How to document bank costs and revenues?

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Currently, every entrepreneur in his business is required to document bank costs and revenues. Importantly, the regulations do not explicitly specify that the owner of the company must set up a bank account, but the necessity to have one results from various legal acts, such as the Tax Ordinance, the VAT Act or the Entrepreneurs' Law Act. For example, in a non-cash form, basically all settlements with the tax office or the Social Insurance Institution must be made.

Having a bank account is associated with incurring various types of fees - e.g. for transfers made, interest on loans taken, using an ATM card, as well as generating income. Can / should the entrepreneur record such events in the tax book of revenues and expenses? If so, on what basis?

Banking costs as tax deductible expenses

At the beginning of considering the expenses related to cooperation with the bank as tax deductible costs, it should be remembered what such costs the entrepreneur can include.

Important!

A tax cost may be an expense that:

  • was actually incurred,
  • is properly documented,
  • is related to the income obtained by the entrepreneur,
  • has not been excluded from tax deductible costs under Art. 23 of the Personal Income Tax Act.

Importantly, banking costs (i.e. account maintenance fee, transfers, payment card, fees for withdrawals at ATMs not belonging to the bank in which the account is opened or withdrawals abroad, fees for transactions and others) were not listed among the expenses not constituting the costs of obtaining income. This means that if the other conditions are met, these expenses may lower the tax base.

It is worth taking a closer look at the third condition, i.e. the need to relate a given cost to the income generated. There is no doubt about the situation when the entrepreneur uses a specially designated bank account as part of his business. Then it is known that all costs associated with it are directly related to the company and the achieved income. It is different when the entrepreneur uses his private account for company settlements. In such a situation, at the expense, he must accurately separate business transactions from those that are his personal transfers. The tax costs include bank commissions in the part in which they related to running a business.

Important!

When using a private bank account for business purposes, the entrepreneur cannot recognize as a tax cost the expenses related to maintaining the account, using the card, etc. The tax base may only be reduced by commissions and other fees directly related to transactions made as part of the business.

When considering banking expenses in business, the issue of borrowings should also be emphasized. The entrepreneur may only include interest and expenses related to its service as tax deductible costs. The received loan does not constitute income, therefore the repayment of installments alone cannot lower the tax base.

All bank costs should be included in col. 13 of the KPiR - “Other expenses”.

Banking income in business

Having a bank account is often also associated with profit. This will happen if the account has company funds on which the bank will charge interest. Importantly, they constitute for the entrepreneur bank income from the conducted activity, which he should tax. The proceeds from various types of loyalty programs or money back (cash back) services will be treated in the same way.

Banking revenues should be included in col. 8 of the KPiR - “Other revenues”.

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Banking costs and revenues - documentation

It is already known that banking expenses may constitute a tax deductible cost, and profits made on the account should be taxed. How to do it, if the entrepreneur does not receive an invoice or a bill from the bank? In such a case, the basis for posting is a bank statement that lists all cash flows on a given account. It results directly from par. 13 point 4 of the Regulation of the Minister of Finance of August 26, 2003 on keeping the tax book of revenues and expenses.

§ 13 of the Regulation on the KPiR:

Accounting evidence also includes:

  1. daily statements of evidence (sales invoices) prepared for posting with a collective entry;
  2. accounting notes, drawn up to correct the entry on a business transaction, resulting from a foreign or own ID, received from the taxpayer's contractor or provided to the contractor;
  3. evidence of shifts;
  4. proofs of postage and bank charges;
  5. other proofs of fees, including those made on the basis of payment books, and documents containing the data referred to in § 12 section 3 point 2.

In accounting practice, recording this type of expenditure is often done by issuing an internal ID card.

Another doubt may concern the date on which the bank expense / cost should be recognized in the KPiR. The general rule is that the date when the cost is incurred is the date of issuing the invoice (bill) or other evidence constituting the basis for recognizing the cost. Therefore, in the case of the cash (simplified) cost accounting method, bank commissions (and other costs) documented with a bank statement should be summed up and included in the KPiR in one amount on the date of issuing this statement. In the case of the accrual method of settling costs, costs are included in the period to which they relate. The same should be done with regard to the obtained bank income.

In summary, the fees associated with having a bank account and taking out a corporate loan may be considered tax deductible costs, and the profits made on it require recognition as income from business and taxation. The basis for recognizing the indicated events in the KPiR is a bank statement.