Sage explains German accounting: EÜR vs. double-entry bookkeeping
Sage provides guidance on German accounting practices, clarifying the distinctions between the simplified EÜR (revenue-expense accounting) and double-entry bookkeeping, and when each method is appropriate.
Businesses operating in Germany must choose a method for recording their income for tax purposes. Sage, a financial software provider, has published information clarifying the difference between the simplified EÜR (Einnahmen-Überschuss-Rechnung, or revenue-expense accounting) method and the more complex double-entry bookkeeping.
Double-entry bookkeeping is mandatory for companies registered in the commercial register, as well as those whose annual profit exceeds EUR 60,000 or whose annual turnover exceeds EUR 600,000. This method requires the preparation of both a balance sheet and an income statement.
The EÜR method is intended for freelancers, small business owners, and self-employed individuals who do not exceed these thresholds. It is based on a simple formula: income minus expenses. With this method, no separate balance sheet or income statement needs to be prepared for capital gains or business profits, and taxation is typically based on the company's own declarations.
Sage also offers its Sage 50 software, designed for small businesses. The software integrates financial accounting, EÜR or double-entry bookkeeping, order processing, and inventory management into a comprehensive package, aiming to simplify accounting tasks for businesses.