Bookkeeping basics: setting up accounting after starting a business

Accounting becomes expensive when documents, payments, and responsibilities remain unclear until the first deadline. During the first week, define ownership, a business payment account, invoice numbering, document intake, and the handover to your tax advisor. The exact accounting and reporting obligations depend on the legal and tax situation and should be confirmed professionally.

During the second week, create one reliable intake and storage process. Keep the original record, add a visible processing status, and make corrections traceable. In weeks three and four, run the first complete monthly cycle: import bank activity, connect records, review unpaid invoices, resolve exceptions, and test the required export.

The goal is not immediate full automation. It is a repeatable routine in which every record has an owner, every exception is visible, and every handover can be reproduced.

A supporting record documents an event, such as a supplier invoice or bank payment. An account classifies its effect on cash, receivables, expenses or another category. A posting connects the amount, date, accounts and evidence. Saving an invoice file is not the same as reviewing and posting it.

Debit means the left side of an account and credit the right. They do not universally mean minus and plus. For an asset account such as bank, increases are debits and decreases credits. An increase in a liability, by contrast, is a credit. The transaction determines which accounts are affected.

A simplified example excludes VAT. A business receives €100 of consumed office supplies on account. It debits office expense €100 and credits trade payables €100. When paying, it debits trade payables €100 and credits bank €100. The payment does not create the expense again.

Debits and credits are equal in both postings. This does not count the expense twice: the first entry records the obligation and the second its settlement. Real transactions may require VAT, input VAT, accruals and other checks. Account numbers must match the chart actually configured.

German cash-basis profit calculation under section 4(3) EStG is generally available where no statutory bookkeeping obligation exists and the business does not voluntarily keep books and prepare accounts. It compares business receipts and expenditure under the relevant rules. It still requires evidence and includes exceptions to merely reading bank movements.

Balance-sheet accounting additionally addresses assets, liabilities and recognition in the proper period. Legal form, commercial law and potential tax bookkeeping obligations must be considered together. The small-business VAT exemption does not answer this question. Agree the method before importing historical data, then follow the practical 30-day plan.