Now it is mid-December and soon the year end bookkeeping is to be done. What does this imply for you the entrepreneur?
The calendar year equals the fiscal year. That implies soon you need to have provided your full 2020 bookkeeping to your accountant. What does this imply?
That implies you need to provide the full bookkeeping. Silly answer, but often we encounter half way the next year that an entrepreneur recovered from the glove box compartment in the car a bunch of cash paid receipts he or she forgot to provide.
Or our accountant asked for the invoices paid from the business bank account, to see the content and VAT amount. For some reason, even after asking several times, none is provided. But suddenly found months later.
What to do with too late provided receipts?
The consequence of not providing receipts is that these costs are not deducted in the books. The individual receipt is not so high, but the total could be a couple of hundred euro deduction.
The thing is, the VAT return is already filed and the income tax return. If the entrepreneur wants us to file the VAT correction and the income tax return correction, the costs related to these services equal or exceed the deduction of the costs.
Moreover, refiling tax returns, done basically every year, could show the tax office computer that the entrepreneur is not on top of his administration. This could imply an audit to check if turnover was not forgotten to be reported as well.
Year-end bookkeeping, be on top of your accounts
The year end is December 31st, make sure you have your accounts complete and please provide them in time to your accountant.
When to invoice turnover/hours you spend during this financial year
Every month you are accustomed to invoice your services the next month. Very practical, but not for the month of December. The rule is that turnover needs to be reported in the year that the turnover was generated. That implies you need to invoice with a date in December, the December turnover/ hours you made. You cannot invoice the previous year (2020) turnover early next year (2021).
Reporting the turnover in the incorrect year is during an audit an issue. An issue you might not see instantly, as in your view you reported the income. The issue is in the overall result of the company. By reporting the December income in January of the next year you influence the total result, which could create tax credits for you, you might not have been entitled to if all the turnover was reported in the correct year.
We think tax-is-exciting and our Max thinks accounting is very much exciting as well. Max has the job with his team to file the Value Added Tax returns for the last quarter of 2020 in time with the tax office.
The last quarter VAT return implies that VAT corrections for private spending, VAT corrections for company car use and other corrections need to be made. Max is very much excited to process this for you.