In accounting, expenditure is understood to mean incoming and outgoing debts (receivables). The expenditures reduce the financial assets, but do not necessarily mean an outflow of liquid funds (payment). The opposite of expenses is income.
On the one hand, expenses arise in connection with payments when something is purchased and a direct delivery of goods or services (expenses = payments) and on the other hand, when liabilities are entered into when purchasing goods or services. In this case, the expenses only become disbursements in the course of the repayment of the liabilities. Ultimately, the receipt of deliveries and / or services that have been paid for in advance, such as customer down payments (reduction of receivables), results in expenses.
From a financial point of view, it is important to what extent and when funds are permanently withdrawn or only temporarily tied up by spending (financial planning).
Expenses and the small business regulation
When applying the small business regulation , the amount of expenditure is irrelevant. Only the turnover is decisive here. As long as this was below 22,000 euros in the previous financial year and the turnover in the current financial year exceeds the limit of 50,000 euros, the entrepreneur can act as a small business owner.
For the founding year, the entrepreneur has to estimate his turnover and if this estimated turnover for the founding year is below 22,000 €, then the small business regulation can be applied. In this case, it is not the actual turnover that is decisive, only the estimate. A turnover of € 13,000 is estimated in the first financial year, so the small business regulation remains and this applies even if the actual turnover amounts to 20,000 €. However, the entrepreneur can then no longer apply the small business regulation in the following financial year and must apply the standard taxation from the second financial year. As a result, the sales tax must then be shown on the invoices and in return the entrepreneur can then claim the input tax paid for purchases from the tax.
However, care must be taken here to avoid confusion. Because even if the legal regulations on small business status are clear, sales are often confused with profit. A simple rule of thumb can be applied here:
Sales minus costs = profit
Therefore the costs for the small business owner do not play a role. Furthermore, it should be noted that if time is invested in the newly founded company and the weekly working time exceeds 15 hours, then there is no longer any entitlement to ALG 1. The conclusion here is that the expenses play no role in the assessment of the small business regulation and are completely disregarded stay.
The difference between expenses, payouts, expenses and costs
The following pairs of terms are summarized in corporate accounting:
- Deposits – Withdrawals
- Revenue expenditure
- Income – expense
- Performance – costs
According to wholevehicles.com, all of the above terms are the so-called “flow variables” and that means the payment or service processes that occur in a certain period (billing period). Each individual term leads to a change in the “stock sizes”, with positive leads to an increase and negative leads to a decrease in the stock. Each of these pairs causes a change in another defined stock.
To make it clear again: Any process in which the company’s financial assets decrease is referred to as an expense. The expenses are real assets and services, expressed in “money”, that the company receives in order to carry out the performance process. It is completely irrelevant when the cash flow takes place!
Income-expenditure calculation: who is allowed to do this?
The income-expenditure account is a simple form of bookkeeping, in which only the income and expenses of the company within a financial year (calendar year) are recorded. It does not matter whether the cash inflow or outflow was in cash or via the bank account. The only exception is the acquisition and production costs of objects.
An income-expenditure calculation may be carried out by the company if the turnover for two consecutive calendar years is less than € 700,000 in each case. If this limit is exceeded, the entrepreneur is obliged to keep double bookkeeping, starting in the second following year. If the turnover is over € 1,000,000, then even from the following financial year – with the exception of all independent professions.
Partnerships are only allowed to make an income-expenditure account if a natural person is registered as a liable partner and the turnover is below the € 700,000 limit. Corporations, on the other hand, are not allowed to account for income and expenditure.