As an entrepreneur, you can also purchase items such as a computer or a phone through an installment plan, meaning the payment is made in parts over time. These purchases are recorded in bookkeeping as follows:
- Check the VAT
- If the installment invoice shows VAT, you can record it monthly in your bookkeeping and receive the VAT deduction each month.
- If the installment invoice does not show VAT, attach the original purchase receipt to the first installment invoice. The receipt must clearly state the total purchase price and VAT specification.
- Record the installments
- Create an entry each time you pay an installment.
- The installment invoice is sufficient as documentation, provided it shows the installment amount along with any interest or financing costs.
The total purchase price has already been added to your accounting at the time of the first entry, but when you add an installment payment to your accounts, the interest and other financial expenses in the installment are entered. The interest and financing costs of the installment are deductible expenses in bookkeeping.