Bookkeeping, also known as bookkeeping, plays a large and important role in business life. It is not only a annoying chore, but also an essential tool for operational management. If you become self-employed or register a business, you should always ask yourself whether you are required to keep accounts. Accurate accounting helps you calculate profits, determine your taxable income and gives you an overview of your expenses. Proper bookkeeping is also important for credit institutions when it comes to granting entrepreneurs a loan.
Who is obliged to keep the books?
The exceptions
The good news first: For small companies and freelancers who become self-employed, the obligation to keep books/bookkeeping would cost a lot of time and therefore money. To ensure that this group of people does not incur unreasonable burdens, the legislature has released micro-entrepreneurs and freelancers from the obligation to keep proper accounting records.
For example, if you become self-employed by writing texts on the Internet, you could forego creating bookkeeping. As a so-called “one-man business” you are exempt from this obligation and then, according to Section 1 Paragraph 2 of the Commercial Code, you do not run a “commercially organized business operation”.
If you have any doubts as to whether you are obliged to keep accounts, the Chamber of Commerce and Industry in your place of residence will provide you with exact information.
If you become self-employed with a freelance activity or fall under Section 18 of the Income Tax Act, you can use the income surplus calculation - regardless of profit and sales limits. You must provide proof of this to the tax office with receipts and it is subject to the retention period. For the legislator, you then earn “income from self-employment”.
Furthermore, Section 241a of the Commercial Code exempts from the accounting requirement those merchants who have not achieved more than 500,000 euros in annual sales and 50,000 euros in annual profits in two consecutive financial years. Newly founded companies can benefit from this regulation from the first deadline.
Register a business
When you register a business, you are usually required to keep books/bookkeeping.
Typically, you are considered a trader if you register a business as a merchant and run an established business, if you are registered in the commercial register or if you have to register your business as a broker or agent. As an innkeeper you also have to register a business.
All partnerships that are registered in the commercial register (OHG, KG), as well as corporations with the corporate forms AG, GmbH, and GmbH &Co. KG, must prepare proper accounting records.
Further regulations - farmers and foresters
If the accounting obligation is not apparent from the legal provisions of the Commercial Code, then this may arise from tax law.
§ 141 AO (Tax Code) imposes an accounting obligation on farmers, foresters and traders if the companies achieve annual sales of 500,000 euros, the profits are more than 50,000 euros annually, or an entrepreneur does not meet the standards of commercial law count merchants. In addition, if the economic value of your usable space is over 25,000 euros. Section 140 of the Tax Code and thus the tax accounting obligation applies regardless of other legal provisions.
outlook
Regardless of whether you want to become self-employed or have to register a business: the obligation to do bookkeeping can not only be a frustration but also a pleasure.
With the help of this instrument you have a real control function in your hand. With proper accounting, you can closely monitor the development of your business and intervene immediately if your expenses do not reach the desired levels!
The GetMyInvoices tool also helps you, as a company founder and freelancer, to keep an eye on your invoices.
