How to keep records when settling under general rules
If you do business and settle taxes under general rules, you will have to keep several types of records. These obligations stem from the tax legislation.
Tax revenue and expense ledger
Revenue and expense ledger (PKPiR) will be used for recording revenues and expenses for the purpose of income tax.
It may be kept by natural persons, civil partnerships of natural persons, registered partnerships of natural persons and partnerships engaged in an economic activity if their revenue from net sales did not exceed for the previous financial year, in the Polish currency equivalent to EUR 2,000,000.
You can keep PKPiR in paper or electronic form (you do need to print it). Template was defined in the Annex to the Regulation of the Minister of Finance of 26 August 2003 on keeping revenue and expense ledger (and amendments). There are also the instructions for filling in the ledger.
PKPiR is set up on 1 January of each tax year, or at the date of commencement of activity during the tax year.
If you conduct activity registered in the CEIDG, you can submit an application to amend the entry in the CEIDG, where in section "Type of accounting records" box "tax revenue and expense ledger"should be selected .
If you settle income tax under the tax revenue and expense ledger, you are obliged to keep records of equipment. It is intended for the purposes of business goods purchased in excess of PLN 1500 net (and for non-VAT payers PLN 1500 gross) and their expected useful life is less than one year. Remember! These records is quite different from the records of fixed assets. You cannot place the same items to equipment record and fixed assets record.
Records of equipment should contain at least the following information: sequence number, the date of purchase, the number of the invoice or bill, the name of equipment, the purchase price of equipment or production cost, the item number, which is entered in the cost associated with the acquisition of equipment, the date of liquidation (including the date of sale or gift) and reason for dismantling equipment.
You are obliged to make records at the latest in the month of transfer of equipment for use.
Records of fixed assets and intangible assets
A further obligation arising from the use of PKPiR is keeping an account of fixed assets and of intangible assets. You enter tangible and intangible assets with a value in excess of PLN 10 000 (net in case of VAT active taxpayers, gross in the case of companies exempted) and their expected useful life exceeds 1 year.
In the records you allocate to each asset the relevant KŚT symbol — Classification of Fixed Assets. This is your chance to apply the appropriate depreciation rate (according to KŚT symbol for each of them a specific rate of depreciation is determined) and spread the depreciation, in other words spreadin in time the initial value (purchase value of the asset), showing its consumption over time, which is used in business
It shall contain at least the following:
- serial number;
- the date of purchase;
- the date put into service;
- the document proving acquisition;
- identification of an asset or an intangible asset and legal asset;
- the symbol of Classification of Fixed Assets;
- initial value;
- depreciation rate;
- the amount of depreciation for a tax year and cumulatively for the duration of the depreciation, including where an asset was ever entered into the register (list) and then removed and restored;
- the updated initial value;
- the updated amount of depreciation;
- increasing the value of improvements to the initial value;
- closure date and reason for the transfer.
You can also add to this record goods with a value of less than PLN 10 000 — then you immediately use a one-off depreciation.
The records shall not cover residential buildings, apartments and a cooperative member's right to residential premises, cooperative member's right to occupy the apartment, the right to a single-family dwelling in a housing cooperation whose initial value you set in a simplified manner, i.e. you take the value which is a product of square metres of useful floor area of the building, flat and an amount of PLN 988.
Records of tangible and intangible fixed assets should be made no later than during the month of handing over for use.
If you do not carry out record of tangible and intangible assets, depreciation on the assets cannot be considered as tax deductible costs.
You are also obliged to draw up and enter into PKPiR physical inventory of commercial goods, raw materials, basic and ancillary materials, work in progress, semi-finished products, finished products, and waste:
- as of 1 January,
- at the end of each tax year,
- at the date of commencemet of activity during the tax year,
- in the event of a change of the shareholder
- a change in the proportion of the shareholders' shares
- liquidation of activity.
Obligation to draw up a physical inventory on 1 January of the tax year does not apply to taxable persons who drew up a physical inventory at the end of the previous tax year. In this case, instead of the physical inventory at 1 January of the tax year to the physical inventory drawn up as at 31 December of the preceding financial year.
Physical inventory shall be entered in the ledger when also self-employed persons draw it up monthly and on the basis of separate provisions its drawing up was ordered by the head of the tax office.
Physical inventory should contain at least the following information: name of owner (business name), the date of drawing up the inventory, serial number of the sheet of physical inventory, specification of the goods and other ingredients, unit of measurement,quantity found during inventory, price in PLN and the unit price, the value resulting from multiplying the quantity by its unit price, the total value of the physical inventory, and the clause "Inventory closed at the position...", the signatures of the persons drawing up an inventory of and the signature of the owner of establishment (shareholders).
Physical inventory should also include goods belonging to a taxable person located on the date of the drawing up an inventory outside the establishment of a tax payer, as well as foreign goods located in the premises of the taxpayer. Foreign goods are not subject to evaluation, it is sufficient in quantitative inventory of goods ispecifying whose property they are.
You must notify the head of the competent tax office of the intention to draw up a physical inventory at a time other than 31 December and start a business within at least seven days prior to the date of drawing up this inventory.
Records of the mileage of the vehicle
If you want to include expenditure related to the use of business passenger cars which are not fixed assets, you should keep records of mileage.
The records cover operating expenditure incurred as a result of the use of a passenger car in business activity not included in the records of fixed which constitutes:
- your property,
- ownership of employees,
- ownership of a third party and it is used e.g. under a rental, lease, lending agreement.
In the record you do not include cars used on the basis of leasing agreements (where the leasing agreements shall fulfil the conditions laid down in the Act on Income Tax and heavy goods vehicles.
You do not need to register the cost of using cars if the expenditure for this purpose were determined on the basis of the monthly lump sum in cash (local travel) or business trip.
The actual mileage of the motor vehicle carried out on the basis of the mileage of the vehicle, is used to determine the limit of the deduction. This is amount resulting from multiplying the actual number of kilometres of the mileage of the vehicle by the the rate per km set out in separate provisions (currently- PLN 0,5214 for a vehicle with a capacity of up to 900 cm³ and 0,8358 PLN for the others).
Records should in principle be carried out by a person using the vehicle. This means that it can be kept by you and the persons employed. However, records of the mileage of the vehicle at the end of the month concerned should be confirmed by your signature, also in the case when it was carried out by another person using the car during the given period.
The provisions do not provide a template of records, however, instructions set out the details that records should contain, such as:
- the surname, first name and address of the person using the vehicle;
- registration plate number of the vehicle and engine capacity;
- route book (from where -to);
- serial number of the entry;
- the date and purpose;
- number of kilometres actually travelled;
- the rate per 1 km;
- the amount resulting from multiplying the actual number of kilometres travelled and the rate per 1 km;
- signature of the taxpayer (employer) and his/her details
Record of the mileage of the vehicle are also required to keep taxpayers wishing to deduct 100 % of the VAT on the purchase of car and operating costs, including fuel. This concerns vehicles up to 3,5 tonnes which are used solely for purposes related to an economic activity.
Personal income card of workers
If you employ workers and pay them wages from an employment relationship ( contract work, etc.) you must keep individual income cards. They are intended to ensure the correct determination of advance income tax.
Records of sales and purchases of VAT
If you are an active VAT taxable person, you must keep records indicating the value of sales with the value of output VAT and the value of purchase with the value of input VAT. VAT records are the basis to complete the return summing up the accounting period (month or quarter) - VAT-7 return or VAT-7K. VAT records do not have a specific template, but in order to properly conduct them they should include, inter alia:
- subsequent numbers of entries
- data of invoice (contractor, invoice number, date of issue)
- the value of sales
- amount of VAT broken down by individual rates.
If you are in currency exchange business you must maintain records of purchases and sales of foreign currency; in case of pawnshops, one is obliged to keep records of loans and pledged goods. In addition, you can either for your own purposes keep other records, helpful for conducting business activity.