The principles of proper bookkeeping (GoB) define generally applicable rules as to how the bookkeeping should look in a company. Because every businessman and every commercial operation that uses double-entry bookkeeping must be able to prove that the bookkeeping is correct. The principles consist partly of codified guidelines, but partly also of non-codified regulations that have resulted from daily practice.
Good accounting principles – definition
Incidentally, the principles of proper bookkeeping have the character of a legal norm. This means that the principles are applied when the German accounting standards give rise to doubts or are even incomplete. Therefore, one often reads in connection with the principles of proper bookkeeping of an indefinite legal term and means exactly the described facts.
The basics of proper bookkeeping and the HGB
According to psyknowhow, the legal regulations with regard to the GoB are regulated in Section 238 (1) of the Commercial Code (HGB). The first principle is that, in order to be considered correct, bookkeeping must be designed in such a way that an uninvolved third party can easily understand it. We will explain in detail below what this means in detail.
The GoB and the Tax Code (AO)
The tax code (AO) is a supplement to the above paragraph of the HGB. Specifically, this concerns the regulations on how you have to store and organize the individual receipts and documents. Depending on which data and documents are involved, very different regulations can be relevant.
What should proper bookkeeping look like?
In order for the bookkeeping to be considered correct, it must be based on the principles of commercial law. Put simply, this is the case when the books are free of complaints in terms of form and content and the bookkeeping has been submitted. The requirements can be divided into different groups:
Material principles of proper accounting
- The information given is correct, true and can be derived from the books
- Information is complete and without omissions (so-called balance sheet truth)
- Bookings are clear and clear
- Bookings are traceable
- All assets are valued individually, but group valuations can still be allowed from time to time.
- In the case of bookkeeping in paper form, the sheets are numbered consecutively
- Bookings are arranged chronologically
Formal principles of proper accounting
- there is a receipt for every booking
- Abbreviations and symbols must be explained and always used according to the explanation
- In the case of electronic bookkeeping , all corrections or changes must be recorded automatically and can be checked at any time
- the balance sheet must always be structured according to the same principle (balance sheet continuity)
- Closing balance and opening balance must show the same values
- Spaces between the individual bookings are prohibited
- Records and documents must be saved and stored to be
Significance for invoicing
When it comes to invoicing, the rules of proper bookkeeping can be a real challenge, especially for freelancers , the self-employed and small business owners . Because the regulations state that you have to store electronically created digital documents in such a way that they cannot be changed – for 10 years or more.
This means that the tax office does not accept Word and Excel documents , which are used by many freelancers and self-employed. At least not if they do not contain so-called hash values that prove that they cannot be changed.
As a rule, however, the authorities accept PDF files. However, it is questionable how long this will continue, because technically gifted people can also change these files with little effort. It is therefore possible that the tax office will no longer accept PDF files in a few years.
But that is not all. Storage and retention of invoices can also be a real problem. Most tax offices do not recognize hard drives, USB sticks or cloud services like Dropbox because they can be changed. Even burning on a CD-ROM does not necessarily have to be considered a correct form of storage in this sense. Because the tax officer cannot check when the invoices were burned onto the data carrier.
The difference between GoB and GoBD
In addition to the principles of proper bookkeeping (GoB), there are also the principles of proper management and storage of books, records and documents in electronic form as well as data protection (GoBD). Put simply, the difference between the two is that the GoB are general guidelines with regard to bookkeeping.
Violations of the principles of proper accounting
Violations of proper accounting can be of a formal or material nature.
One of the formal deficiencies is if you have not printed out the cash register , inventory or diary, or necessary receipts. If the tax office classifies the formal deficiencies as significant, it can lead to the bookkeeping no longer being considered proper bookkeeping. Smaller, negligible deficiencies usually have no impact on the accounting requirement . However, you shouldn’t hope that the tax office will classify the deficiencies as negligible.
Material defects always exist when the factual correctness of the bookkeeping is questioned. This can be the case, for example, if you have not kept the cash book chronologically or have not recorded certain income.
An accounting software among other things, a useful tool for a proper accounting.
The consequences of a lack of compliance
Should the tax office come to the conclusion that the existing formal and material deficiencies are significant, this can have various, sometimes very unpleasant, consequences.
With regard to the tax payments, the tax office can switch to estimating the tax bases (appraisal). For you, this can mean that the tax burden is much higher than it would be with proper bookkeeping. If you cannot provide a lot of booking evidence, the tax office will cancel the tax breaks that are attached to them.
Often formal and material deficiencies in the bookkeeping also mean that the burden of proof is reversed, which is associated with considerable additional work for you. Depending on the scope and extent of the deficiencies, the tax office can also threaten coercive measures that can lead to criminal tax proceedings.
Criminal and civil law consequences of non-compliance with the GoB
Incorrect bookkeeping can also have far-reaching consequences under criminal and civil law. This leads to suspicion of having committed tax evasion . Depending on the scope, this can even mean imprisonment for the managing director. From a legal point of view, tax evasion is comparable to theft.
The tax authorities can also question the evidential value of the business books, which in the worst case can lead to bankruptcy offenses.
For corporations things get even worse: If improper bookkeeping can be proven, it will in all probability not receive their auditor’s report.