How do you keep the accounts for a sole trader?

Did you know that as many as 60 per cent of sole traders choose to do their own bookkeeping? It may seem complicated, but in reality, all you need is the right bookkeeping software and a basic understanding of the relevant regulations to get a handle on your business’s finances. In this article, we’ll show you how to effectively minimise costs and avoid mistakes when doing your own bookkeeping. You’ll see that it’s easier than you think!

Setting up your own business is a step that more and more people are deciding to take. From an entrepreneur’s perspective, one of the main challenges is keeping the accounts. So how do you manage the bookkeeping for a sole trader business, and is doing your own bookkeeping a good solution? You’ll find the answers to these questions in the article below.

Choosing an accounting method – a flat-rate scheme or a revenue and expenditure ledger?

The first step in managing the accounts for a sole trader business is choosing the right method of accounting. You can choose between the flat-rate scheme and the Revenue and Expenditure Ledger (KPiR). The flat-rate scheme is simpler, as you pay tax on your revenue without being able to deduct costs. This is advantageous if your costs are low. The KPiR, on the other hand, allows you to deduct business-related expenses, which may be beneficial for businesses with higher operating costs.

Rules for keeping your own accounts

Keeping your own accounts in a sole trader business requires a basic understanding of accounting and knowledge of tax regulations. You must register your business with the CEIDG and indicate on the form whether you are keeping the accounts yourself. Keeping your own accounts involves regularly recording income and expenditure, as well as submitting tax returns.

Accounting software – your best tool

Modern technology makes it easier to manage your own accounts. Choosing the right accounting software can significantly automate many processes, reducing the risk of errors. These programmes integrate accounting functions with banking features, enabling you to issue invoices, keep records and generate tax returns. This saves you time and minimises the risk of errors.

Accounting obligations for a sole trader

Keeping accounts involves a number of obligations. You must regularly keep records of income and expenditure, submit VAT returns (if you are a registered VAT payer) and pay social security contributions and income tax advances. It is important that all accounting documents are kept for the period required by law, which is at least 5 years.

Advantages and disadvantages of doing your own bookkeeping versus outsourcing it

Doing your own bookkeeping allows you to reduce your business’s operating costs, but it requires time and attention. An alternative is to use the services of an accountancy firm, which eliminates the risk of errors and allows you to focus on growing your business. The cost of such services can range from 200 zł to several thousand zł a month, depending on the size and nature of your business.

In summary, you can successfully manage the accounts for a sole trader business yourself, provided you have the right tools and knowledge. In the case of more complex financial transactions or a lack of time, it is worth considering outsourcing your bookkeeping to professionals, which will allow you to focus on growing your business.