What is the difference between a commercial law-based and a tax law-based financial statement?
March 9, 2023 | 40,00 EUR | answered by Louis König
Dear tax consultant,
My name is Lukas Ackermann and I run a small business in the service industry. I am currently in the process of preparing my annual financial statements and have a question regarding the differences between a commercial and a tax-related annual financial statement.
As background information, I would like to mention that I have only ever prepared a commercial annual financial statement and am now unsure if I also need to prepare a tax-related annual financial statement. My company does not have any special tax considerations and I have not yet gained any experience with tax-related annual financial statements.
My concerns are that I may make errors in preparing my annual financial statements that could lead to tax disadvantages. I want to ensure that I comply with all legal requirements and do not leave any tax benefits unused.
Therefore, my specific question to you is: What are the key differences between a commercial and a tax-related annual financial statement? Do I need to prepare both, and if so, how can I ensure that both are correct and complete? Are there possibly ways to simplify the preparation of the tax-related annual financial statement?
Thank you in advance for your support and advice.
Best regards,
Lukas Ackermann
Dear Mr. Ackermann,
Thank you for your question regarding the differences between a commercial and a tax accounting annual financial statement. As a tax advisor with many years of experience in this field, I am happy to assist you and provide you with the necessary information.
First of all, it is important to understand that the commercial annual financial statement and the tax annual financial statement serve different purposes. The commercial annual financial statement is primarily used for external reporting to creditors, investors, and the public. It is based on the regulations of the Commercial Code (HGB) and includes the balance sheet, the profit and loss statement, and the notes.
On the other hand, the tax annual financial statement is used to determine taxable profits and serves as the basis for calculating taxes. It is based on the tax regulations of the Income Tax Act (EStG) and may differ from the commercial annual financial statement. Some tax regulations, for example, allow for tax depreciation options or special deductions that are not taken into account in the commercial annual financial statement.
In many cases, it is necessary to prepare both a commercial and a tax annual financial statement. This is particularly the case when your company needs to make tax adjustments to correctly determine taxable profits. It is important to ensure that both financial statements are accurate and complete to avoid tax disadvantages.
To simplify the preparation of the tax annual financial statement, I recommend consulting an experienced tax advisor. A tax advisor can assist you in making the necessary tax adjustments for your financial statement and ensure compliance with all legal requirements. Additionally, a tax advisor can help you take advantage of potential tax benefits and optimize your tax situation.
Overall, it is important to carefully prepare both the commercial and tax annual financial statements and seek external assistance if necessary to ensure compliance with all legal requirements. I hope that my response has been helpful to you and I am available for any further questions.
Best regards,
Louis König
