How do I proceed if I need to correct a balance sheet?
July 19, 2022 | 55,00 EUR | answered by Laura Hohenwarter
Dear tax advisor,
My name is Selma Dörr and I run a small business in the event planning industry. This year, I have prepared my balance sheet and realized that I made a mistake. There is a journal entry that was recorded incorrectly, which has distorted the overall picture of my balance sheet.
I am concerned that this mistake could have consequences for my tax return and would like to know the best course of action to correct the balance sheet. Should I inform the tax office? Do I need to prepare and submit a corrected balance sheet? How will the correction affect my tax burden and my profit and loss statement?
I would greatly appreciate it if you could explain to me step by step how I should proceed to correct the error in my balance sheet and what impact this will have. I want to make sure that everything is handled properly and correctly to avoid any potential issues with the tax office.
Thank you in advance for your help and support.
Best regards,
Selma Dörr
Dear Mrs. Dörr,
Thank you for your inquiry regarding the correction of an error in your balance sheet. It is understandable that you are concerned, as an incorrect balance sheet could have consequences for your tax return. I will now explain to you step by step how to proceed to correct the error and what impact this will have.
1. Identify the error: First, you should identify the specific journal entry that was incorrectly recorded. Review your accounting records carefully to locate the error.
2. Make the correction: Once you have found the error, you need to make a correction in your accounting. Correct the incorrectly recorded journal entry and ensure that the balance sheet is now accurate.
3. Create a correction balance sheet: It is advisable to create a correction balance sheet in which the error and the corresponding correction are documented. You can submit this correction balance sheet to the tax office to transparently present the error.
4. Inform the tax office: It is important that you inform the tax office about the correction in your balance sheet. You can submit a copy of the correction balance sheet and explain the error. The tax office will review the correction and consider it in your tax return.
5. Impact on tax liability and profit and loss statement: The correction in your balance sheet will affect your tax liability and your profit and loss statement. Depending on the type of error, changes in tax payment may occur. It is important that you accurately report all changes in your tax return.
Overall, it is important to correct the error in your balance sheet to avoid potential issues with the tax office. By following a transparent and proper procedure, you can ensure that your tax return is correct.
I hope this information is helpful to you and I am happy to assist if you have any further questions.
Sincerely,
Laura Hohenwarter
