Closing of the tax year and the Tax Book of Income and Expenditures

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When running a business, you should remember to close the tax year correctly. Pursuant to the regulations in force, taxpayers keeping a tax book of revenues and expenses are obliged to prepare a physical inventory and close the book. What should the end of the tax year look like correctly? You will find the answer to this question in the article below.

Closing of the tax year and the obligation to prepare a physical inventory

The obligation to prepare a physical inventory at the end of the year and to include it in the book results directly from § 24 point 1 of the Regulation on the KPiR. According to it, the taxpayer is obliged to prepare and enter in the KPiR an inventory of the nature of commercial goods, basic and auxiliary materials (raw materials), semi-finished products, work in progress, finished products, shortages and waste as at January 1 and at the end of the tax year.

In addition to the above-mentioned elements, the taxpayer should also include in the inventory goods that are his property, located on the date of the inventory outside the taxpayer's establishment, as well as foreign goods in his establishment. However, external goods are not subject to valuation, as it is sufficient to include them quantitatively in the list of goods with information about whose property they are.

The entrepreneur does not have to inform the head of the tax office about the compilation of a physical inventory at the end of the year.

Essential elements of physical inventory

The physical inventory is prepared according to a specific scheme because it should contain the obligatory elements indicated in par. 25 sec. 2 of the regulation, which include:

  1. name and surname of the plant owner (company name),
  2. date of the inventory,
  3. sequence number of the physical inventory sheet item,
  4. detailed description of the goods and other ingredients listed in § 24,
  5. unit of measure,
  6. the amount found during the census,
  7. price in PLN and grosze per unit of measurement,
  8. the value resulting from the multiplication of the quantity of the product by its unit price,
  9. the value resulting from the multiplication of the quantity of other ingredients listed in § 24 by their unit price,
  10. the total value of the physical inventory,
  11. the clause "The list has been completed on the item ...",
  12. signatures of persons drawing up the list and signature of the plant owner (partners).

Specific forms of activity and physical inventory

For entities conducting quite specific types of activity, the legislator has provided for additional rules for the preparation of a physical inventory. These entities include:

  • bookstores and antique bookstores,
  • currency exchange activities,
  • special departments of agricultural production.

Bookstores and antiquities bookstores - the physical inventory may include one item of the publishing house with the same price, regardless of the name and surname of the author, divided into books, brochures, albums and others.

Currency exchange - the physical inventory also includes unsold foreign exchange values.

Special departments of agricultural production - with the inventory of nature also include materials and raw materials not used in the course of production, as well as the number of animals by species, broken down by groups.

Valuation of ingredients included in the physical inventory

The regulation on keeping a tax book of revenues and expenditures also specifies the method of valuation of individual components included in the inventory. Regulations in this regard are included in § 26 point 1-4. Valuation of the ingredients included in the inventory should be made within 14 days from the date of its completion.

Ingredient included in physical inventory

Method of valuation

commercial materials and goods

purchase or acquisition prices or market prices from the date of the inventory, if they are lower than the purchase or acquisition prices

semi-finished products (semi-finished products), finished products and shortages of own production

manufacturing costs

utility waste which has lost its original value in use in the course of its activity

estimation taking into account their suitability for further use

unsold foreign exchange values

purchase price from the date of the inventory, and on the day ending the tax year - the purchase price, but in the amount not higher than the average rate announced by the National Bank of Poland on the day ending the tax year

work in progress (for service and construction activities)

manufacturing costs, but it cannot be a value lower than the costs of direct materials used for work in progress

animal production

market prices as at the date of the inventory, taking into account the species, group and weight of animals

Inclusion of the physical inventory in the KPiR

§ 26 point 6 of the Regulation on the KPiR obliges the entrepreneur to enter the inventory into the book according to individual types of its components or in one item (total), if a separate, detailed list of all its components has been prepared on the basis of the inventory. The statement is kept together with the book.

If as at December 31, the taxpayer does not have any assets that are subject to the physical inventory (often the case with service companies) - then he prepares a zero physical inventory and also includes it in the KPiR.

The obligation to prepare a physical inventory as at 1 January of the tax year does not apply to taxpayers who have prepared a physical inventory at the end of the previous tax year. In this case, instead of the physical inventory as of 1 January of the tax year, the book is entered with the physical inventory prepared as of 31 December of the previous tax year.

Closing of the tax year and closing the book

Due to the end of the tax year, entrepreneurs are required to close the book of revenues and expenses. At the same time - no regulations define the time limit for this obligation. However, in practice, it has been accepted that the deadline is the date of submitting the annual tax return for a given tax year.

Closing the fiscal year is associated with the need to summarize the ledger. The taxpayer has two options in this respect:

  1. if during the year the entrepreneur summarized the book separately for each month, then he should prepare an annual statement on a separate page of the book (information for each month); such summaries of individual months are entered into the appropriate columns and then added up,
  2. on the other hand, if the book columns were summarized on a monthly basis from the beginning of the year, the taxpayer will receive an appropriate summary after the end of the last month of the year - December -.

Importantly, the physical inventory is not included in the book summary. The difference between the value of the initial physical inventory count and the year-end physical inventory count is only taken into account when calculating income tax.

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Natural inventory in the wfirma.pl system

An inventory of nature made after the end of the tax year in the wfirma.pl system should be entered through the tab RECORDS »REMANENTS» ADD REMANENT. As the type of inventory, select FINAL REMANENT and enter the date of the last day of December, as well as the value of the inventory.

The introduced physical inventory will automatically go to column 15 of the Book of Income and Expenses, and its value will be taken into account when determining the inventory difference in the annual tax return.