceeding 2.85 million euros
How is the distribution of dividends recorded and limited?
After approval at the meeting of the application of the result, a liability for “dividend payable” and the corresponding withholding for the partners are recognized.
What is the legal reserve and when must I fund it?
Every period you must allocate 10% of the year’s profit until the legal reserve reaches at least 20% of the share capital.
How do I calculate and use the hourly cost to set prices for services?
For this type of situation, you must allocate direct and indirect costs (such as billable hours), add an objective margin
How are business property leases treated from an accounting and tax perspective?
From an accounting perspective, you record the lease expense and incorporate it. Remember that from a tax perspective, the expense is deductible if it is necessary and justified
