What is an annual report? A guide for small businesses

Published Thursday 23 July 2026

Table of contents

• What is an annual report?
• Why annual reports matter
• What goes in an annual report?
• Who needs to prepare an annual report in Australia?
• Annual reports for small businesses
• How to prepare an annual report
• When is an annual report due?
• Simplify your annual reporting with Xero
• FAQs on annual reports

Key takeaways

• An annual report is a yearly summary of how your business performed, combining financial results with a plain-language account of the year.
• In Australia, public companies, large proprietary companies and some small proprietary companies must lodge financial reports with ASIC under the Corporations Act 2001.
• Most small proprietary companies don't have to lodge, but a simple internal annual report still helps you make decisions and talk to lenders and investors.
• Good record keeping through the year makes the report quick to pull together when you need it.

What is an annual report?

An annual report is a document that summarises how your business performed over a financial year, both in numbers and in words. It brings together your financial results and a short account of what happened, so readers can see the full picture in one place.

In Australia, the report usually covers the financial year and follows the requirements set out in the Corporations Act 2001. For companies that must report to the Australian Securities and Investments Commission (ASIC), it sits alongside the financial statements they lodge each year.

Why annual reports matter

Annual reports matter because they show, in one place, whether your business is healthy and heading in the right direction. They give owners, directors, lenders and investors a clear, honest view of performance over the year.

For a company that reports to ASIC, the report is also about transparency and accountability. It lets shareholders and regulators check that the business is being run properly and that the numbers stack up.

Even if you're not required to report, the exercise is useful. Reviewing a full year of business accounting in one document helps you spot trends, plan ahead and back up decisions with evidence.

What goes in an annual report?

An annual report combines a written account of the year with the numbers that back it up. The exact contents depend on the type of company, but a full report for a public or large company usually includes several standard parts.

The main components you'll come across are:

• Directors' report: a summary from the directors covering the company's activities, results and key events over the year
• Auditor's report: an independent opinion on whether the financial statements give a true and fair view
• Chair or chief executive letter: a plain-language message setting out the highlights, challenges and outlook
• Financial statements: the core numbers that show how the business performed and where it stands

The financial statements are the heart of the report, and this is where your financial reporting comes together. Reading them alongside the notes gives you the detail behind each figure.

The core financial statements show you the following:

• Balance sheet: what your business owns and owes at a point in time
• Profit and loss statement: your income, expenses and profit over the period
• Cash flow statement: how cash moved in and out of the business

Who needs to prepare an annual report in Australia?

Whether you have to prepare and lodge financial reports depends on the type and size of your business. In Australia, the rules sit under the Corporations Act 2001 and are administered by ASIC.

The entities that must lodge financial reports with ASIC are:

• Disclosing entities, such as companies with securities held by the public
• Public companies
• Large proprietary companies
• Some small proprietary companies, in specific circumstances

A company is a large proprietary company if it meets at least 2 of these thresholds: consolidated revenue of $50 million or more; consolidated gross assets of $25 million or more; 100 or more employees.

Small proprietary companies must lodge only if they're directed to by shareholders or ASIC, if they have crowd-sourced funding shareholders, or if they're controlled by a foreign company. Charities are treated differently again: they register with and report to the Australian Charities and Not-for-profits Commission (ACNC) rather than lodging with ASIC.

Annual reports for small businesses

If you run a small proprietary company, you're usually exempt from lodging financial reports with ASIC. That doesn't mean an annual report has no value for you.

A simple internal annual report gives you a clear yearly view of how the business is tracking. It helps you compare one year to the next, set targets and decide where to invest.

It's also handy when other people need to see your numbers. Lenders assessing a loan and investors weighing up a stake will often ask for a summary of your performance, and a tidy annual report answers those questions quickly.

How to prepare an annual report

Preparing an annual report is easier when your records are in order and you work through it step by step. Here's a practical sequence for a small business.

1. Set your reporting period, usually your financial year, and gather the records that cover it
2. Reconcile your accounts so your bank transactions, invoices and bills all match your records
3. Prepare your financial statements: the balance sheet, profit and loss statement, and cash flow statement
4. Write a short summary of the year, covering results, key events and what's next
5. Review everything for accuracy, and get advice from your accountant or bookkeeper if you need it
6. Share the finished report with the people who need it, and file a copy for your records

When is an annual report due?

Timing only applies if your company is one that must lodge with ASIC. If that's you, the deadline is tied to the end of your financial year.

Companies that must lodge generally have to submit their financial reports within a set time after the financial year ends. The exact deadline depends on the type of entity, so check the current ASIC requirements for your company and diarise the date well ahead.

If you're not required to lodge, there's no ASIC deadline to meet. It still helps to prepare your internal report soon after year end, while the detail is fresh and useful for planning.

Simplify your annual reporting with Xero

Annual reporting gets a lot simpler when your numbers are accurate and up to date all year, not just at year end. When your bank transactions are reconciled and your records sit in one place, pulling together the statements you need takes far less time.

Xero brings your finances together so you can prepare a profit and loss statement, balance sheet and cash flow statement from data you're already keeping, and see your numbers update in real time. Get one month free.

FAQs on annual reports

Here are answers to some frequently asked questions about annual reports for Australian small businesses.

Is an annual report the same as financial statements?

No. Financial statements are the core numbers, while the annual report wraps them in a wider account of the year, often with a directors' report and a letter from the chair or chief executive.

Do small businesses need an annual report?

Most small proprietary companies are exempt from lodging with ASIC, so they don't legally need one. A simple internal report is still worth doing to guide decisions and support loan or investment conversations.

Who prepares an annual report?

In a small business, the owner often prepares it, usually with help from an accountant or bookkeeper. Larger companies rely on their finance team, directors and an independent auditor.

When is an annual report due?

Companies that must lodge with ASIC have to file within a set period after their financial year ends. If you're not required to lodge, there's no ASIC deadline, though preparing it soon after year end keeps the information useful.

What financial year does an annual report cover?

It covers your company's financial year, which for many Australian businesses runs from 1 July to 30 June. You can confirm your own reporting period against the dates registered for your company.