Taxes
Tax Records vs Accounting: What Is the Difference Between a Sole Trader and an s.r.o. and Why Might You Pay More Tax?
· 3 min read
The very same commercial transaction can be taxed in a completely different year for a sole trader (OSVČ) compared to a limited liability company (s.r.o.). We explain the difference between tax records and double-entry accounting using practical examples: rent paid in advance, an unpaid invoice, received advance payments, and purchasing inventory before Christmas.
How tax records work for sole traders (OSVČ)
Under tax records (daňová evidence), actual received income and actual expenses paid are decisive. The objective is to determine the tax base, not the accounting profit or loss.
How double-entry accounting works for an s.r.o.
Double-entry accounting (účetnictví) works with expenses, revenues, receivables, liabilities, and accruals/deferrals. The accrual principle applies: the time of occurrence is decisive, not the timing of payment.
Practical examples
Rent paid in advance, an unpaid December invoice, an advance payment of 1 000 000 CZK received, or purchasing stock before Christmas. In every situation, sole traders (OSVČ) and limited liability companies (s.r.o.) are treated differently.
Author: FinTaxo expert team
Operated by: Zaklipso s.r.o.
Czech original: read this article in Czech
This article is general information and does not replace individual tax, accounting or legal advice. Czech legislation changes frequently — verify the current wording or discuss your situation with us before acting on it.
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