Distinction between the business’s finances and your private finances
Sole Proprietorships are characterised by the fact that capital is not paid into the business – unlike companies (e.g. private or public limited companies). This means that you operate within the limits of your private finances – albeit with a clear division between the business’s finances and your private finances.
Nowadays sole proprietorships include:
- Sole traders
- Personally owned small businesses (PMV)
Requirements for Financial Statements for unincorporated businesses
Your bookkeeping must be set up so that the tax authorities can follow all postings that are relevant to tax records – tax returns and financial statements. There are no specific requirements for financial statements, but the better you present your finances the easier it is for the tax authorities to approve them.
Financial statements and tax returns in the same operation
The overall performance of your business (revenue minus expenses) should be included in your personal income tax return. For this reason it makes the most sense to have your business and personal accounts prepared in the same operation.
At Vistas Revisor it is just as easy to have both the financial statements for the business as well as the tax returns for you and your spouse prepared. As a rule, we prepare financial statements from our own accounting and reconciliations, but it can also be carried out from a balance statement you prepare yourself.