Accounting obligations of the trader (sole trader)

Verified 01 March 2024 - Directorate for Legal and Administrative Information (Prime Minister)

The sole proprietor (IS) who carries on a commercial activity must fulfill several accounting obligations. These include invoicing, keeping accounts and certain records, drawing up annual accounts and keeping accounting documents.

In this sheet we present the rules concerning the trader subject to a actual taxation system (simplified or normal).

It shall be subject to the simplified effective taxation system it meets all of the following conditions:

  • The company's turnover shall not exceed:
    • €840,000 for activities relating to the sale, catering or supply of accommodation
    • €254,000 for other activities
  • The amount of VAT for which it is liable is less than €15,000

The trader is subject to the normal effective taxation system if it exceeds these thresholds.

To know the accounting obligations of the micro-entrepreneur, you can consult the relevant sheet.

Simplified real regime

The trader is required to invoice for all its sales.

All important billing information is described in the card “All about billing”.

Warning  

Failure to comply with the billing rules is punishable by a fine of up to €75,000. In the event of repeated infringement, the fine may be increased to €150,000.

The trader who exercises a commercial activity must keep accounts.

When (automatically or on option) subject to a simplified effective taxation arrangements, its accounts may be kept in such a way that super-simplified. In order to benefit from this scheme, the sole trader must opt for it. Each year he must indicate whether he opts for the super-simplified accounting system on his income statement No 2031 by ticking the box provided for this purpose:

2023 Income Statement 2022 - Industrial and Commercial Profits (BIC)

It must then record from chronological manner transactions (purchases, sales, loans...) that affect the patrimony on his company. It must also monitor the value of its assets and liabilities at most every 12 months through an inventory. The company may carry out a simplified valuation of stocks and products.

The trader can keep his own books. However, when it decides to to entrust it to a professional, he must contact a public accountant registered in the order :

The trader may also join an approved management organization which can help him manage his company (taxation, accounting, etc.). In this case, it must communicate its annual accounts each year to the approved management organization to which it belongs.

Warning  

In case willful omission in the invoicing of the trader (inaccurate or fictitious entries), the person who committed the breach may be sentenced to up to 5 years' imprisonment; and €500,000 of fine.

The trader shall prepare the following accounting documents:

  • Journal Book : The book in which all transactions that affect the company's balance sheet are recorded. Only receipts and payments are recorded daily, operation by operation. Debts and debts shall be established only at the end of the accounting year. However, overhead costs should be recorded at regular intervals no more than once a year. The accounting entries can be centralized every 3 months.
  • Ledger : The book that collects all accounts. It reproduces the journal information by account and in the order of number provided by the General Chart of Accounts (GCP). Transactions are listed in chronological order.
  • Accounting Procedures Manual : A document that describes the accounting procedures and organization to understand the processing system and the performance of controls.

Each book receives a identification number registered by a registrar. They must also be quoted and initialed.

Any accounting record shall specify origin, on content and the assignment to an account of each datum, and references the supporting evidence.

Books may be kept electronically with computer software or manually without blanks or alterations. They must be dated and registered from the moment the trader establishes them to guarantee their content.

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Small company

The business is a small company if it fills 2 of the 3 criteria following:

  • Total balance less than or equal to €7,500 000
  • Net amount net of turnover less than or equal to €15 000 000
  • Average number of employees employed during the year 50 or less

The business is a small company if it fills 2 of the 3 criteria following:

  • Total balance less than or equal to €7,500 000
  • Net amount net of turnover less than or equal to €15 000 000
  • Average number of employees employed during the year 50 or less

At the end of each accounting year, the annual accounts company. They shall consist of a balance sheet, a profit and loss account and an annex. They may be presented in a simplified form (document template).

The trader subject to the simplified taxation system is not obliged to draw up the notes on the accounts which normally constitute the annual accounts.

Average company

The business is an average company if it fills 2 of the 3 criteria following:

  • Total balance less than or equal to €25 000 000
  • Net amount net of turnover less than or equal to €50 000 000
  • Average number of employees employed during the year up to 250

The business is an average company if it fills 2 of the 3 criteria following:

  • Total balance less than or equal to €25 000 000
  • Net amount net of turnover less than or equal to €50 000 000
  • Average number of employees employed during the year up to 250

At the end of each accounting year, the annual accounts company. They shall consist of a balance sheet, a profit and loss account and an annex. The company may present its profit and loss account in simplified form (document model).

The trader subject to the simplified taxation system is not obliged to draw up the notes on the accounts which normally constitute the annual accounts.

The trader is obliged to keep his accounting documents and supporting documents (invoices, records...) at least 10 years from the end of the accounting year.

Warning  

The retention of documents is necessary in case of control by the tax administration or in case of dispute. The trader who has not kept his documents is liable to a fine of €10,000.

Normal effective taxation system

The trader is required to invoice for all its sales.

All important billing information is described in the card “All about billing”.

Warning  

Failure to comply with the billing rules is punishable by a fine of up to €75,000. In the event of repeated infringement, the fine may be increased to €150,000.

The trader who exercises a commercial activity must keep accounts.

It must record from chronological manner transactions (purchases, sales, loans...) that affect the patrimony on his company. It must also monitor the value of its assets and liabilities at most every 12 months through an inventory.

The trader can keep his own books. However, when it decides to to entrust it to a professional, he must contact a public accountant registered in the order :

Warning  

In case willful omission in the invoicing of the trader (inaccurate or fictitious entries), the person who committed the omission may be sentenced to up to 5 years' imprisonment; and €500,000 of fine.

The trader can also join an approved management organization which can help the entrepreneur in the management of his company (taxation, accounting...). Instead, it must communicate its annual accounts to the approved management organization to which it belongs each year.

The trader must establish a number of mandatory accounting records. These are:

  • Journal Book : The book in which all transactions that affect the company's balance sheet are recorded. They are recorded daily, operation by operation.
  • Ledger : The book that collects all accounts. It reproduces the journal information by account and in the order of number provided by the General Chart of Accounts (GCP). Transactions are listed in chronological order.
  • Accounting Procedures Manual : A document that describes the accounting procedures and organization to understand the processing system and the performance of controls.

Each book receives a identification number registered by a registrar. They must also be quoted and initialed.

Any accounting record shall specify origin, on content and the assignment to an account of each datum, and references the supporting evidence.

Books may be kept electronically with computer software or manually without blanks or alterations. They must be dated and recorded from the moment the entrepreneur establishes them to guarantee their content.

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Small company

The business is a small company if it fills 2 of the 3 criteria following:

  • Total balance less than or equal to €7,500 000
  • Net amount net of turnover less than or equal to €15 000 000
  • Average number of employees employed during the year 50 or less

The business is a small company if it fills 2 of the 3 criteria following:

  • Total balance less than or equal to €7,500 000
  • Net amount net of turnover less than or equal to €15 000 000
  • Average number of employees employed during the year 50 or less

At the end of each accounting year, the annual accounts company. The annual accounts shall consist of a balance sheet, a profit and loss account and an annex. They may be presented in a simplified form (document template).

Average company

The business is an average company if it fills 2 of the 3 criteria following:

  • Total balance less than or equal to €25 000 000
  • Net amount net of turnover less than or equal to €50 000 000
  • Average number of employees employed during the year up to 250

The business is an average company if it fills 2 of the 3 criteria following:

  • Total balance less than or equal to €25 000 000
  • Net amount net of turnover less than or equal to €50 000 000
  • Average number of employees employed during the year up to 250

At the end of each accounting year, the annual accounts company. The annual accounts shall consist of a balance sheet, a profit and loss account and an annex. The company may present its income statement in a simplified form.

The trader is obliged to keep his accounting documents and supporting documents (invoices, records...) at least 10 years from the end of the accounting year.

Warning  

The retention of documents is necessary in case of control by the tax administration or in case of dispute. The trader who has not kept his documents is liable to a fine of €10,000.