If you are working for yourself, you have to keep a precise record of how much money you are earning for the Finanzamt (tax office). This is done by submitting a so called Einnahmenüberschussrechnung (EÜR) as part of your annual tax declaration. It translates to surplus revenue statement or profit and loss statement.
In this article, we dive deeper into what the Einnahmenüberschussrechnung is, who can use it to determine their profits, and how Accountable can help you to quickly and easily submit this document to the Finanzamt.
Content
- What is the Einnahmenüberschussrechnung?
- What is doppelte Buchführung (double-entry accounting)?
- Who can use the EÜR?
- What happens if you are a Kleinunternehmer (small business owner)?
- What do I need to complete the statement?
- How does the inflow and outflow principle work?
- How do I determine my profit?
- What about VAT?
- How to complete the EÜR
- Submit your complete tax return for this year
What is the Einnahmenüberschussrechnung?
The Einnahmenüberschussrechnung (EÜR), or profit and loss statement, is a simple way to determine your profits from working as a freelancer. All you need to do is list your income and subtract your business expenses:
Income – expenses = profit
If you are self-employed and registered in Germany for tax purposes, you have to submit a Einnahmenüberschussrechnung alongside your annual tax declaration. This can be done either electronically via your Elster account or simply with a tax software like Accountable.
➡️ Here’s everything you need to know about Elster
What is doppelte Buchführung (double-entry accounting)?
There is more than one way to determine your profits for the Finanzamt. Alternatively, you can commit to doppelte Buchführung (double-entry accounting), which is a way more detailed and complex method of calculating your profits, including both active as well as passive assets.
Basically, you are required to keep detailed accounts on your accumulated assets, so not only your income from your business, but also potential investments or stock market shares.
Depending on your business registration, you might even be required to use doppelte Buchführung to keep a detailed record of your business accounts. More on that in the next chapter.
Who can use the EÜR?
As we mentioned before, whether or not you are allowed to use the simple option of the Einnahmenüberschussrechnung depends on your business registration. If you are a sole-trader, as most freelancers are, then it’s up to you which one of the aforementioned strategies you want to use to determine your profit.
So-called Handelsgesellschaften however, which is most commonly translated as trading companies or partnerships (like a GmbH or UG), can’t choose but rather have to use double-entry accounting to keep track of their finances.
➡️ When should I start a GmbH?
Once we get into trade business though, it is getting increasingly complicated. If you are registered as a Gewerbe (tradesperson), but are not part of the commercial registry, don’t earn more than 600,000 Euros a year or don’t exceed an annual profit of 60,000 Euros, then you are allowed to use the Einnahmenüberschussrechnung for your profit calculation.
But as soon as you exceed one of these thresholds, you will be notified by the Finanzamt and have to start doppelte Buchführung by the following financial year.
Note that even exceeding just one of these income thresholds will lead to a change of status, so be sure to track your income closely to avoid any surprises.
💡 Tip from Accountable: Our free app allows you to track your income and your expenses online, so you’ll always know how much money you are making.
What happens if you are a Kleinunternehmer (small business owner)?
Small business owners, or Kleinunternehmer, are not exempt from having to present a detailed calculation of their income and their expenses.
But, they can choose which method they want to use to determine their profit. We would still highly recommend using the much simpler Einnahmenüberschussrechnung though, as it will make your life a lot easier.
The Einnahmenüberschussrechnung only has one thing you need to do differently when you are a Kleinunternehmer, and that is entering your income in a different field than freelancers who have to charge VAT.
Apart from that, small business owners have to fill in the exact same things as their VAT-paying counterparts.
➡️ When is a freelancer a Kleinunternehmer?
What do I need to complete the statement?
To submit your Einnahmenüberschussrechnung to the Finanzamt, you can set up an Elster account and complete the document electronically. Alternatively, just do it with a tax software like Accountable. It’s in English and you don’t need to deal with the complicated government forms.
In any case you will need to provide some personal information regarding your self-employed job, e.g. your job description as well as the legal nature of your business.
The next step is to gather all your relevant business expenses as well as the income you made in the respective financial year. But to get this information right, you not only need the payment amounts, but also the date of the payments – by that we mean the date the money was received in your account. This is generally referred to as the inflow and outflow principle.
💡 Tip from Accountable: You can save a lot of time by preparing your income and expenses beforehand, for example, by using a free app such as Accountable. By tracking all your incoming and outgoing payments, you can quickly prepare the relevant details directly in the app and send it stress-free to your Finanzamt.
How does the inflow and outflow principle work?
When submitting your Einnahmenüberschussrechnung, you will only have to include income that you have already been paid for, so that has been transferred into your bank account. This is called the inflow and outflow principle.
So basically, it is not important which date you sent out your invoice, but rather which date you had the payment made into your account. The same applies to any business expenses as well: you can ignore the invoice date and only include payments that were taken from your account before the end of the financial year.
This is actually very similar to the concept of debit and actual taxation, or Soll- und Ist-Versteuerung in German. This is used to determine which payments to include for your respective VAT payments: With Sollversteuerung, the VAT you need to submit to the Finanzamt is due when you issue an invoice. With Istversteuerung, the VAT is due when the money is received.
➡️ Learn more about Soll- and Istversteuerung here
How do I determine my profit?
Your income does not directly equal your profit. Keep in mind that as a freelancer, you will have some business related expenses that minimize your income. So in order to determine your actual profit, you will have to subtract all your business expenses from your income. This is basically the Einnahmenüberschussrechnung.
To complete the statement, you first need to know how much you earned in the last financial year. In Accountable it’s easy to keep track of your earnings, as you can simply create your invoices in the app or upload them from another software. Also other revenue like cash income can be saved digitally in the app.
The other thing you will need to determine your profit is of course your business expenses. But since not everything can be claimed as a work-related cost, you need to familiarize yourself with the concept of business expenses first.
💡 Tip from Accountable: Generally speaking, every purchase that you need to make to pursue your work is considered a business expense. But of course we also have a free tool that helps you determining business expenses. It’s called All you can deduct!
This includes the following expenses:
- Business travel expenses
- Wages for employees
- Rent for your office or home office
- Phone and internet bills
- Presents for clients
- Services you need to perform your work, e.g. an accountant
- Insurance cost
- Cost for a bank account
- Further education and training
- Car-related expenses
➡️ How to claim business expenses on tax from before you were a registered freelancer
What about VAT?
If you are not registered as a Kleinunternehmer, you will have to charge VAT on your invoices to your clients. The amount of VAT that you charged and paid on to the Finanzamt is also relevant for the Einnahmenüberschussrechnung.
For the Einnahmenüberschussrechnung, you will have to split your income and include an amount without VAT as well as the sum of the charged VAT. But with Accountable you don’t have to worry about that. The app does this for you automatically!
(If you use Elster for your EÜR, you will have to enter your income without VAT in line 14 and then enter the amount of VAT you charged in line 16. You will have to add the amount of VAT you had to pay for business related purchases in line 63. If at any point, the Finanzamt paid you any amount of VAT back, you will have to add this amount in line 17.)
➡️ How to file your German VAT return
How to complete the EÜR
You can submit your Einnahmenüberschussrechnung directly via Accountable. Go to the Accountable website and log in to your account. In the side menu navigate to the tax screen.
Information you need to provide in the EÜR apart form your income and expenses are personal details about your business, like your name, Steuer-ID (tax-ID) and type of business.
Determining your profit
Then, you will see an overview of your income minus your expenses to determine your actual profit. You can submit your Einnahmenüberschussrechnung directly via our Elster interface to your Finanzamt.
Complete your income tax
Note, that you will have to submit the Einnahmenüberschussrechnung alongside your annual tax return. But no reason to panic, we have a step by step guide for every part of your tax return, making sure your tax obligations for this year are done in no time.
➡️ This is an overview of submitting your complete income tax with Accountable.
➡️ Here we show you step-by-step how to submit you income tax with Accountable.
What are you waiting for? Download Accountable now and quickly create your first Einnahmenüberschussrechnung.
