The general chart of accounts

The general chart of accounts (Plan Comptable Général, or PCG) is a regulation established by the Autorité des normes comptables, France’s accounting standards authority. This document serves as a guide for businesses, setting out the procedures to follow for bookkeeping as well as for administrative management. Here is how the general chart of accounts is structured.

What is the general chart of accounts?

The general chart of accounts allows business owners to keep their books in compliance with the standards in force in France. By formalizing the account presentation rules that businesses are required to follow, the PCG clearly defines the following:

• accounting principles;
• definitions of assets and liabilities;
• expenses and income;
• transactions of a specific nature;
• the recognition and valuation of merger transactions;
• financial statements: balance sheet, income statement and notes;
• account classes.

Which businesses are required to follow the general chart of accounts?

The general chart of accounts applies to three types of businesses:

• businesses falling under the BIC category: Industrial and Commercial Profits;
• self-employed professionals taxed under the BNC regime: Non-Commercial Profits;
• companies subject to corporate income tax (IS): SARL, SCI, SAS, SA, SASU, etc.

Businesses whose activity is non-commercial, such as foundations and associations, are governed by separate regulations and refer to a general chart of accounts specific to their activity.

Micro-entrepreneurs (sole traders) are excluded from this framework. Their bookkeeping is limited to keeping a register of income received and a register of purchases. However, as soon as they exceed the authorized revenue threshold, sole traders must change their legal status and adapt their bookkeeping to the general chart of accounts.

As a reminder, the thresholds are €176,200 for the sale of goods, sale for on-site or takeaway consumption, and accommodation activities, and €72,600 for the provision of services.

N.B. When you set up your sole trader business, you should plan ahead and anticipate that your bookkeeping will become more complex once you change legal status. It is therefore crucial to choose, right from the creation of your business, an accounting software like Bizyness that is designed for sole traders but also for other legal statuses. That way, once you exceed the authorized thresholds, the processing of your accounts will be automated within the invoicing software, in just a few clicks, so you can comply with the new rules that will apply to your company.

What is the purpose of the PCG?

The general chart of accounts is a major asset for the financial management and administrative organization of a business. It serves as the ultimate guide for recording accounting entries, as well as for producing the required books and documents.

The general chart of accounts is your accounting reference document: it helps standardize the rules for all business owners, as well as for tax officials who may audit you. Since the PCG defines the standards for the balance sheet and income statement, all the other stakeholders involved with the business share the same reading of it: accountants, chartered accountants, bankers, investors, partners and financial partners, etc.

Thanks to shared criteria, the harmonization brought about by this chart of accounts also makes it possible to compare results across different businesses, regardless of their size or industry.

The content of the general chart of accounts

The general chart of accounts contains several chapters.

The guide to recording financial transactions

The PCG describes how to keep your books and prepare your annual financial statements. The accounts provide a snapshot of the business, covering its assets, financial position and results for each fiscal year. Among other things, this makes it possible to compare results from one year to the next.

The recording of financial transactions is organized by account and summarized in the financial statements, namely the balance sheet, the income statement and the notes. Depending on the size of the business, it may adopt the basic, simplified or extended system.

The account classes of the general chart of accounts

The general chart of accounts consists of 8 classes. Classes 1 to 5 belong to the balance sheet, classes 6 and 7 relate to the income statement, and class 8 relates to supplementary documents.

• Class 1: capital accounts correspond to equity, other equity, borrowings and similar debts, and provisions. They list the business’s stable resources, including investment grants, capital contributions, reserves, etc.
• Class 2: fixed asset accounts relate to the business’s assets. These are non-current assets, including tangible, intangible and financial fixed assets, along with their depreciation and impairment.
• Class 3: inventory and work-in-progress accounts are items intended to be resold or fully consumed.
• Class 4: third-party accounts correspond to debtors and creditors, for example suppliers (40), customers (41), staff (42), social security bodies (43), the State and public authorities (44), partners (45), etc.
• Class 5: financial accounts record financial movements affecting bank accounts (512) or cash (53), taking into account all means of payment (checks, cash, bank card, transfers, etc.).
• Class 6: expense accounts list transactions that result in an outflow of money and consequently affect the income statement.
• Class 7: income accounts record transactions that cover expenses and generate a profit, thereby increasing revenue.
• Class 8: special accounts record commitments given or received by the business, i.e. finance lease fees, deposits, guarantees, etc.

The PCG and accounting software

The general chart of accounts is available in paper form, for sale online or in specialized stores. In any case, the accounting software you choose must account for the rules set out in this guide. This ensures you comply with tax administration standards and are therefore protected in the event of an audit.

Finally, make sure the invoicing software you use is regularly updated, as tax rules change from one year to the next.