How to prepare your annual accounts (Jahresabschluss in German) – a simple explanation. German business economist and coach Dagmar Meinz is offering us her best tips for your first Jahresabschluss. The Jahresabschluss give self-employed persons (Selbstständige) and entrepreneurs (Unternehmer) an overview of the previous year’s economic result and, above all, reports this to the tax authorities. Anyone who doesn’t know how or simply does not want to deal with it can pass it on to a tax consultant (Steuerberater). But, even in this case, you can prepare the documents for the tax consultant with only a small effort – and save some money by doing so.
When doing taxes, simply determining profit is not enough. Self-employed persons and companies are liable for several types of taxes:
- Income tax (Einkommensteuer) for individual companies and partnerships;
- Corporate tax (Körperschaftsteuer)for legal persons;
- Solidarity surcharge (Solidaritätszuschlag) for everyone;
- Church tax (Kirchensteuer) depending on religious affiliation;
- VAT (Umsatzsteuer) (also applies in principle for small entrepreneurs with exclusively VAT-free sales);
- Trade tax (Gewerbesteuer) for all businesses that have had to register a trade;
- As well as the payroll tax (Lohnsteuer) for employees (as a special form of the collection of income tax).
Most entrepreneurs who are just starting out are so unaware that this often results in your documentation being incomplete. Apart from the fact that this predominantly leads to an excessive tax burden, because certain operating expenses, income-related expenses and other deductible amounts are not fully utilised, and as a self-employed person and entrepreneur, the rule goes: No receipt, no entry.
As an employee, however, you can use a number of standard deductions and need no proof for it.
That’s why we’re giving all entrepreneurs a few tips on how to prepare their annual accounts with as little effort as possible, regardless of whether they then do it themselves or leave it to tax consultants.
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Create a schedule for your Jahresabschluss
First, determine when your annual accounts and tax returns should be ready. From this date, you can count back and set the date on which you begin your preparation.
When scheduling, you need to consider vacation time and seasonal work breaks. Be sure to add a little buffer time. You can’t freely set the deadline for the tax office (Finanzamt) – the law does.
The deadlines for submission of the Jahresabschluss can be found in § 149 paragraph 2 of the German Tax Code (Abgabenordnung – AO).
Anyone who has a tax adviser or does not finish by the specified date may also apply for a time extension.
Tip: If you’re expecting a tax back payment (Steuernachzahlung), the late payment of the tax declaration (Steuererklärung) will result in a time and liquidity gain. However, if you expect a tax refund, then you should submit the tax declaration as early as possible so that you receive the money quickly.
Use the checklist to ensure you haven’t forgotten anything that will help you save taxes.
The checklist is pretty self-explanatory: If some things are not finished yet or the decision has yet to be made, tick the ‘still open’ box. When everything’s finished, check the ‘done’ box.
Note: Getting familiar with how to manage accounting is an essential part of opening a business in Germany. That’s why we’ve listed on our company formation checklist.
Download Jahresabschluss Checklist [PDF] (English)