Overview of Profit Determination Methods

In a tax advisory firm, the correct determination and taxation of profit is of central importance for taxable individuals. There are various methods to determine profit, including the income surplus calculation (EÜR) and accounting. This article explains the profit determination methods and describes the necessary steps and considerations for a possible switch between the methods.

1. Who must determine their profit through accounting?

The obligation to account primarily applies to merchants within the meaning of the Commercial Code (HGB). This includes both sole traders and partnerships (OHG, KG) as well as corporations (GmbH, UG, AG). The obligation to account exists when certain sales and profit thresholds are exceeded. Newly founded companies may be exempt from this obligation under certain conditions.

2. Who is allowed to determine their profit through EÜR?

The EÜR offers a simpler alternative to accounting and is primarily available to traders who are not required to keep double-entry accounts. This includes non-merchants as well as freelancers such as lawyers, doctors, and architects. The EÜR allows profit determination by comparing business income and expenses.

3. Switching from EÜR to Accounting

A voluntary switch from EÜR to accounting can be sensible in certain cases. It provides clear conditions, better risk management, and a more accurate asset situation, which banks prefer when making credit decisions. When switching, preparatory measures must be taken, such as creating an opening balance sheet and conducting an inventory.

4. Switching from Accounting to EÜR

Switching from accounting to EÜR can represent a simplification and lead to reduced administrative effort. In this switch, correct transition calculations must be prepared to ensure that no business transactions are recorded twice or omitted. It is important to carefully examine the impact of the switch on profit and take it into account accordingly.

Overall, the choice of the correct profit determination method and possible switches between EÜR and accounting play an important role in the tax situation of companies and self-employed individuals. With sound advice from a tax advisory firm, tax risks can be minimized and advantages optimally utilized.