Transition from the tax ledger to the accounting ledgers - it's worth knowing


In order to determine the correct amount of tax liability, entities conducting business activity are required to keep appropriate books based on accounting principles. The Polish legal system provides for two possible methods of accounting - with the use of the tax book of revenues and expenses and with the use of accounting books. It should be noted that there is no strict division between the indicated tax books and taxpayers have the option, and sometimes even an obligation, to switch from one form to another.

Transition from the tax ledger to the accounting ledgers

As indicated in the introduction, taxpayers are obliged to keep relevant records aimed at determining income or loss, tax base and the amount of tax due for a specific tax year. The criterion indicating when to keep accounting books, and when to keep the tax book of revenues and expenses, was indicated in the Accounting Act. Pursuant to the provisions of this Act, the obligation to transfer from the tax book of revenues and expenses to accounting books applies to natural persons, civil partnerships of natural persons, general partnerships of natural persons and partnerships, in a situation where net revenues from the sale of goods, products and financial operations in a given year will be greater than EUR 2,000,000. The euro exchange rate is converted into Polish zlotys at the average exchange rate announced by the National Bank of Poland on the first business day of October of the year preceding the financial year from which you should start making entries in the form of books of accounts.

Example 1.

A natural person kept a tax book of revenues and expenses from the beginning of 2016. In 2016, the entrepreneur's net income amounted to EUR 2,200,000. This means that from 2017, the taxpayer was obliged to keep accounting books.

Example 2.

Private Limited company. achieved a net income of EUR 1,000,000 in 2016. Even though the statutory threshold has not been exceeded, commercial companies are always required to keep their books of account.

In order to determine whether there is an obligation to switch to the books of accounts, the revenues from column 9 "Total revenue" should be compared. The transition from the tax revenue and expense ledger takes place from the next year after the above-mentioned revenue limit is exceeded.

It should also be noted that natural persons, civil partnerships of natural persons, general partnerships and partnerships may voluntarily apply the provisions of the Accounting Act from the beginning of the next financial year, i.e. keep accounting books, even if the revenues are lower than the equivalent in the Polish currency of PLN 2,000. 000 euros. In this situation, these entities are required to notify the competent head of the tax office of this prior to the beginning of the financial year.

Obligation to close the tax book of revenues and expenses

If the limit is exceeded, the taxpayer who has kept the tax book so far starts keeping

full accounting from the beginning of the next year. Earlier, however, the tax ledger of revenues and expenses should be closed. For this purpose, it is necessary to summarize all the columns of the book, carry out a physical inventory of goods and materials and determine the result of the conducted activity.

One of the elements directly affecting income is the value of the physical inventory at the beginning and end of the period for which the income is determined. The obligation to prepare a physical inventory results from the adoption of simplifications in keeping the tax book of revenues and expenses. Drawing up a physical inventory at the beginning and end of the period for which income is determined enables the change in inventories in the form of trading goods and materials to be determined.

Opening the books of accounts

A number of activities that should be performed have been imposed on an economic entity that is switching from a tax book to an accounting book. First of all, you should:

  • make an inventory of the company's assets and sources of financing,

  • define and introduce documentation of the adopted accounting principles;

  • prepare the opening balance based on the approved inventory;

  • open accounting books;

  • record economic operations and generalize the results in the form of reports, in accordance with the accounting principles.

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As it results from the presented calculation, the first step related to the transition from the tax ledger to the accounting ledgers is the preparation of an inventory. The inventory is understood as the list of the entrepreneur's assets owned at the beginning of the year.

The definition and implementation of accounting principles (policy) should include such items as the determination of:

  1. the financial year and its reporting periods;

  2. methods of valuating assets and liabilities and determining the financial result;

  3. the method of keeping the books of accounts, including at least:
    a system for the protection of data and their files, including accounting vouchers, books of accounts and other documents constituting the basis for the entries made in them.

Another obligatory element is the preparation of the opening balance sheet. The balance sheet is a list of economic resources (assets) and their financing sources (liabilities) prepared as at a given date. Assets and liabilities represent the same wealth of an economic unit from different perspectives. Therefore, when drawing up the balance sheet, the principle of balance sheet balance applies, according to which the total amount of assets must be equal to the total amount of liabilities.