Cash-basis profit calculation

The cash-basis profit calculation is the simple form of profit determination for the self-employed: all business income of a calendar year minus all business expenses of the same year gives the profit. No balance sheet, no inventory, no double-entry bookkeeping.

What there is to do in practice

The work consists of three gestures that arise through the year. You record every payment that comes in for your activity — fees, platform payouts, reimbursements. You record every professionally caused payment that goes out. And you keep a receipt for both.

At the end of the year that becomes a statement which is transmitted electronically together with the income-tax return. The profit from this calculation is the figure on which income tax is levied — not your turnover and not the amount that arrived in the account over the year.

Anyone who also works as an employee or studies enters both in the same return. The profit from the self-employed activity is then added to the rest of the income, which raises the burden on the extra euro. That too is a reason to form reserves instead of looking only at the incoming payment.

The inflow principle

What counts is not when you performed a service or wrote an invoice, but when the money flowed. A shoot day in December that is paid in January belongs in the new year. Conversely an expense counts in the year in which you paid it.

That has a practical side effect: when you pay for a larger purchase shifts profit between two years. For durable purchases, however, special rules apply, because the costs are then spread over the useful life. Whether and from which amount that bites is settled by tax advice — the values for that change.

Why turnover is not profit

A video production brings 400 to 1,200 euros per shoot day. What of that is profit hangs on the expenses of that year: travel, tools, recordings for the Sedcard, a share of phone and internet, tax advice, account fees. Two people with identical fees can therefore have very different profits.

On top of that unpaid time cannot be deducted. Days for applications, arrangements, travel without a shoot or content production without turnover appear in no line — they lower the hourly wage, not the profit. Which items are typically deducted is under business expense.

How the calculation stays checkable

Collect receipts as you go instead of in March of the following year. A separate account for professional payments replaces most of the sorting work, because the statement then itself supplies the chronology. Digital receipts belong filed securely; retention periods apply to them as well.

If you remit VAT, received and paid tax is treated separately in the calculation and does not affect profit. The basic principle is under VAT; everyday practice is described in the article trade and tax for performers.

This explanation places the procedure in context and is not a substitute for tax advice.