Accounting - an obligation of every entrepreneur

Anna MAJ
Accounting Manager at RSM Poland

Every entrepreneur running a business activity is obliged to record all transactions they make in their company. The way in which they will keep accounts depends on the form of the business and the annual income achieved.

Records can be kept in a simplified form (Tax Revenue and Expense Ledger) or full form (accounting ledgers).

The Tax Income and Expense Ledger is intended for natural persons, civil partnerships of natural persons, general partnerships of natural persons and partner companies, whose income from the previous year did not exceed the equivalent of EUR 2 million in Polish currency. It is a simplified form and the entrepreneur only has to keep a register of fixed assets and equipment, vehicle mileage register, VAT register, income and expense ledger or income register.

In the case of simplified accounting, the entrepreneur may use one of three forms of taxation:

• revenue and expense ledger - general rules - 17% or 32% or flat rate tax - 19%;
• lump sum tax on registered income - a specific tax rate which depends on the type of business activity performed;
• fixed amount tax - consists in paying a predetermined amount of tax to the tax office, calculated on the basis of several factors, including the scope of business activity, the number of employees and the number of residents in the place where the business is conducted.

According to the Accounting Act, the following are obliged to keep full accounting records:

• commercial companies (partnerships and capital companies, including organizations) and civil partnerships;
• natural persons, civil partnerships of natural persons, general partnerships of natural persons, partner companies, whose income for the previous year amounted to at least the equivalent of EUR 2 million in Polish currency;
• organisational units operating under the Banking Law;
• communes, districts, provinces and their associations;
• branches and representative offices of foreign entrepreneurs.

The accounting ledgers include:

• journals;
• general ledger;
• subsidiary ledger;
• statements of turnover and balances of the general ledger accounts and subsidiary ledgers;
• list of assets and liabilities (inventory).

The duties of an entrepreneur who keeps accounts on the basis of full ledgers additionally include the preparation of financial statements, which include the balance sheet, profit and loss account, introductory information to the financial statement and additional information and explanations.

The accounting principles are regulated by the Accounting Act of 29 September 1994 (Journal of Laws No. 121 item 591).

The books in an entity are the responsibility of the manager of that entity. However, this responsibility may be transferred to another person with their consent, which does not exempt the manager from supervision.

When commencing a business, each entrepreneur must decide who will be responsible for handling the accounting in the entity. They can decide whether to take care of the accounts themselves or hire an accountant. They also have the possibility to transfer the accounting to the hands of professionals by contracting an accounting office.