Book of revenues and expenses - everything about keeping it

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Book of revenues and expenses - what is worth knowing?

The tax revenue and expense ledger is kept as part of simplified accounting in order to record current economic operations. On the basis of the entries made therein, the tax liability is determined.

Pursuant to the Ordinance of the Minister of Finance of August 26, 2003 on keeping a tax book of revenues and expenses, this obligation applies to: natural persons conducting business activity, civil partnerships and general partnerships of natural persons and partnerships not exceeding a net income of EUR 1,200,000. The obligation to keep a tax book of revenues and expenses depends also on the selected form of taxation. Entities that have chosen taxation on general principles (i.e. on a scale or on a linear basis) are obliged to conduct it, while entities that have opted for taxation in the form of a tax card or lump sum on recorded revenues are exempt from it.

Due to the address of residence, you should notify the competent tax office that we will start keeping the book up to 20 days from its establishment. In the case of general partnerships, partnerships and civil partnerships run by natural persons, it is required that each partner submits an application to the tax office competent for his place of residence. When starting a business, the form can be submitted along with the documents at the time of business registration.

If the book of revenues and expenses is entrusted to an accounting office, the taxpayer is obliged to:

  • up to 7 days after concluding the contract with the accounting office, update the entry in CEIDG-1 by selecting the square in item 21 "Data of the entity maintaining the applicant's accounting records" and entering the name of the accounting company and its tax identification number. Then you need to complete pos. 22 of the form, ie "Address of the place where the applicant's accounting records are kept";

  • keep sales records in the place of business.

Exemptions from the obligation to keep the KPiR

In exceptional situations, the Head of the Tax Office, at the request of the entrepreneur, may grant an exemption from the obligation to keep a book. However, it should be remembered that the application must be submitted at least 30 days before the beginning of the month for which we want to obtain the exemption or 14 days before the obligation to keep a book in the case of starting a business. In the case of newly established enterprises, the revenue and expense ledger should be established on the first day of operation. Each subsequent revenue and expense ledger should be kept from January 1 of the new tax year. Such exemptions may be justified by the type of business activity, age or health condition.

Book of revenues and expenditures - making entries

Within the book, we distinguish 17 columns. It is important that each record is properly documented.

Column 1 is used to record the ordinal numbers of accounting entries, the same number is used for the documents that were the basis for the accounting entry.

In column 2, enter the date of incurring the expenditure, receipt of goods or obtaining income, or the date of the statement of sales, resulting from the document confirming the accounting entry.

In column 3, we enter the number of the invoice or other proof on the basis of which we make the entry. If the entry is made on the basis of the sales statement, the number of the invoice statement should be provided.

Columns 4 and 5 are used to record the names, surnames, names of companies and addresses of contractors, if these transactions are confirmed by documents, in the case of sales revenues based on daily sales statements and internal evidence, these columns are not completed.

Column 6 is where the types of expenses and revenues are recorded. The essence of the economic event should be briefly described.

Column 7 includes revenues from the sale of goods and services.

In the case of granting loans against collateral (e.g. in pawn shops) at the end of the month, this column includes the amount representing the sum of interest repaid in a given month or the difference between the amount at which we obtained the goods and the amount of loans granted.

It is also worth adding that taxpayers conducting currency exchange activities in this column enter the monthly amount of income (sale of foreign exchange values) resulting from the records of purchase and sale of foreign exchange values.

Column 8 is used to record other revenues, e.g. from the sale of assets, received contractual penalties, compensation, exchange rate differences, interest on a bank account.

Column 9 is the sum of the values ​​in columns 7 and 8.

Column 10 is where the purchase of materials and items is recorded according to the purchase price.

Taxpayers conducting currency exchange activities enter in this column the monthly amount of purchased foreign exchange values, resulting from the records of purchase and sale of foreign exchange values.

Column 11 includes side costs related to the purchase of materials or goods, i.e. costs of transport, loading, unloading or road insurance.

Column 12 is used to record gross wages that are paid to employees both in cash and in kind. The entry must be made on the basis of appropriate documents, i.e. payroll or confirmation of a transfer to the employee's account, unless it is paid at the cash desk. The column also includes remuneration for specific task contracts and mandate contracts.

Column 13 includes other costs (not listed in columns 10-12) with the exception of costs not recognized as tax deductible costs. This column includes, in particular, such expenses as:

  • rent for the premises,

  • charges for water, gas, electricity,

  • purchase of equipment,

  • purchase of office supplies,

  • fuel purchase,

  • renovation costs,

  • advertising costs.

Column 14 is the sum of the expenses in columns 12 and 13.

Column 15 is intended for entering other economic events than in columns 1-13, you can also enter expenses that refer to the next month or year.

Column 16 should be filled in with the costs of research and development activities referred to in art. 26e of the Income Tax Act. After the end of the year, these costs should be added up.

In column 17, comments are made regarding entries in columns 2-16. In this column you can also enter collected advances.

After the end of the month, data from all columns for a given month should be underlined, and data from columns 7-14 should be summed up. Under the summary of a given month, the taxpayer may enter the sums from individual columns from the beginning of the year.

If the taxpayer does not summarize the entries for the following months cumulatively from the beginning of the year, after the end of the tax year, he must prepare an annual statement on a separate page in the book of revenues and expenses. To do this, enter the sums for each month in the appropriate columns and add them.

Principles of recognizing costs in the book of revenues and expenditures

Recognition of costs in the revenue and expense ledger may be based on two methods:

  • accrual method,

  • simplified method.

It is important to remember that the chosen method should be used throughout the tax year, and it is not necessary to report this fact to the office. As a rule, the date of incurring the cost is the date of issuing the document constituting the basis for the records, e.g. an invoice. It is a rule that applies to both the taxpayers who have chosen the accrual method and the simplified method.

In the case of the accrual method, the basis is the separation of costs directly and indirectly related to the income obtained in a given year, because it depends on when a given expenditure will be included in the book. Costs directly related to the income and incurred in the current or next year, up to the date of filing the tax return, should be recognized in the year in which the corresponding income took place. In the case of indirect costs, these expenses are included in the costs on the invoice issue date. The exception is the situation when the costs relate to the turn of the year, in which case they should be recognized proportionally to the tax year to which they relate.

Example 1.

A very good example is the January telephone bill that includes the January subscription and the December call charges. Distribute these costs proportionally and allocate them to the appropriate months.

This rule applies only to invoices at the turn of the year, not months. If, for example, the invoice concerns July and August, it should be entered in the book according to the issue date shown on the document.

On the other hand, the main principle of the simplified method is that the expenses are entered into the KPiR according to the date they were incurred, regardless of the period they relate to. Additionally, when using this method, there is no need to divide costs directly and indirectly related to revenues. All expenses are treated the same.

Example 2.

The difference between the two methods can be very well illustrated by the example of an insurance policy concluded for two years. In the case of the accrual method, the entrepreneur would be forced to divide the costs proportionally over the tax years covered by the contract. In the case of choosing the simplified method, the entrepreneur has the option of recognizing all costs according to the date appearing on the contract.

In the case of the simplified method, the exceptions are social security contributions and employee remuneration, which are entered in the book on the date of actual payment.

The tax book of revenues and expenses is a simple form of accounting for economic events and can be kept on your own, which makes it a form very often chosen by entrepreneurs.