Lokikirjanpito

Lokikirjanpito is a Finnish term that refers to a simplified form of bookkeeping in which all financial transactions are recorded in a chronological log rather than in a full set of accounts. The method is designed to be straightforward, making it suitable for micro‑enterprises and sole proprietors with limited transactions. In a logbook, each entry typically includes a date, a description, the amount, and a reference, but does not require the use of ledgers or separate P&L and balance sheet accounts.

The main characteristic of lokikirjanpito is its linear structure. Unlike double‑entry accounting, it does not automatically balance debits and credits, and the user must manually check for errors. Because of its simplicity, it allows for fast record keeping and reduces the amount of paperwork. It can still be integrated into more detailed accounting systems if the business grows and the volume of transactions increases.

Legally, the use of lokikirjanpito is permitted for specific businesses under Finnish tax law. It is generally allowed for sole proprietors with annual revenues below a certain threshold and for certain service providers. Businesses that exceed the revenue cutoff or that are obligated to produce a balance sheet must use a regular double‑entry bookkeeping system. Tax authorities may require records in a specific format, so compliance is essential.

The advantages of lokikirjanpito include lower administrative costs, easier entry for non‑accountants, and sufficient data for tax declarations in many cases. However, the method offers less support for analytical reporting, can be more error‑prone, and makes audit or financial analysis more difficult than with traditional double‑entry books.

In practice, lokikirjanpito is commonly applied to small-scale craftsmen, freelance consultants, or home‑based businesses that maintain fewer than a few hundred transactions per year. As a business expands, owners often transition to full bookkeeping or accounting software to capture more detailed financial information and to meet regulatory demands.