Individual Merchant in Latvia - How to Track Expenses and Avoid Overpaying Taxes

As we already wrote in the first blog article, despite the fact that many self-employed professionals already know how to earn money by selling services or products, we see that many still overpay taxes. The taxable base can be reduced very simply by registering all expenses related to business activity.

Receipts are still scattered across multiple places: phones, chats, emails, folders on a computer, Google Drive, or Excel files. It is not surprising that something gets lost or forgotten. As a result, part of the expenses never reaches accounting records.

What happens next? Taxes are paid not on real profit, but on almost the entire turnover amount. That is why we continue this two-part article series with practical examples, where we show:

• how self-employed professionals earn money in everyday work,
• which expenses can be legally deducted,
• how much tax is paid before and after expense tracking,
• how much time accounting takes,
• and why using pats.lv is easier than working with a traditional accountant or complex software.

Simple, legal, and automated processes.

Why it is important for the self-employed to track expenses

Many still store receipts, enter them into Excel or Google Sheets, create folders on their computer, or forward documents to an accountant. At first, this seems sufficient… until transactions are not recorded or errors need to be found.

Some expenses are not taken into account, which leads to paying more tax than necessary. Documents are postponed, forgotten, forwarded, and later the accounting becomes inaccurate.

Next, let’s look at an example of what this means in real money.

Example: self-employed marketing specialist (IK) in Latvia

Which expenses can be deducted

Financial example

Below you will find a detailed example with real but variable expenses. Please note that expenses are shown as an average monthly amount on an annual basis, as in practice they are not the same every month. In one month there may be training or courses, and in the next six months there may be none, but over the year they form a stable amount that significantly reduces taxable profit. Expenses may also vary depending on amounts, market trends, and seasonality.

Monthly income: €3600

Expenses:

• Advertising €600 – paid advertising campaigns for client acquisition, social media ads, Google Ads, marketing banners, printed materials;
• Car €300 – fuel, maintenance, insurance, parking;
• Home office €150 – electricity, rent or property share, internet;
• Software €180 – design tools, CRM, advertising analytics, accounting;
• Equipment (average) €120 – computers, phones, camera, monitors;
• Education €100 – courses, training, seminars, professional development.

Total expenses: €1550

Routine with pats.lv

• Enter income
• Scan receipts
• Automatic categorization
• Ready-made reports

Time: ~1 hour per month! Register for free and start doing your own accounting!

Summary

By using automated accounting like pats.lv, all data is stored in one place, accessible from anywhere in the world with internet access, and you can also work together with an accountant.

• Less time spent
• Lower tax payments
• Full control
• No lost expenses

If you are unsure whether you can manage without an accountant, here are some criteria typical for those who successfully handle accounting on their own:

• No employees
• No complex structure
• Regular income
• Wants and is able to control everything personally

For such a specialist, pats.lv is often the most cost-effective and convenient solution. Try it!