When do you have to prepare a balance sheet?

Income tax is levied on profits, and these must be calculated. There are two common methods for this: the income statement (EÜR) and the balance sheet. Both methods have their advantages and disadvantages, depending on the size and structure of the company. This article explains when which method makes sense.

The EÜR is an easy-to-use method for calculating profits. It deducts all operating expenses from the operating income so that the remaining amount represents the taxable profit. The EÜR is particularly suitable for small self-employed persons, freelancers and tradespeople who do not have complex financial structures.

Advantages of the EÜR:

Commercial entrepreneurs with a profit of up to 80,000 euros per year or a turnover of up to 800,000 euros per year can decide whether they want to use the EÜR or a balance sheet. Freelancers are always authorised to use the EÜR.

The balance sheet is a more detailed method of determining profit and is usually required for larger companies and more complex business models. It systematically compares assets and liabilities, providing a more comprehensive overview of the company's financial position.

When is the balance sheet necessary?

The balance sheet is particularly important for companies that need a detailed overview of their financial situation, for example when acquiring investors or granting loans.

For the self-employed and freelancers, the EÜR is generally the simplest and most effective choice, as it involves less effort and minimises the administrative burden. The balance sheet should be considered for larger companies or more complex business structures where a detailed overview of the financial situation is required. If you have the choice, you should favour the EÜR as long as there are no special financial reporting requirements.