Notes to the annual accounts: content and exemptions

Quick answer. The notes are the third component of the annual accounts, inseparable from the balance sheet and the income statement (article L123-12 of the French Commercial Code). They complete and comment on those two statements. Micro-entities in the accounting sense, which do not exceed two of the three thresholds of 450,000 euros total balance sheet, 900,000 euros net turnover and 10 employees, are exempted from drawing up notes (article L123-16-1).

Many directors know their balance sheet and their income statement, but see the notes as an unreadable formality the accountant adds at the end of the file. That is a misreading. The notes are not an accessory document: they are an integral part of the annual accounts and carry the information without which the other two statements do not give a true and fair view. In practice, the real question is not what the notes are for but whether your company must draw them up, and in what form. The answer depends on your size, and the rules have their nuances.

This article explains what the notes contain, who is exempted, who may use an abridged version, and why an accounting exemption never releases you from your tax obligations.

A company's annual accounts comprise three documents: the balance sheet, the income statement and the notes. Article L123-12 of the Commercial Code presents them as an inseparable whole. You cannot properly read a balance sheet without its notes, just as you do not judge a photograph without its caption.

The balance sheet gives a situation at a point in time, the income statement traces the activity of the financial year, and the notes explain. They comment on the methods used, detail certain items, and flag anything that could change a reader's understanding (bank, partner, buyer, tax authority).

In concrete terms, the notes answer questions that the raw figures leave open: how did fixed assets change, over what period are they depreciated, which provisions were recognised, which off-balance-sheet commitments exist, which accounting rules were applied and why.

The content of the notes is organised around a few families of information. Not all of them are mandatory for every company: the guiding principle is materiality. You disclose what genuinely sheds light on the reading, not what needlessly weighs the document down.

The last item is the most important in terms of judgement. Information does not need to fit a standardised table to require disclosure: as soon as it is material to understanding the company's situation, it belongs in the notes.

Our reading. In the files we handle, the most useful notes are not the longest. Relevant notes isolate three or four points that genuinely deserve explanation (a change in depreciation period, a provision for litigation, a guarantee commitment) rather than copying standard wording. It is precisely that selection which sets thoughtful notes apart from mechanically generated ones.

The regime that applies to your notes depends on your company's accounting category. Since 1 March 2024, for financial years opened on or after 1 January 2024, the thresholds have been raised. Two of the three criteria are assessed to place the company in a category.

Be careful with the vocabulary: the micro-entity in the accounting sense is not the micro-entrepreneur (former auto-entrepreneur) of the simplified social and tax regime. These are two distinct concepts that unfortunately share the same name. A limited company subject to an actual taxation regime can perfectly well be a micro-entity in the accounting sense if it stays under the thresholds above.

This is where the practical interest lies for most directors. The obligations relating to the notes vary clearly by category.

The micro-entity exemption stems from article L123-16-1 of the Commercial Code. It is clear: a micro-entity in the accounting sense does not have to draw up notes. The text sets a single exception, for companies whose activity consists in managing equity investments and transferable securities.

Small companies, for their part, are not exempted but benefit from a lighter regime. Articles L123-16 and D123-200 open up a simplified presentation of their accounts and the possibility of drawing up abridged notes, with content reduced to the most useful information.

Hayot Expertise tip. The exemption is not an obligation to abstain: it is an option. If your micro-entity is seeking financing, preparing a fundraising round or a sale, well-built voluntary notes reassure the reader and tell your figures better than a bare balance sheet. We recommend them as soon as an informed third party must analyse your accounts.

The micro-entity managing securities#

The exception in the text targets companies whose activity consists in managing equity investments and transferable securities. A patrimonial holding company that would otherwise meet the micro-entity size criteria remains required to draw up notes. The logic is protective: for this type of structure, the notes carry essential information (composition and valuation of the portfolio, commitments) that the balance sheet alone does not convey.

The small company and the abridged notes#

Abridged notes are not cut-rate notes: they are targeted notes. You keep the genuinely material information and set aside the developments the company's size does not justify. In practice, the choice of abridged notes is decided ahead of the closing, in line with the simplified presentation of the balance sheet and income statement.

Drawing up notes without being required to#

An exempted micro-entity may still draw up notes if it considers it useful. It is a financial communication choice. Facing a bank, an investor or a buyer, explaining your methods and commitments is often worth more than leaving the reader to interpret raw figures alone.

The underestimated risk. Many directors think that being exempted from notes simply means having fewer documents to produce. That is false on the tax side, and it is the error we correct most often.

Notes exemptions belong to accounting law. They do not affect your tax obligations. The tax return package and its supporting schedules remain due, whatever your size category. These are two distinct regimes, with two different logics.

A micro-entity in the accounting sense can therefore be exempted from notes under the Commercial Code and, at the same time, have to file a full tax return package with the authorities. The reconciliation work between the accounting result and the taxable result remains intact, as we detail in our article on extra-accounting add-backs and deductions.

In practice, here is how to articulate the two logics:

• Determine your accounting category (micro, small, medium) by assessing two of the three thresholds.
• Deduce your notes obligation: exemption, abridged notes or full notes.
• Prepare, separately, the tax return package and its schedules, which remain due in all cases.
• Check that the accounting choices (simplified presentation, abridged notes) are consistent from one financial year to the next.

Preparing the notes is part of bookkeeping and accounting review. It is built at the closing, once the balance sheet and the income statement are finalised, and relies on the supporting documents collected throughout the financial year. That is why we handle the notes as a direct continuation of the closing and of bookkeeping and accounting review.

In a statutory audit engagement, the notes are also examined closely: this is often where the information whose absence could affect the true and fair view is located. The auditor checks that off-balance-sheet commitments, changes in method and material items are indeed disclosed.

2026 watch points.

• Confirm your size category with the thresholds in force since 1 March 2024: a change of category alters your obligations.
• Do not confuse accounting exemption and tax exemption: the tax return package remains due.
• If you manage securities, check whether the exception to the exemption concerns you.
• Anticipate small-company abridged notes ahead of the closing, not after.

To see how the notes fit into the overall timetable, also read our articles on the financial year, the filing of the annual accounts and the management report. To connect the notes to the figures they comment on, our guide to reading a balance sheet clarifies the mechanics.