If you are not obliged to prepare annual accounts, it is sufficient to calculate the profit as the surplus of the operating income over the operating expenses. These are then compiled in a so-called surplus income statement and sent to the tax office once a year together with the corresponding tax forms. Since the income surplus calculation is regulated in § 4 exp. 3 of the income tax law it is called also 4/3 calculation .
One of the legal bases is § 141 AO, in which size criteria are mentioned. Only if you remain as a commercial entrepreneur under it, you can exercise the option and instead of an annual financial statement only an income statement. For freelancers, the exemption option applies regardless of their size.
The profit and loss account differs from the annual accounts in particular in that it is payment oriented. By delaying or bringing forward payments, you can legally influence the profit in one year. Outgoing invoices are only recorded as revenue when they have been paid. Incoming invoices are only entered as expenses if you have paid them. The only exception is therefore regular recurring payments such as rents, which are added to the old year even if they were paid within the first 10 days of the new year.
Do you need help in this field? Find out here, how we can support you.