What is the EÜR?
The income surplus statement, abbreviated as EÜR (Einnahmen-Überschuss-Rechnung in German), is a simplified method of profit determination in accounting. It is a specific procedure primarily used in Germany. It is part of the German tax law and serves the purpose of profit determination for tax-related matters. Other countries have their own methods and standards for accounting and the determination of taxable profits. It is primarily used by small business owners, freelancers, and self-employed individuals to transparently present their income and expenses and calculate the tax burden. In contrast to double-entry accounting, which is mandatory for larger companies, the EÜR is less complex and does not require a formal balance sheet.
Why is the EÜR important?
The EÜR is an indispensable foundation for the financial planning and tax return of many small business owners and self-employed individuals. It allows for the simple determination of the profit or loss for a fiscal year and, consequently, the calculation of the tax burden. Additionally, the EÜR provides an overview of the financial health of the company, which is crucial for strategic planning and decision-making.
How is an EÜR created?
Creating an income statement involves several steps:
- Record income: All income generated during the fiscal year, such as revenues from sold products or provided services, must be recorded.
- List expenses: All business-related expenses, including rent, material costs, insurance, and personnel costs, are documented in the EÜR.
- Determine operating income and expenses: The difference between income and expenses yields the profit or loss before taxes.
- Consider taxes: Taxes, typically income tax and trade tax, must be paid on the determined profit.
- Submit the EÜR: The income statement is submitted to the tax office along with the income tax return.
What are the advantages of the EÜR?
Easy to use: It is less complex than double-entry accounting and requires less bureaucratic effort.
Cost savings: As no elaborate accounting is necessary, the EÜR saves time and money.
Transparency: The EÜR provides a clear overview of the financial situation of the company.
Planning certainty: Entrepreneurs can better plan their tax burden with the EÜR.
What are the limits of the EÜR?
Although the EÜR is a suitable method for profit determination for many small business owners and self-employed individuals, it has its limitations:
Revenue thresholds: There are revenue thresholds beyond which double-entry accounting is mandatory.
Complexity: The EÜR may not be sufficient for complex company structures or international business activities.
Limited information diversity: In contrast to double-entry accounting, the EÜR offers less detailed information about the financial situation of the company.
Conclusion
Overall, the EÜR is a valuable method for profit determination and tax planning for small business owners and self-employed individuals looking to manage their finances simply and cost-effectively in Germany and Austria. However, it is advisable to seek professional support from an accountant or auditor in case of uncertainties or complex business transactions.