Accounting for small business owners! Do these words or the thought of tables make you dizzy? Don’t you have time to deal with the numbers? That is understandable. But: As the owner of a small business, you either have to hire someone to do it or take on the responsibility yourself.
Our recommendation for accounting for small business owners
However, thanks to special rules for small self-employed people or freelancers and the following “basic settings”, this isn’t as bad. Because they help you reduce the amount of accounting effort. You will also gain valuable insights into the financial health of your business.
Tip 1: Open a business account
At the beginning, separating private and business finances seems unnecessary. But the development can quickly become confusing: Which booking is business and which is private? With just one account, you will eventually lose track of how liquid your company is and whether you have enough reserves for advance tax payments and VAT pass-through items. In addition, you do not want to present all of your private cash flows in the event of a tax audit. In addition, many banks exclude the use of checking accounts for business purposes. There may be a risk of termination.
Consequently, you need a business account. In addition, only a business account can help your company gain creditworthiness. So separate your finances! The effort required for this is not great and the costs are limited. Some banks also offer you to open a business account for free.
Tip 2: Keep receipts safe
Companies are subject to much stricter retention requirements than private individuals, and not just in terms of tax law. For example, companies must retain bank statements. In addition, all other receipts, invoices, mandatory books and financial statements must be kept at hand and stored safely for ten years. Delivery notes, all correspondence with customers and other documents must be archived for six years. To do this, file the documents for each financial year neatly sorted, dated and numbered - preferably digitally.
Tip 3: Categorize shelves
For everyday accounting in small businesses, all relevant documents should be arranged chronologically. The following categories have proven useful for this:
- Incoming invoices from suppliers, service providers or other operational purchases and expenses
- Outgoing invoices to your customers
- Business account statements
- Cash register for cash flows, kept as a book with sorted receipts
- Accounting evaluations plus advance VAT returns: Both are informative for your overall overview.
- Credit card statements, only if you also pay by credit card
Tip 4: Choose EÜR
Small business owners, freelancers and self-employed people are allowed to use the simplest form of profit calculation: the income surplus calculation (EÜR). Small businesses, registered merchants and civil law companies with a turnover of less than 600,000 euros and a profit of less than 60,000 euros can also opt for the EÜR. However, this only applies as long as they do not exceed these limits. In contrast, legal forms such as GmbH, OHG or AG have no choice. You have to keep double records. Who exactly is allowed to use the EÜR is in Section 4 Paragraph 3 EStG regulated. Otherwise, you simply need to document operating income and expenses for each financial year in the EÜR. In addition, you must collect the relevant receipts. This can be easily managed even without a tax advisor.
Tip 5: Get an overview regularly
Check your accounting and all documents weekly or once a month, but at least at the end of each quarter! This way you can keep track of outstanding receipts, overdue invoices and expiring deadlines. More importantly, you get into the habit of keeping an eye on how your business finances are developing. They develop a forward-looking perspective and recognize emerging trends or imbalances. The financial overview is in turn the basis for further planning such as investments or hiring employees.
Tip 6: Keep an eye on taxes
An equally important aspect of accounting in small businesses: pay attention to compliance with deadlines for reports, advance payments and declarations! In addition, you should set aside the amounts for expected tax payments in a timely manner. Consider them unavailable!
Tip 7: Digitize and automate
Take advantage of the quick options wherever you can! German data storage devices in particular are much more secure than file folders or hard drives. That’s why our recommendation is: Use cloud-based software for:
- online banking,
- Bills,
- Accounting,
- Storage,
- Synchronizations and
- export
This also includes GetMyInvoices with its many functions. The software enables immense time and cost savings.
Meanwhile, you can forget about filling out tables or forms by hand. Whether as Software as a Service (SaaS) in the cloud or, if necessary, on the hard drive: modern accounting software can relieve you of a lot of work. The more connected, the more. Scan paper receipts and you’re done! Powerful yet slim tools take care of the rest. In addition, your tax advisor’s office receives all receipts digitally via a data interface.
