Simplified accounting - sole proprietorship
The single or simplified accounting is mandatory for all sole proprietorships. So this also applies to most freelancers, whether in main or secondary occupations. It goes without saying that you must be able to prove all income and expenses. Nowadays there are numerous free online accounting programs that will help you do this.
What does simplified accounting entail?
1. Purchase Journal
This consists of all invoices, bills or notes that strike the expenses of your business and are numbered and sorted by date. Some expenses must be split into private and professional parts such as the telephone bill, for example.
2. Sales Journal
The sales journal will contain all the invoices you prepare for your services rendered. You can do this yourself or using an invoice program. These invoices are also numbered and sorted by date, which makes for orderly administration.
3. Financial journal
This is where all payments and receipts are recorded for business purposes. In practice, these entries are usually computerized. As long as you need to keep simplified accounting records, you only need to keep your bank statements.
4. Inventory diary
Every year you must take an inventory of your debts and assets. This is an accounting law, so those who only keep records for tax purposes do not have to take this into account.
Simple accounting may be another advantage, but there is, of course, a disadvantage to this. For example, simplified accounting does not apply to sufficient burden of proof. If you ever come to a legal dispute with the tax authorities, you will be at a disadvantage. So the choice to apply single- or double-entry bookkeeping depends not only on the nature of your business but also on the risks you yourself are willing to take.
Do you still have questions? GIGHOUSE is happy to assist you. Download the app And register as a freelancer!
