A company category (micro/small/medium/large) directly affects the scope of the management report is required, and how closely auditors, banks or partners may review the report.annual report: which forms will be available in e‑Äriregister, how many appendices (notes to the financial statements) must be disclosed, whether a
The most expensive mistake is choosing a category “by habit”, then refiling the report or explaining to a counterparty why the report looks too “empty”.
In practice, before filing, verify the requirements in Accounting Act (RPS) and Commercial Code (ÄS).
Below is a short algorithm I use in practice to determine the category (micro/small/medium/large) and immediately understand how much disclosure the report will require.
How to determine the category: the “2 out of 3” rule
In Estonia, the category is determined by three indicators of the reporting (financial) year. The logic is simple: if 2 out of 3 thresholds are not exceeded, the company belongs to that category.
Indicators:
- Assets at year-end (total assets on the balance sheet as of 31.12 or your financial year-end date).
- Revenue/turnover for the year (this is turnover, not profit).
- Average number of employees over the year (the average, not the maximum).
Practical algorithm:
- Export the final balance sheet and profit & loss statement from your accounting system.
- Pull HR statistics (or calculate the average headcount).
- Compare the indicators with the thresholds in the Accounting Act.
- When creating the report in e‑Äriregister, select the category.
How to quickly calculate average headcount
The most practical way for a small company:
- Take the number of employees by month (or at each month end).
- Add the 12 values and divide by 12.
If you have part-time contracts (0.5, 0.25), you can calculate in full-time equivalents (FTE) — if that is how you track internal statistics. The key is that the method is:
- consistent year to year;
- clear;
- documentable if needed.
Save a short note in your “Annual report 20XX” folder on how you calculated average headcount, plus the source numbers. It saves time if the question comes up a year later.
What changes in the annual report depending on category
Micro/small (often an “abbreviated report”) can usually file:
- a balance sheet + profit and loss statement;
- a reduced set of appendices (notes).
But “reduced” does not mean “none”. If the balance sheet includes loans, fixed assets or material payables, they still need to be disclosed and explained.
Medium/large usually require:
- more disclosures in the appendices;
- sometimes additional reports/sections;
- a higher likelihood of audit or review and supporting documents.
In practice, the category affects:
- how many sections open in e‑Äriregister;
- which appendix fields become mandatory;
- how deeply you’ll need to explain the numbers (for example, loans, related parties, etc.).
The two-year rule and “borderline” cases
Many companies have fluctuating metrics: revenue jumps one year and returns to its usual level the next. The law relies on stability, but when filing the annual report you still need to choose a category that matches the facts and requirements.
Practical approach:
- If the indicators clearly fit the category, choose it.
- If you are on the boundary and expect especially close attention from an auditor or a bank, choose the higher category. It is safer legally and better perceived by partners.
- If you intentionally want to disclose more (for example, for an investor), you can also choose the higher category.
How to choose the category in e‑Äriregister without surprises
- Create a draft report and choose the category.
- Check which forms open (main reports, appendices and additional documents).
- If you see there isn’t enough space for your reality (many transactions but minimal default disclosure), reconsider the category or your approach to the appendices.
- Record the chosen category and the reason in your working folder (one short paragraph is enough).
Common mistakes (and how to avoid them)
- Mixing up revenue and profit. Revenue/turnover is not the final result.
- Using maximum headcount. You need the average headcount.
- Choosing a category “to write less”. The report then looks suspiciously empty.
- Not disclosing material items in the appendices. This is a common reason for refiling.
Mini checklist (to avoid mistakes)
- Year-end assets are calculated.
- Annual revenue/turnover is calculated.
- Average headcount is calculated and the calculation is saved.
- Thresholds in the law are checked.
- The category is selected in e‑Äriregister and the available forms are reviewed.
- The appendices cover material balance-sheet items.
How we can help
If you want to close this quickly and avoid refiling: we will verify the data, prepare and fill the report in e‑Äriregister, advise on documents and take it through filing. Contact us.
See also on blog.accres.eu
Practical bonus: if a bank asks “why are you micro/small”, you should have three proofs: the balance sheet (assets), the profit and loss statement (revenue/turnover), and the headcount calculation. It takes 2 minutes if you saved the calculations upfront — and hours if you later have to dig through messages.
FAQ
Can we voluntarily choose a higher category?
Yes. This is common (for example, when banks or investors expect more detailed disclosure).
If we are micro, can we skip the appendices completely?
No. Even micro reporting has a minimum required set of disclosures in the notes/appendices under the Estonian Accounting Act, and the required fields depend on your category and reporting format. If something is not applicable, mark it as such — but don’t leave material items unexplained.
What matters more: the exact category or a report that is easy to understand?
Both. The category must be correct, and the annual report should clearly explain the numbers.