Definition
In Korea, simplified bookkeeping (ganpyeon jangbu) is a stripped-down ledger created by the National Tax Service so that tiny small businesses can record income and expenses without any accounting knowledge. Just write each day's transactions in date order, like a household budget book, and it counts as an official ledger when you file your comprehensive income tax return.
As easy as an allowance notebook: a household budget book for small business owners
When you first open a shop, you don't have to give up on keeping books just because you don't know accounting rules. The official ledgers that big companies and accountants use rely on double-entry bookkeeping (a careful method where every entry is recorded on two sides, "debit" and "credit," and the two sides must balance). That's a steep learning curve if you never studied it.
Simplified bookkeeping is different. It looks almost exactly like the allowance notebook you had as a kid, or the household budget book you might use every day. You write one line at a time, in date order: what you sold today and how much came in, and what you spent on rent or ingredients.
You don't need accounting software. A spreadsheet or a single notebook is enough. Just record the date, the transaction details, income, and expenses, one after another. If you buy or sell long-lasting business assets such as a vehicle or a machine, note that change too. As long as the flow of income and spending is clearly recorded, the National Tax Service accepts it as an official ledger, so anyone can start without pressure.
To be more precise: not everyone can use it
To be more precise, not every business owner is allowed to use simplified bookkeeping. The National Tax Service of Korea offers this convenient option only to brand-new businesses and to small sole proprietors whose sales in the previous year were under a set limit.
For example, farming, wholesale and retail, and real estate sales businesses must have earned under 300 million won (about $220,000) in the previous year. Restaurants, manufacturers, and lodging businesses must be under 150 million won (about $110,000). Service businesses and real estate rental businesses have an even lower limit: under 75 million won (about $55,000). On top of that, professionals such as doctors, pharmacists, lawyers, and tax accountants must use full double-entry bookkeeping from day one, no matter how small their sales are.
If your business grows and your yearly sales pass the limit, you are automatically switched to a "double-entry bookkeeping filer" starting the next year. So it's safest to check in advance where your type of business falls.
Keeping your books steadily lowers your taxes
Suppose you keep no books at all and just pay tax using a rough rate set by the government. Even if you actually lost money or had big expenses, you can't prove it, and you risk an unexpectedly huge tax bill. On the other hand, if you faithfully keep simplified books every day, all the money spent on running the shop, such as ingredients, electricity, and supplies, can be counted as necessary expenses, which can sharply cut your income tax.
There's also a nice bonus from the government. If someone who is allowed to use simplified books goes one step further, uses accounting software or hires a tax accountant, and files using double-entry bookkeeping, they can get the bookkeeping tax credit: 20% off their tax, up to 1 million won (about $730). This credit has been extended in time-limited rounds, so whether it applies can change from year to year.
On the flip side, if you don't keep even simplified books, a no-bookkeeping penalty equal to 20% of your calculated tax may be added. However, brand-new businesses and small businesses whose previous-year income was under 48 million won (about $35,000) are not charged this penalty. Spending five minutes a day on your books is the surest and safest tax-saving tool you have.
Common misconceptions
Simplified books are just personal notes, so the tax office doesn't count them.
Simplified books are an official ledger recognized by Korea's National Tax Service. They serve as supporting records when you file your comprehensive income tax, and you are legally required to keep them for 5 years after you write them.
A self-employed person can use simplified books for life, no matter how much they sell.
If your business grows and last year's sales go above the limit for your type of business, you are automatically switched to double-entry bookkeeping and must use it.
Where you meet it
A neighborhood cafe owner logs each day's coffee bean receipts and card sales in a spreadsheet, one line at a time, in date order.
A first-time online shop owner wrote down shipping and packaging costs in a simplified ledger, like a budget book, and saved on comprehensive income tax.
In one sentence
It's a simple ledger, recognized by Korea's National Tax Service, where small business owners write income and expenses in date order like a household budget book and legally lower their taxes.