From bank statement to annual report — how the numbers come together

27 June 20265 min readannual reportbank statementcategorisation

An annual report is built from a bank statement, where each transaction is categorised as revenue, an expense, an owner payment, or a loan. The categories produce the income statement. The balance sheet then needs accrual entries a bank statement does not show: unpaid invoices, unpaid expenses, and tax payable.

Part of the guide: Filing the Estonian annual report

How does a bank statement become a report?

The bank statement is the starting point, because most transactions are recorded there. But the statement itself is not a report — it is a list of transfers. Getting to a report takes three steps.

Step 1 — categorise every transaction

Every line on the statement is something: revenue, an operating expense, an owner payment, a loan, a tax payment. The category decides where the number lands in the report.

Revenue — a client payment → income statement revenue line.
Operating expense — software, rent, services → income statement expense line.
Owner payment — a dividend, board member fee, or loan to a shareholder. These behave differently for tax and on the balance sheet, so the right choice matters.
Tax payment — transfers to EMTA → not an expense in the same sense, but the settlement of a tax liability.

The wrong category means the wrong report. This is the most time-consuming part when done by hand.

Step 2 — the income statement from the categories

Once transactions are categorised, the categories are summed into income statement lines: total revenue, total operating expenses, total labour costs. Costs are subtracted from revenue, leaving the profit for the year.

Step 3 — the balance sheet and what the statement does not show

A bank statement is cash-based — it only shows money moving. The report must be accrual-based (RPS paragrahv 5) — revenue and expenses are recorded when they arise, not when cash moves.

So the balance sheet needs things the statement does not have, added by hand:

unpaid client invoices (trade receivables),
unpaid supplier invoices (trade payables),
December payroll tax paid in January (tax payable),
fixed assets and their depreciation.

This gap between the cash-based statement and the accrual report is what makes DIY hard. To see cash and profit differ in real figures, look at the annual report example.

What a bank statement does not contain at all

Three things you must find separately:

Employer taxes. The statement shows net salary; labour cost also includes employer social tax and, for a salaried employee, unemployment insurance. These come from EMTA data.
Cash and personal-card business expenses. If they did not go through the business account, they are not on the statement.
The prior-year opening balance. The balance sheet starts from last year's closing position (the opening balance in the first year, RPS paragrahv 26).

The whole DIY process, from documents to submission: file your annual report yourself.

References

Raamatupidamise seadus (RPS / Accounting Act) — paragrahv 5 (accrual basis), paragrahv 18 (balance sheet and income statement), paragrahv 26 (opening balance).
Äriseadustik (Commercial Code) — paragrahv 179 (filing deadline).

nosweat.finance does steps 1–3 for you: it categorises transactions and builds the income statement and balance sheet. You review, check the numbers, and submit it yourself. About 15 minutes, €49.