What tax obligations do I have as the founder of a sole proprietorship?
October 3, 2022 | 50,00 EUR | answered by Karl Albrecht
Dear tax advisor,
My name is Georg Hofstetter and I am planning to start a sole proprietorship. I have thoroughly researched the business idea and am now taking the first steps towards implementation. However, I am unsure about the tax obligations that I, as a founder, will have to face and how best to handle them.
I have no prior experience in the field of taxes and accounting, so the thought of having to deal with these issues is somewhat worrying to me. I want to ensure that I correctly pay all necessary taxes and avoid making mistakes that could cause problems later on.
Could you please explain in detail what tax obligations I have as the founder of a sole proprietorship? What should I consider in terms of bookkeeping, and which taxes do I need to pay? Are there specific deadlines that I need to meet, and what documents do I need to keep?
I would appreciate receiving specific information and tips from you so that I can best prepare for the tax aspects of starting my business.
Thank you in advance for your help.
Sincerely,
Georg Hofstetter
Dear Georg Hofstetter,
thank you for your inquiry and your interest in my online consultation on taxes and entrepreneurship. I am pleased to hear that you are already working intensively on your business idea and are now planning the next steps for implementation. I would be happy to help you become familiar with the tax obligations as the founder of a sole proprietorship.
As the founder of a sole proprietorship, you have various tax obligations to fulfill. First and foremost, you must register with the tax office and apply for a tax number. You will need this to submit your tax returns. As a sole proprietor, you are generally required to submit an income tax return. Here, you must disclose your income and expenses to the tax office and pay the corresponding taxes.
When it comes to bookkeeping, it is important that you document all business transactions properly. This includes invoices, receipts, bank statements, and contracts, for example. Good bookkeeping forms the basis for your tax returns and helps you keep track of your financial situation. As a sole proprietor, you have the choice between the income surplus calculation (EÜR) and double-entry bookkeeping. For smaller companies, the EÜR is usually sufficient.
The taxes that you must pay as a sole proprietor include income tax, sales tax, and possibly trade tax. You must pay sales tax to the tax office if you provide taxable services. Trade tax is levied if you operate a trade. It is important that you pay the respective taxes on time and correctly to avoid fines and other consequences.
There are certain legal regulations for storing documents. Generally, you must keep your business records for a period of 10 years. This includes your tax documents, invoices, receipts, and contracts in particular. An organized filing system will help you keep track of your documents and have them readily available when needed.
I hope this information helps you prepare for the tax aspects of starting your business. I am also available for any further questions and support you on your path to self-employment.
Best regards,
Karl Albrecht
