Accounting for light entrepreneurs
Accounting is one of the most daunting tasks for beginning entrepreneurs that requires great care and understanding of how things should be done. As a light entrepreneur, you do not need to worry about getting buried under endless paperwork and sending different kinds of notifications. Light entrepreneurs have different obligations compared to regular entrepreneurs. In this article, we explain accounting from the point of view of light entrepreneurs and present the most important facts.
Does a light entrepreneur need accounting?
Accounting is an important part of the operations of every business. However, single entrepreneurs rarely benefit from taking care of their accounting by themselves. Many beginning businesses have to outsource their accounting and pay for it every month in order to fulfill their legal obligations.
However, light entrepreneurs are not legally obligated to keep accounts. When a light entrepreneur invoices for their work with Eezy, they are in essence an employee for the service. Thus, a light entrepreneur is not officially recognized as an entrepreneur and, as a consequence, does not have a Business ID. This is why there is no obligation to keep accounts.
Light entrepreneurs do not have to spend time on accounting when their valuable time could be used to do billable work. Instead, a light entrepreneur has to send an invoice to their clients and fill in their own tax return. The light entrepreneur service does everything else for them, including the necessary paperwork as well as the payment of VAT and salary.
Light entrepreneur’s receipts and reimbursements
In addition to managing financial transactions, one important part of accounting is taking care of receipts and taxes.
The deduction rights and reimbursement of expenses are different for a light entrepreneur when compared to a regular entrepreneur operating with a business ID. This is because a light entrepreneur is classified as a private person. Despite this, as a light entrepreneur, you can deduct some of your work-related expenses on your tax return.
In order to deduct work-related expenses, you have to save receipts and vouchers in an appropriate manner for your tax return. Although a light entrepreneur is not obligated to keep accounts, private persons claiming an income tax deduction need to keep supporting documents for six years starting from the end of the tax year.
Light entrepreneur’s salary and taxation
Depending on the type of business, an entrepreneur pays themselves a salary or withdraws personal income. Managing these withdrawals and their incidental expenses is a part of accounting, and has to be done either by the entrepreneur or an accountant hired for the job.
Things are more straightforward for a light entrepreneur. You can focus on doing your job without having to waste time on anything unnecessary or pay unexpected expenses related to accounting. A light entrepreneur is paid their salary just like a regular salaried employee.
Eezy Kevytyrittäjät receives your tax card directly from the Tax Administration with an up-to-date tax percentage. All you need to do is your job and make sure to send your clients an invoice for your work. The service takes care of all the necessary withholdings and incidental expenses of your salary.
Accounting for light entrepreneurs in a nutshell
- When operating as a light entrepreneur with Eezy, you do not need to worry about accounting.
- As a light entrepreneur, you do not have your own Business ID and therefore are not obligated to keep accounts.
- Eezy takes care of the paperwork for you, so you can focus on doing your job.
- Keep a copy of your receipts and vouchers for reimbursements for the duration of six years.
