Are Private Companies Required to Publish Financial Statements?

Are Private Companies' Financials Public?

In short, not in the United States. While many may speculate about the business revenue or look for financial statements of private companies, typically they will find this to be difficult. As the name implies, a private company is not required to disclose financial information to the public. Privately owned companies include family-owned businesses, sole proprietorships, and the majority of small and medium-sized companies.

Because private companies do not need to appeal to shareholders, there is no need nor incentive to publish their financial statements. This is in contrast to public companies, which are required to make periodic financial statements available to the public.

Disclosure Requirements for Private U.S. Companies

All U.S. companies, both private and public, are required to file financial documents with the secretary of state in the state where they incorporate. When a company incorporates, it must file articles of incorporation or a certificate of formation, depending on the type of entity. This allows the company to formalize when it is first getting started.

After filing these documents, a company is not required to provide any additional information to the public in its operations. That being said, all companies must file quarterly tax estimates with the Internal Revenue Service (IRS) and a yearly tax return, which contains all of its financial information for the year. However, these documents are not public but restricted to government use. Primarily, they are used to assess tax liabilities for incorporated entities in the U.S.and give the government the ability to track and be apprised of larger market forces and shifts in the economy.

While this provides certain benefits to private companies—for example, disallowing public competitors to get a good sense of the financials, spread, and strategy of private companies—nonetheless large private companies will still have estimated revenues by analysts or through other reports. The largest privately-owned company in the U.S., Cargill, is estimated to bring in over $134 billion in revenue. Publications such as Forbes will typically maintain a list of the largest private companies that give the general public a sense of its size and operations. Essentially, while private companies are not legally required to publicly disclose their financial statements, it's often not hard to find revenue estimates of larger private companies.

Disclosure Requirements for Private EU Companies

These requirements differ slightly when considering European companies that operate in the EU. No matter whether a limited liability business is public or private in the EU, they are required to publish certain financial documents.

Although member states are free to implement their own disclosure laws, all member states must adopt European Union law in the form of directives. Public documents that need to be filed with the EU comprise constitutive documents, amendments, and information on the authorized representatives of the company for purposes of dealing with third parties.

Every European company with limited liability—public or non-public—must publish its balance sheet, profit-and-loss account, annual report, and auditor's opinion. Small and medium-sized businesses that meet balance sheet and turnover thresholds must also disclose financial information.