Accounting software, 'Lohnsteuerverein' income tax association or a tax accountant after all?

If you go into business for yourself with a car wash, you must submit your tax return. You have other things to consider than, for example, your employee. Especially for beginners there are a lot of pitfalls when filling in the forms and also during the preliminary work. And when tax officials come across mistakes in a tax return, they tend to look all the more closely – and in most cases they find something. It is virtually impossible for you to fill out your tax return without any prior knowledge and without any mistakes and to take advantage of all your opportunities. But there are various tools that you can use.

Who must submit a tax return?

In short, every entrepreneur. But how you have to list and file your profits and expenses depends on your profit and also on the legal form of your company. If you are a sole trader or have set up a GbR (company constituted under civil law) for your car wash, you do not necessarily have to prepare a balance sheet if you make less than 60,000 euros profit per year or remain below a turnover of 600,000 euros. In this case, the cash method of accounting (EÜR), which you prepare in your income tax return, is sufficient. If you, as a trader, earn more than this amount or have a higher turnover, you are obliged to prepare a balance sheet.

This is also obligatory for all companies entered in the commercial register, i.e. for all GmbHs, AGs, OHGs, etc. In order to prepare a balance sheet, you need double-entry bookkeeping. And this can be very complicated, especially for people with little experience. Not only do you have to keep a compact journal and a general ledger in which all items are put into a temporal or factual order – you also have to keep several other books such as the cash book, the payroll book or the stock ledger. For beginners this quickly becomes confusing. However, you can use accounting software or take advantage of a tax accountant's services.

Helpful bookkeeping tools and software

There are different forms of support for your accounting. You can either buy programs or subscribe, install the software on your computer, or work in a cloud. A few things a good accounting software should definitely include are: automatic document recognition by photo and scan, online banking and an interface to the tax accountant software, the preliminary VAT return, the automated creation of customer or supplier accounts and the creation of down payment invoices with templates. It is also advantageous if customer service is easily accessible and if a database full of tutorials, tips and tricks is available. Particularly popular types of accounting software for start-ups are for example the following.

WISO Buchhaltung 365

This software is released annually and is particularly suitable for small and medium-sized companies as well as start-ups. You can use it to generate a profit and loss account, to do your cash method of accounting or prepare your balance sheet including double-entry bookkeeping. The program gives you the option of online banking and preliminary VAT return, and you can check your current income and cost situation at any time. If you are unsure whether the software is suitable for you, you can try it out for thirty days without obligation.

sevDesk

The practical solution in the cloud is both clear and easy to understand. You can use sevDesk to manage your invoices and keep track of your costs and profits. Online banking, cash method of accounting, the cash book and the preliminary VAT return are also integrated. Profit and loss accounting is also supported. There is an interface for the tax accountant, who prepares the tax return after your preparatory work with the program. The program is free for the first 14 days.

Lexware Buchhaltung

The Lexware Buchhaltung accounting software has been around for a long time and is very popular. As a start-up, you already have an eye on all positions and can decide: is simple cash method of accounting sufficient for the beginning? Or do you already need double-entry bookkeeping with profit and loss accounting and a balance sheet? In addition to numerous booking templates, you can use online banking or make your VAT advance payment – the necessary interfaces are also provided, as is the interface to the tax accountant if you want them to check your accounts again. You can find further information about the software here, which you can test free of charge for one month.

Steuer-Spar-Erklärung

As a sole trader, if you do not use double-entry bookkeeping at the start of your self-employment, then the Steuer-Spar-Erklärung ('tax savings declaration') is one of the easiest-to-understand and affordable software programs for you. It features an excellent common thread that guides you reliably through the pitfalls of your tax return and allows you to store your receipts. However, if you eventually earn more than 60,000 euros a year, this program is no longer sufficient. If you are still interested for the start-up period, you can find more information here.

A tax accountant offers these advantages

The advantages offered by tax accountants cannot be ignored. They know all about the matters that make your hair turn grey and will do the necessary work in a fraction of the time you would need. In all probability, they will save you sums that you would not achieve yourself. However, it is of course also expensive. 

You can use their services in many different ways. Either you work closely with them and learn over time how to take on the tasks yourself. Or you can supply them with everything they need for your tax returns and annual financial statements and sit back and relax. If the tax officials still have questions after submitting your tax return, for example, they will ask them directly to your tax accountant and not to you. In addition, tax returns submitted by a tax accountant on your behalf are often not checked as closely as those that you prepare yourself, which reveal one or two uncertainties. 

How to find a trustworthy tax accountant

First of all, to put your mind at rest, a tax accountant is always on your side – if they do their job well, you will have to pay as little tax as possible. You can start by asking your friends or family if someone has had good experiences with a tax accountant in the area. Then you can look at the websites and see how professional they seem to you and how well the information is presented. Alternatively you can search for example with the search service of the Deutscher Steuerberaterverband e. V.: Here you can also restrict your search by industry, because many tax accountants have specialised in certain fields of activity. 

How much you ultimately have to pay for the tax accountant is calculated on the basis of your income. However, the law does not stipulate how much the accountant may charge. Instead, there is a margin of discretion. Here you will find, for example, a calculator for the tax consultancy costs. This tells you how wide the range of permitted fees is. Keep in mind the average value of what would be appropriate for your business. If, in an initial interview, the tax accountant mentions a sum for his fee that is well above this average, it is legitimate to ask him for the reason. First make a comparison and finally decide on a consultant who suits you and whose price is right.

The 'Lohnsteuerhilfeverein' service is not an option

The 'Lohnsteuerhilfeverein' (income tax assistance) is considerably cheaper than a tax accountant. Even after paying small contributions, well-trained specialists would assist you in preparing your tax return – if you were not setting up your own business. In fact, only employees, civil servants, unemployed people, pensioners, students and trainees are in a position to be advised by this association. 

Cost comparison between software and tax accountant

Of course, accounting software comes up tops when comparing costs. It is usually much cheaper than a tax accountant. On the other hand, the advantages of a tax accountant cannot be dismissed. They know all the tips and tricks to get you more net from the gross, whereas the software contains some advice, but you have to implement it yourself. The consultant saves you a lot of time and gives you the reassuring feeling of having put an important matter in the hands of a professional. With the software, on the other hand, you keep the reins in your hand and save money compared to the tax accountant's fee. So you have to decide for yourself what is most suitable for you personally.   

Summary: Accounting is relatively complicated

Accounting is usually more complicated than most people imagine it to be. Especially as a start-up it is important to avoid some pitfalls. With a tax accountant, you avoid the difficulties and get a comprehensive and good result, but dig deeper into your pocket for it. The high-quality accounting software that is now available is the much cheaper alternative. However, you will have to do the work yourself and, despite the assistance, you cannot be sure that you are not making mistakes that will attract the attention of tax officials. Unfortunately, you cannot make use of the services of the 'Lohnsteuerhilfeverein' as a self-employed person.