Last modified:Thursday 31 October 2019
What is a sole proprietorship?
A sole proprietorship is a company without a separate legal personality. You ‘are’ your business, which primarily differentiates you from a company. And the consequences? In a sole proprietorship, you have unlimited liability and your private assets are not separate from those of your business.
What are your accounting obligations?
Like any other self-employed person, you have to keep accounts. In a sole proprietorship, however, single-entry or simplified bookkeeping is sufficient. It consists of a financial daybook, a purchases and sales daybook and an inventory book. Based on this information, you prepare separate financial statements for each financial year. In addition, you may need to file a VAT return at regular intervals.
Good to know: a sole proprietorship may also carry out double accounting. It is advisable in many cases, as this allows you to get a more complete picture of your own business operations and then adjust your policy based on concrete figures and trends.