(2022) What is a net income method?

With the income statement according to Section 4 (3) EStG, you can easily determine your business profit. Business income and expenses are recorded and compared using the cash basis method. This simple form of accounting does not take provisions into account, for example.

Another advantage is that the income statement does not require the maintenance of balance accounts or an inventory.

If you determine your profit using the income statement, the surplus of your income over your business expenses is the profit that is declared for taxation in the tax return.