Full or simplified accounting - what to choose?

Most aspiring entrepreneurs ask themselves this question. The choice is not simple because of the disadvantages, advantages of the form and the associated restrictions.

Below we will try to describe both types giving a clear picture when each of them has appropriate application along with its associated features.

Simplified accounting

Accounting of this type can be used by natural persons conducting business activity, by civil law partnerships of natural persons, partnerships of natural persons and partner companies. However, it is stipulated that net revenues from sales of goods, products and financial operations of the company for the previous tax year were not greater than EUR 2 million in the Polish currency.

Simplified accounting comes in three forms:

– tax card: involves paying a fixed, fixed amount each month. Its amount depends on the number of residents at the place of business, number of employees and type of activity. The appropriate tax rate is read from the table provided for this purpose.

– registered lump sum: consists of paying a specific rate depending on the amount of income. The lump sum rates are much lower than usual tax rates, however the payment results from the volume of sales. It doesn’t matter if the company made any profit.

– revenue and expense ledger: the simple and most popular method of calculating tax, involving the addition of income and expenses in a special book and paying the tax on the difference. The tax is higher than for a flat rate, depending on the rate and level of income. His big plus is the no obligation to pay when no profit is made.

Full accounting

Full accounting uses a double system, literally every amount flowing through the company is recorded. These include cash receipts, bank transfers, loans, payments for goods / services, etc. Non-cash transactions that can affect financial results are also recorded. An example would be impairment of a fixed asset or threat of compensation.

Full accounting, also referred to as trading books or accounting books, must be kept by companies, including limited liability companies, joint-stock companies and capital companies (regardless of the form of business), which generated revenues of at least EUR 2 million last year in Polish currency, as well as by specific entities, including commercial companies, specific organizational units (e.g. banks), insurers, municipalities, poviats and voivodships.