Balance sheet or cash-basis accounting?
Anyone obliged to keep double-entry books prepares a balance sheet with a profit and loss account. Those who are not – many freelancers and small traders – usually determine their profit with the simpler cash-basis accounting (Einnahmen-Überschuss-Rechnung).
Thresholds in commercial and tax law
| Threshold | Legal basis | |
|---|---|---|
| Sole traders (commercial law) | exempt up to 800,000 € turnover and 80,000 € net income on two consecutive balance sheet dates | § 241a HGB |
| Commercial businesses (tax law) | obliged above 800,000 € turnover or above 80,000 € profit | § 141 AO |
| GmbH, UG | always obliged | HGB |
For newly founded businesses, the exemption under § 241a HGB already applies if the values are not exceeded on the first balance sheet date after founding.
How long do I have to keep records?
| Documents | Period |
|---|---|
| Books, records, annual financial statements | 10 years |
| Accounting vouchers (e.g. invoices) | 8 years |
| Commercial and business letters, other tax-relevant documents | 6 years |
The periods are set out in § 147 (3) AO. They do not end as long as the documents are relevant to a tax whose assessment period has not yet expired.
Practical tips
- File vouchers digitally and in order from day one
- Keep business and private accounts separate
- Put VAT return deadlines in your calendar
- For detailed tax questions, consult a tax adviser
How we support you
Our accounting service takes care of financial accounting, payroll and fixed-asset accounting – transparently and precisely, so you can focus on your business.
Frequently asked questions
Do the thresholds also apply to freelancers?
Freelancers are not obliged to keep books under § 141 AO and usually determine their profit using cash-basis accounting.
May I keep vouchers only in digital form?
In principle yes, if storage meets the requirements of the tax authorities. If in doubt, get tax advice.
What applies to a GmbH?
As a commercial company, a GmbH is always obliged to keep books and prepare annual financial statements.
Sources
This guide gives a general overview and is not legal or tax advice. Rules and fees can change – the information from the responsible authority is what counts.