What is the simplest form or revenue
The income surplus calculation (EÜR) according to the simple bookkeeping
Income surplus calculation - what is it?
The income surplus calculation (EÜR) is the method of determining profits in simple bookkeeping. In contrast to double bookkeeping, with simple bookkeeping you post each business transaction to just one account, either as income or as expenditure. Therefore, the income surplus calculation (EÜR) is also known as the income-expenditure calculation.
As a founder, you can do the income surplus calculation yourself, for example with an EÜR template in Excel and your account at ELSTER. Or you use an invoice program with an EÜR module or good accounting software. If you prefer to delegate accounting work, consider working with a tax advisor.
Our contribution is intended to help the founders who want to do their income surplus calculation (EÜR) themselves. The EÜR guidelines also give the self-employed with a tax advisor valuable insights into the interrelationships between simple bookkeeping and the income statement.
Special regulation for gastronomy in 2021: A sales tax rate of 7% applies to restaurant and catering services until June 30th, 2021.
1. Which entrepreneur is allowed to do an EÜR?
According to Section 4 (3) EStG (Income Tax Act), the following entrepreneurs and self-employed persons are allowed to prepare an income surplus calculation (EÜR):
- Businesses with an annual turnover of less than 600,000 euros and an annual profit of less than 60,000 euros.
- This threshold does not apply to corporations: UG (limited liability), GmbH, AG, etc.
All other entrepreneurs, in particular corporations, have to make a balance sheet, i.e. use double-entry bookkeeping and determine their profit using the balance sheet and profit and loss account (P&L).
The following table gives you an overview of whether an EÜR is sufficient for your company or whether you need to use double-entry bookkeeping and prepare annual financial statements with a balance sheet and income statement.
|legal form||simple bookkeeping and EÜR||Double bookkeeping and annual accounts with balance sheet and income statement|
|Small business owners||Yes||Yes, if the size threshold* exceeded|
|registered merchants||Yes||Yes, if the size threshold* exceeded|
|GbR||Yes||Yes, if the size threshold* exceeded, (then the GbR becomes an OHG.)|
|GmbH & Co. KG||No||Yes|
|gGmbH or gUG||No||Yes|
(* The size threshold is defined as follows: € 600,000 in sales or € 60,000 in annual profit)
2. Income surplus calculation (EÜR): How to prepare?
Here you can learn more about the rationale and details when preparing your Income Surplus Calculation (EÜR).
1. The 4 essential steps in creating an EÜR
To determine the profit with the EÜR, 3 steps are necessary first, in the 4th step you determine the liquidity or the financial surplus:
- First, determine your total earnings. You show net income and sales tax separately.
- Then figure out your total expenses. Here, too, you split up into net expenditure and input tax (input tax = the sales tax included in your invoices). The sales tax paid to the tax office is also included in the expenses.
In order to determine the profit, you also need the depreciation, which you determine using your asset directory.
- Profit = total income - total expenses - depreciation
- Financial surplus = profit + depreciation + financing + private deposits - investments - repayments - private withdrawals
Our EÜR tool also works on the basis of these 4 steps.
2. Income surplus calculation: rules and structure
The inflow principle (or the outflow principle) and the structuring rules are two important rules when creating the EÜR.
Note the inflow principle or the outflow principle
- Example: You issued an invoice in December and it will be paid in January. Which fiscal year is the invoice now assigned to?
Here the flow principle says: It is not the invoice date that is decisive, but when the amount flowed into the account. Therefore, the invoice from the example mentioned is assigned to the new fiscal year as part of the EÜR creation. It works in the same way for invoices that you receive. The decisive factor is when the invoice was paid or when the invoice amount flowed from the account. Example: You only pay an invoice from December in January. So this issue belongs to January.
Note the record-keeping requirements and account structure
The purpose of the recording rules is to make the EÜR comprehensible and to create uniform rules for all taxable companies that work with it. For the journal of the excess income statement, you need to consider the following things:
- Record income and expenses separately according to the respective VAT rate
- You need a list of assets for non-depreciable assets, for example for fixed assets. This includes, for example, land.
- You need a depreciation register for depreciable assets. Depreciable assets are depreciated on the basis of depreciation tables.
- Record of low-value assets up to 800 euros in a separate directory. The same applies to goods that you assign to the GWG pool.
- Record limited deductible expenses: record your home office or entertainment separately
- You must also add the logbook to the records separately.
Lists of wear-and-tear and non-wear-and-tear assets as part of the EÜR
In this directory you have to enter valuables that can be assigned to fixed assets, such as machines, PCs, company cars, land and buildings. Non-depreciable assets are, for example, land. The list to be attached to the EÜR form must contain in detail:
- Name of the asset, date of acquisition or manufacture, cost of acquisition or manufacture, useful life and the annual depreciation amount
An annual depreciation is made for the depreciable assets, which is to be taken into account as a business expense. However, this depreciation does not lead to a cash outflow. Therefore, it is added again later when determining the liquidity.
- Assets up to EUR 800 (minus sales tax) can be written off in full in the income statement in the year of acquisition.
- A collective item (per fiscal year) can be created for assets that cost between EUR 150 and EUR 1,000. The depreciation then takes place uniformly over five years. (Example PC at 700 euros: annual depreciation of 140 euros). You have to decide in each financial year which regulation you want to apply.
- Assets that cost more than 1,000 euros must be included individually in the income statement and depreciated with their respective statutory useful life.
- There is an obligation to record within the scope of the EÜR for assets with a value of over 150 euros.
The role of the cash book
In the EÜR's cash book, you enter all income and expenses that are made in cash on a daily basis. A cash balance is determined from this, which must match your actual cash balance. In a separate chapter, we have put together for you what you need to consider when you keep a cash book and what is important for a cash register.
The EÜR's incoming and outgoing goods book
You must enter all goods, raw materials and auxiliary materials that you buy in the EÜR's incoming goods book. If you deliver to other companies, you are also obliged to keep a goods issue book with regard to the EÜR. Modern merchandise management systems take over the function of these books today.
3. EÜR in the tax return
Once you have determined and sorted your total income and total expenses, fill out the EÜR annex in your tax return and send it electronically via ELSTER. Here you can see how this is basically structured.
|1. Determination of profits||Values to be entered|
|Operating income (net values)|
|Sales tax received|
|= Total operating income|
|2. Business expenses|
|Depreciation for wear|
|Space costs and other land expenses|
|Other unlimited deductible business expenses|
|Limited deductible business expenses|
|Car costs and other travel expenses|
|Input tax included|
|paid sales tax|
|= Total operating expenses|
|Determination of profit|
Taxable profit / loss
|2. Supplementary information|
|Reserves and hidden reserves|
|3. Additional information for sole proprietorships|
|Withdrawals and deposits i. S. d. Section 4 (4a) of the Income Tax Act|
3. Determine profit and liquidity with the EÜR
You can determine your profit in the income statement as the difference between operating income and operating expenses:
# 1: Operating Income
Operating income includes:
- Removal of operational items (material removals)
- Operating income at the respective sales tax rate (net amounts)
- Sales tax-free operating income (net amounts)
- Private vehicle use
- Private phone usage
- Sales tax included in operating income
- The release of provisions
So you always have to deduct the sales tax from the amounts of your paid customer invoices and enter them separately.
# 2: Business expenses
Operating expenses include:
- Wages and salaries
- Purchased services
- Purchases of goods
- Expenditures for low-value assets
- Car costs
- Input tax paid
- Rent for business premises
- Sales tax paid in the fiscal year
- Limited deductible business expenses
Important: For all expenses that include VAT, deduct this included VAT as input tax. Whether expenses for services, goods, gasoline or rent, you show these expenses as net amounts.
# 3 Determine your profit
When you have recorded all operating income and expenses, determine your profit. In the EÜR, profit is the difference between operating income and operating expenses. If you work without a tax advisor, you have to fill in the EÜR with ELSTER.
# 4 Determination of liquidity
When calculating profits, only consider those expenses that are part of the so-called operating expenses. Investments are not included. Financing through bank loans or personal loans are also not taken into account when determining profits. Once the profit has been determined, the next step is to determine the financial surplus with the EÜR. The following table shows how it works:
|Determination of liquidity with the EÜR||comment|
|+||Depreciation||Depreciation reduces profit, but does not lead to expenses. Therefore you have to add the depreciation for the liquidity determination.|
|+||Financing received||Bank loans, personal loans|
|+||private deposits||Money that you bring into your company yourself|
|-||Private withdrawals||The money you need for a living|
|=||Financial surplus||Shows you the financial strength of your company.|
It is important to keep an eye on the financial surplus: you need liquidity, for example to make further investments or to be able to pay taxes. You can also use our EÜR tool or, alternatively, good accounting software.
4. Special questions when creating an EÜR
Anyone who prepares their own revenue surplus will soon find out that the devil is often in the details. In the following, we therefore explain a few typical questions on topics that are relevant for all founders and self-employed.
How are loans handled in the EÜR?
In principle, loans are not revenue. They do not play a role in determining the profit. Loan interest, on the other hand, is expenditure that has a profit-reducing effect. You must therefore record interest as part of the expenses.
How do contributions in kind affect profits?
Let's assume you are setting up a company and bringing private IT or private furniture to the company. These contributions in kind are not income, so they have no effect on profits. However, you need to estimate and usually write off private contributions in kind. These depreciations, in turn, reduce profits.
Do cash contributions affect profits?
Cash contributions are not income either. They therefore do not affect profit. Since you cannot write off cash deposits, there is no write-off and therefore no reduction in profit.
How is sales tax treated in the income statement?
The value added tax contained in invoices paid to your customers counts as sales tax as revenue. The opposite is the case with expenses for goods, services or investments, in which the respective invoice shows VAT. As paid VAT, it counts as input tax expense.
If you choose the small business scheme, you don't pay sales tax. As a result, you report all income and expenses that include sales tax as gross amounts.More about the small business regulation
What are the differences between EÜR and accounting?
When accounting, you determine your profit with the help of the profit and loss account (P&L). We answer this question in the form of a table:
|Income surplus calculation||Accounting|
|Type of bookkeeping||simple accounting||double-entry bookkeeping: each business transaction is posted to two accounts|
|Type of profit determination||Profit as the difference between income and expenditure||Determination of profits by comparing assets: Has the business assets increased (= profit) or decreased (= loss) over the course of the financial year|
|Inventory||not mandatory||Required: You use the inventory to determine the business assets for the asset comparison.|
|value added tax||Part of income and expenses and important for determining profit||Not important for determining profit. Sales tax is a so-called transitory item.|
Knowing the difference between EÜR and accounting is important if you as an entrepreneur are no longer allowed to carry out simple bookkeeping due to your size.
The more extensive the bookkeeping and the more complex the tax returns, the more it pays off to have a good tax advisor.Find a tax advisor now
5. Create an income surplus calculation with ELSTER
Elster Software is the software officially recognized by the tax office with which entrepreneurs and private individuals can send their tax data to the tax office. These tax returns include the advance VAT return, all tax returns and the EÜR annex.
How do you create your EÜR with ELSTER?
How to work with ELSTER:
- Download the ELSTER software: the EÜR is already included in the standard installation
- Fill in the general information on page 1
- On page 2 and carry out the profit determination: There you enter your operating income and operating expenses.
What place does the EÜR have in the tax return?
You can send your entire tax return to the tax office via ELSTER. This contains at least 5 important forms:
- The cover sheet for the tax return: There you enter your general information, e.g. name, address, tax number, etc.
- Appendix G or Appendix S: Businesses choose Appendix G for their income from business operations. Freelancers, on the other hand, use Appendix S for their income from self-employed work.
- The EÜR annex with the determination of profits via the income surplus calculation
- The annual sales tax return
- The trade tax declaration: This 5th declaration is relevant for traders. For freelancers, however, not.
Depending on the personal situation, additional documents can be added, for example Annex KAP for income from capital assets or Annex V for income from renting and leasing.
6. Create EÜR - advantages of an accounting software
If you work with ELSTER, you must have sorted and systematically recorded your income and expenses beforehand. Many self-employed people do this with an EÜR template in Excel, for example. Working with an EÜR template requires precise filing of the receipts and exact recording of every income and expenditure item in the spreadsheet. This approach is prone to errors.
The following table shows you the difference between the procedure with an EÜR template and a modern accounting program. We are assuming the case of an entrepreneur who is subject to VAT.
|Steps when booking and creating the EÜR||With EÜR template (e.g. in Excel)||With accounting program|
|Record receipt||Manual entry of the business transaction, no predefined accounts||Record the business transaction with predefined accounts|
|Exclude sales tax||Need to do it manually.||Does the program automatically.|
|Sort income and expenses according to sales tax||Need to do it manually.||Does the program automatically.|
|Organize income and expenses properly||Need to do it manually.||Does the program automatically.|
|Enter income and expenses in ELSTER||Need to do it manually||The program runs automatically via an ELSTER interface|
You can see that accounting software automates many work steps that you have to do by hand with the template and ELSTER software. The accounting software therefore saves time when calculating excess income and is less prone to errors. In addition, the leading accounting software programs conform to the GOBD standard for proper bookkeeping. This also speaks in favor of accounting software and pays off at the latest in tax audits.
Our online bookkeeping offers easy-to-use bookkeeping software with an EÜR module and an ELSTER interface.Try it now!
7. Conclusion: Create the EÜR with an accounting software
The income surplus calculation (EÜR) is the determination of profits in simple bookkeeping. It is only open to freelancers or tradespeople below the turnover threshold of 600,000 euros or the breakeven point of 60,000 euros. Corporations also have to prepare their accounts. So if you as the founder choose the legal form GmbH or UG (limited liability), you cannot work with the EÜR regardless of the amount of turnover and profit.
In the EÜR, profit is calculated as the difference between income and expenditure. Income is actually received payments in the cash register or on the bank account (inflow principle). Expenses are actual debits from the business account or payments from the cash register (outflow principle).
The tax office requires a verifiable determination of profits, so you have to sort and show income and expenses according to the structure requirements of the EÜR annex. You can do this manually with an EÜR template in Excel or with an online accounting software, whereby the accounting software automates many work steps. Then transfer the EÜR together with your other attachments as part of your tax return to the tax office via ELSTER. Here, too, an accounting program with an ELSTER interface has the advantage of automation.
The more extensive your bookkeeping and the more complex your tax situation, the more you should think about working with a tax advisor.
Try online accounting now
As editor-in-chief, René Klein has been responsible for the content of the portal and all publications by Für-Gründer.de for over 10 years. He is a regular interlocutor in other media and writes numerous external specialist articles on start-up topics. Before his time as editor-in-chief and co-founder of Für-Gründer.de, he advised listed companies in the field of financial market communication.
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