How do you use online accounting when running a sole trader business?

Having your own business offers endless and flexible opportunities for growth. Today, the process of setting up its simplest form, a sole proprietorship, is easy, fast, and requires no capital investment. Nevertheless, there is something that worries the future entrepreneur – the obligation of accounting. How can a sole proprietorship fulfil this obligation? Online accounting – that's the simplest answer! We'll tell you all about it in our guide.

Sole proprietorship – online accounting or traditional accounting office?

A sole proprietorship is the most basic and one of the most popular forms of running a business – the business owner enjoys considerable flexibility and does not face as many formal obligations as is the case with companies incorporated under commercial law. That is why sole proprietors are allowed to use a simplified accounting system, known as ‘small-scale accounting’, either independently or through an accounting firm, whether traditional or online. 

Online accounting is more advantageous in that all the processes involved run more smoothly and quickly – and most of them are automated. You don’t have to leave the office or your home to hand over documents to the accountancy firm; you can sort everything out electronically.

In practice, however, the term „online accounting” covers two solutions. Firstly, there are To Accounting services, though provided remotely, and secondly – independent bookkeeping With the help of dedicated programmes available online. What do they involve?

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What is online accounting for a sole proprietorship?

In the first variant, you use the services online accounting firms, e.g. Open Profit. Your responsibilities are limited to providing us with documents – naturally remotely, automatically from the invoicing system we provide. You have your own dedicated accountant – a Guardian – who handles all of your company's accounting for you (depending on its structure), for example, maintaining your revenue and expense records, fixed asset register, vehicle mileage log and VAT register, calculating indirect taxes (e.g. VAT, excise duty, customs duties), advance income tax payments, ZUS contributions, and filing declarations on your behalf. 

The obligation to record sales and expenses is taken over by an external company. You only carry out bank transfers according to the provided schedule. This is an accounting firm represents you in all dealings with authorities and takes responsibility for any errors. If the accountant makes a mistake, you will not face any negative consequences as a result.

This involves running your own online accounting system.

The second form of online accounting is DIY accounting – you need to purchase accounting software, usually in the form of access to an online platform or app. 

You take on all accounting responsibilities, with the programme assisting you. – e.g. it automatically calculates taxes and ZUS contributions or generates the JPK_V7 control file after selecting the tax form and importing documents. If you run a sole proprietorship, considering only this small accounting, you can use such a solution, but it involves the risk of making a mistake or neglecting formalities and changing regulations. And in this case, you will be liable for any mistake with your entire assets.

How is online small-scale accounting for a sole trader business conducted?

There are two forms of small-scale accounting for sole proprietorships – they are is a revenue and expenditure record (KPiR) and a flat-rate registered income tax. There is also a third option: the tax card, but this is only available to those who were already using this form of taxation before 31 December 2021 and who meet several other conditions.

• Record of Revenue and Expenditure. This is a form of accounting for businesses that opt for general income tax rules or a flat tax. It involves the monthly recording of the company's sales (revenue) and expenses. The expenses incurred are considered deductible costs and reduce the taxable income, meaning you pay less tax. You can include all business expenses, such as the purchase of a computer, internet, or fuel.
• Flat-rate scheme. Accounting is carried out in the form of a revenue ledger, on the basis of which the business owner pays tax. Depending on the type of business, the flat-rate tax rates range from 2 to 17%. This is not a beneficial form of taxation for every business, but it may be worthwhile for you if you do not incur any business-related expenses. However, you must bear in mind the revenue limits for this form of taxation.

The revenue and expense ledger is not the only document you need to keep – in addition to the ledger, you’ll also need a VAT register (if you become a registered VAT payer), a register of fixed assets and intangible assets, and a vehicle mileage log.

An entrepreneur running a sole proprietorship may, of course, also choose to full accounting, although it is not compulsory up to a certain revenue limit (in 2023 it is PLN 9,654,400 for 2022). Such accounting involves keeping financial records that contain far more elements than income and expenses, as they also include turnover and balance statements for the general ledger and subsidiary ledgers, asset and liability listings, and financial statements. It provides a complete insight into the company's finances. 

How does online accounting (sole trader) work with Open Profit?

1. We're helping you set up a sole proprietorship.. If you haven't registered your business yet, we'll help you through the entire process – including selecting the most advantageous form of taxation. We also verify the need for VAT registration, advise on ZUS relief, and help you submit your business registration online, after which we check the application's accuracy.
2. You are opening an account with Open Profit and granting us power of attorney.. Once you have registered your company, we sign a subscription agreement and send you authorisations, which you complete and then submit to the tax office and ZUS. You set up an account with Open Profit and gain access to a company account on the Dropbox platform, accounting software, and an application for notifications about ZUS contribution deadlines and tax payments.
3. Meet your Account Manager, your personal accountant. You will receive an email from your Supervisor, who will also provide you with all the necessary information to get you started. One person will be responsible for all of your company's accounting. And they will always be at your disposal – they will advise you not only on accounting matters, but also on tax and legal aspects of your business.
4. You easily issue and send invoices in the programme. We supply you with COMARCH ERP XT software, which allows you to issue invoices and automatically send them to our accounting office, as well as having many other useful business management functionalities. You can conveniently import all necessary documents to your Dropbox account. 
5. You are receiving information on the amount of taxes, advances, and contributions.. We provide you with the necessary data on the amounts of VAT (and other taxes, e.g. customs duties, excise duty), income tax advances, and ZUS contributions by email or phone. Through the app, you receive personalised notifications about transfer deadlines. You make the transfers – and that’s all your duty!

 

 

What are the advantages and benefits of online accounting?

• Gigantic time saver and convenience. You don't waste time contacting an accountant, preparing and sending paper documents, or dealing with fixed asset accounting, depreciation, VAT returns, or tax and contribution calculations yourself. You have specialists for that. Your role is to provide invoices and documents and make payments.
• Peace of mind and a sense of security. You don't have to worry about forgetting to include something or missing any legal changes, and consequently making a costly error or losing out. The accountant takes on all responsibility – they are accountable for mistakes, represent you in dealings with authorities, and participate in any potential audits or proceedings.
• Tax and legal changes from the top of my head. Entrepreneurs have enough on their plates with their own affairs and challenges – they don't need to be experts in the law and keep track of changes, which are usually difficult to understand, and even harder to adapt company procedures to the new order. Managing your own accounts receivable requires this of you, but outsourcing your company's receivables management absolutely does not.
• Support – not just in accounting. Years of experience in managing the accounts of various entities provide Open Profit specialists with vast and multifaceted knowledge, which they are happy to share with their clients. If you decide to collaborate with a company like ours, you will gain more than just an accountant – you will gain a reliable partner who will help you grow your business.

Not just online accounting – what else can an e-accounting office help with?

Online accounting for a sole proprietorship can turn into comprehensive administrative support for your company – and you'll end up entrusting us at Open Profit with your entire HR and payroll processing, salary calculations, maintaining staff personnel files, preparing contracts and employment certificates, compiling payslips, and submitting PIT and ZUS declarations. Your responsibilities in this regard will essentially involve approving salary transfers. What else? You will have access to tax and legal specialists who will review contracts before they are signed, advise on the choice of employment contract, or recover outstanding payments from clients and contractors. 

FAQ – Frequently asked questions about online accounting for sole traders

1. What does online accounting involve (for a sole trader)?

Online accounting involves remote collaboration with an accounting firm. You conveniently provide all documents via software or email, and from the accountant, you receive information on taxes, advance payments, and contributions. The accounting firm submits declarations to the tax office and ZUS.

2. What are the benefits of online accounting for a sole proprietorship?

Online accounting combines convenience and time-saving with a sense of complete security. Your responsibilities are kept to a minimum (providing invoices and making payments), you only contact the accounting firm remotely, but it is the accountants who take on all responsibility and represent you in dealings with the authorities.

3. How much does online bookkeeping cost (for a sole trader)?

Much depends on the scope of services and work (e.g., the average monthly number of documents to be accounted for), but online accounting costs less than the services of a traditional accounting firm. It is also a symbolic cost compared to employing specialists within the company. On average, the service costs between 150 and several hundred złoty.