Profit and Loss statement - tax issue

Hi all,

first of all I am very happy with the ease of use of It is a very easy to use software!
Thanks to all the people who made it.

I have one question or problem where I can´t get a solution for me. I am writing from Germany and we have a kind of “small Business regulation”, in German “Kleinunternehmerregelung”. In this case you don´t have to pay taxes to the tax authorities, but neither you can use the tax of suppliers as deduction.
I just work on gross amounts.

I just need to create a profit and loss statement at the end of the year, but if I do this, I only have the values without taxes in the report.

Is there any way to work on a “non tax” basis but to use taxes anyway?
I need to have invoices with gross amount but a written statement “including 10.7% taxes on agricultural products”
Suppliers invoice tax with 19%. So I would like to use the tax function anyway.

But is there any option to have the profit and loss including the taxes?

For example:
I need to buy spareparts, Diesel and so on for 1000€ + VAT, so I pay 1000€+190€ for taxes
I sell products for 2000€, so I invoice and get 2000€+221,40 (10,7%)

Normally I would have to pay 31,40€ to tax authorities but as it is to much effort for them for small business I can keep it.
So my profit and loss statement would be:
spendings: 1190€
earnings: 2221,40€
profit: 1031,40€

At current state makes a report like this:
spendings: 1000€
earnings: 2000€
profit: 1000€


@Panger, you have two separate situations here:

  • Purchasing
  • Selling


I’ll deal with purchasing first. Manager’s tax processes are set up on the assumption that most taxes will be offsetting, such as VAT. In other words, you will collect taxes from customers, pay taxes to suppliers, and remit the balance to the tax authority. Because of your special small business status, you cannot offset taxes paid against taxes collected. Therefore, do not use any tax codes on your purchases. You have two options:

A. Include the tax paid within the unit price of every line item on a purchase invoice or payment form. For you, tax paid on purchases means simply a higher price. If you purchase inventory items this way, the tax will be included in their cost in the Inventory on hand account. In other words, you will be capitalizing the tax as a temporary asset, then later passing it through as the cost of goods sold to become an expense. This might not be permissible under German tax regulations. You should consult a qualified accountant or the tax authority about this. I am not saying there is anything morally or ethically questionable about this option. But some jurisdictions permit you to capitalize the full acquisition cost of inventory, including such things as tax, shipping, etc., and some jurisdictions do not. Just do your research and follow the rules.

B. Separate the tax paid on its own line item, posted to an expense account created for the purpose. This gives you visibility about where you are spending your money. It does not capitalize taxes as part of inventory (if that is even an issue for you). Again, consult qualified sources to determine whether this expense is deductible for such purposes as figuring income tax. (Financial and tax accounting are seldom the same. But the tax is a real expense and reduces your net profit.)

Whichever option you choose, the tax ultimately becomes an expense on your profit and loss statement. This is why tax authorities have different regulations about capitalizing taxes on inventory. Some are satisfied with the expense being recognized when goods are sold. Others want the expense recognized in the period when payment is made.

From your perspective, Option B is easier, because you do not need to prorate taxes paid to unit prices. And you get the benefit of the expense immediately. Since you are generating internal forms (purchase invoices and payments), you need not worry how they will be interpreted by outsiders.


Selling is a little more complex, because you need to show customers something recognizable and understandable on sales invoices and receipts. So for sales, you do want to use tax codes. Fortunately, Manager has a solution, called flat rate tax. Read the Guide: Create and use tax codes | Manager. The section on flat rate schemes is about 3/4 of the way through the Guide.

In your case, you will have to create a tax liability account, even though you will actually not remit anything to the government. Otherwise, the program will not work. Just follow the instructions in the Guide. Also create a custom, single rate tax code for 10.7%. Give it a name like Agricultural tax 10.7%. Check the box for Flat rate, and in the Flat rate field, enter 0%.

Your customer (using your example numbers) will see an invoice for the amount €2000, plus €221,40 tax, for a total of €2221,40. To them, this will seem perfectly routine. But your tax liability account will show no change. Instead, the income account to which you post the €2000 amount for the goods will increase by €2221,40.

The tax authority will get back some of the money it let you keep by not remitting VAT by taxing this extra income. Depending on your marginal income tax rate and the ratio of your sales to purchases, you might actually pay more than the 10.7% they would have received through VAT. (That is something else to discuss with an accountant. It could be—if you have a choice—that participating in this program is not worth it.)

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Wow, chapeu

I have to say this answer is by far better than I expected.

I have tried yesterday evening already with custom tax codes, named “Sales10.7” and “VAT19” but with 0% behind it, that worked in the first step for me.
On sales invoices I am not sure if I need to show the exact VAT Amount or if it is sufficient to have a text like:
“includes 10.7% VAT on agricultural products”

I will check on that.

For Purchasing I used the “VAT19” custom tax because it is used as internal forms.

I will give an update again after I found my exact way to go



I have used the way you supposed for sales invoices with flat tax. Works perfect for me.

For purchasing I have created a new custom VAT named “MWST19” with 0%
I use it and add the items on incoming invoices as “including tax”

This works fine for me too.
As for my case I just need to create a loss and profit at the end of a year to show my loss or profit for tax purposes I do not need to have the complete VAT functionality in it.

Thanks and thumbs up again for this perfect software!

It is quite perfect for me to use because I can easily create invoices in it with automatic numbers and so on, which is very important to be conform to our laws.


If you defined the flat rate tax code correctly, all this will happen automatically whenever you apply it.

Read my first post again. You should not be using any tax code on purchases.

You cannot do things halfway. If you do this incorrectly, your profit and loss statement will be wrong.


yes, exactly. It works perfect for me!

I have defined a custom tax code only named “VAT19” but with 0%
It is for me an internal note which tax was applied from supplier on this invoice.
It does not affect the profit and loss statement which is now usable perfect.

Tomorrow I probably will create my first sales invoices and I am very excited on it :wink:

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I like your spirit🤘