· Camilla Pesonen · accounting · 2 min read
Single-Entry Bookkeeping for Sole Proprietors – How It Works
Single-entry bookkeeping is a lightweight and cost-effective way to manage the finances of a sole proprietorship, provided your annual turnover is under €200,000 and you have no employees. Learn who it suits and what's required to do it properly.
Table of Contents
- Single-Entry Bookkeeping for Sole Proprietors
- What Is Single-Entry Bookkeeping?
- Who Is Eligible for Single-Entry Bookkeeping?
- What Information Must Be Recorded?
- Summary of Benefits and Challenges
- Conclusion
Single-Entry Bookkeeping for Sole Proprietors
Single-entry bookkeeping is a simple and cost-efficient method for managing bookkeeping when your business activity is small-scale. In this article, we’ll explain what single-entry bookkeeping means, who can use it, and how it works in practice.
What Is Single-Entry Bookkeeping?
Single-entry bookkeeping means that financial transactions are recorded only once—either as an income or expense—on a cash basis. This means that you record transactions when money actually moves, not when an invoice is issued or received.
Who Is Eligible for Single-Entry Bookkeeping?
Single-entry bookkeeping is allowed under certain conditions. You can use it if:
- You operate as a sole proprietor (not as a limited company)
- You have no employees
- Your fiscal year is the calendar year (Jan 1–Dec 31)
- Your annual turnover is under €200,000
- You only sell goods or services within Finland
If these conditions are met, single-entry bookkeeping is an excellent choice.
What Information Must Be Recorded?
Single-entry bookkeeping requires the following information to be recorded:
- Income and expenses (based on payment date)
- Value-added tax (if you’re VAT registered)
- Fixed assets (e.g., tools, machinery, vehicles)
- Bank account and any cash balance
- Any private withdrawals or contributions
Bookkeeping can be automated by using our service designed for entrepreneurs.
Summary of Benefits and Challenges
Benefits:
- Simplicity: less information to record
- Cost-effective: can be done without an accountant
- Clear cash flow tracking
Challenges:
- Only suitable for small-scale businesses
- Less detailed financial overview than double-entry bookkeeping
- Limited to sales within Finland
Conclusion
If you operate on a small scale without employees and your annual turnover stays under €200,000, single-entry bookkeeping is a light and functional solution. It allows you to focus on running your business without a heavy administrative burden.
