The category of books is a term you hear often at the accountant’s office, but few people know what it means in practice. In short: “B category” books are single-entry and “C category” books are double-entry.
Single-entry books (B category)
They essentially record income and expenses. They are usually kept by:
- sole proprietors and self-employed professionals
- general and limited partnerships, as long as their revenue is below the legal threshold
They are simpler and cheaper to keep, but give less insight into the real financial position.
Double-entry books (C category)
Every transaction is recorded in two accounts, giving a complete picture: balance sheet, results, receivables, payables and fixed assets. They are mandatory for capital companies such as an IKE or an AE, and for businesses that exceed the revenue threshold.
When the category changes
A business on single-entry books moves to double-entry when:
- gross revenue exceeds the threshold set by law
- it converts to a capital company
- it voluntarily opts for double-entry, for example for funding or bank financing
The change usually applies from the start of the following financial year and needs preparation, because an inventory and an opening balance sheet are required.
What changes day to day
- more detail in documents and bank transactions
- tracking of customers, suppliers and stock
- depreciation of fixed assets and annual financial statements
- a higher accounting cost
On the other hand, the owner gets a clearer picture of how the business is doing, and banks get more reliable data for lending.
Which category suits you
Where there is no obligation, most small businesses stay on single-entry books. It is worth considering double-entry if you are preparing a large investment, applying for a funding programme or bringing in a partner.
Would you like us to check whether your business needs to change category? Contact us.
If you would like our office to handle it for you, see TAXGROUP services. For step-by-step instructions on the AADE and EFKA platforms, see our Useful guides.
Frequently asked questions
Can an IKE keep single-entry books?
No. Capital companies keep double-entry books regardless of their revenue.
When does a sole proprietorship move to double-entry?
When gross revenue exceeds the legal threshold or when it opts in voluntarily. The change usually applies from the next financial year.
Do double-entry books cost more?
Usually yes, because they involve more work. They also give a fuller picture of the business.
Can I choose double-entry books without being obliged to?
Yes, voluntarily. It can be useful for funding programmes, bank lending or bringing in partners.