One of the revisions to the law that has had a large impact on freelancers is the “Revision of the Electronic Book Preservation Law”. It has been in effect since January 2022 and is also a revision of the law that has attracted a lot of attention.
It includes several important changes, but it seems that many freelancers do not understand the legal issues. From now on, freelancers will have many opportunities to be affected by the Electronic Book Storage Law, so let’s understand what kind of revisions have been made.
What is the revision of the Electronic Book Preservation Law?
Since the Electronic Book Storage Law has undergone multiple revisions, some people may not understand what kind of revisions are taking place. First of all, I will explain how the Electronic Book Storage Law has changed with the latest revision.
The revised law will come into effect from January 2022
Currently, the Electronic Book Preservation Law is in effect from January 2022. Since the law was originally enacted in 1998 and has been amended repeatedly, it is necessary to collect the latest information regarding the revision of the Electronic Book Preservation Law.
Although the details of the Electronic Book Preservation Law have been revised, the fundamental intention is to “make it possible to save books as electronic data” and “manage transaction information exchanged electronically”. Due to the spread of computers, there are more opportunities to digitize transaction data, so the Electronic Book Preservation Law stipulates that these data should be managed appropriately.
In addition, the major points of the January 2022 revision of the Electronic Book Preservation Law are “paperless” and “reduction of introduction hurdles. ” The law has been amended in response to the digitization and paperless progress of the world. In addition, to disseminate the revised content, efforts are being made to create a system that facilitates electronic information management.
Freelance also available
The Electronic Bookkeeping Act is a law that affects all businesses. Therefore, it must be recognized that freelancing also applies without exception.
Since some accounting-related laws only apply to corporations, some people have the perception that freelancing is irrelevant. Yes, there are laws like that, but there are many others that affect freelancing. The revision of the Electronic Book Preservation Act is exactly this, and it will have a big impact on freelancers.
In addition, the revised contents will be fully enforced from January 1, 2024, and all freelancers must comply. If there are people who thought, “It doesn’t matter to me,” please try to change your perception.
Revision points of the electronic book storage law that freelancers want to understand
Next, we will explain the points that freelancers should especially understand in the revised content.
Abolition of the approval system
The pre-approval system has been abolished due to the revision of the Electronic Book Preservation Law. In the past, to save electronic books or save by scanner, it was necessary to submit a notification three months in advance and obtain permission.
In addition, the declaration had to indicate what types of documents were to be preserved and in what manner. It was a very time-consuming task for a freelancer because it was necessary to attach an overview and manuals of the equipment and systems used for storage.
However, due to the revision of the Electronic Book Preservation Act, such a declaration is no longer necessary. If you ever wanted to switch to electronic storage, you could do it at any time.
Revision of additional tax for underreporting
If you meet the conditions of an “excellent electronic ledger” indicated by the National Tax Agency, the additional tax for under-declaration will be reduced by 5% in the event of an omission. The conditions for excellent electronic books are complicated, but precisely because such complicated conditions are imposed, if the conditions are met, the additional tax for underreporting will be reduced.
It is an advantage that the additional tax for underreporting is reduced, but it does not affect freelancers who have correctly filed their tax returns. There is an error in the final tax return, and the additional tax that occurs when correcting the contents will only be reduced. Filing a final tax return without any errors is the most ideal.
The additional tax for underreporting is applied when there is an error in the final tax return due to carelessness. It does not apply to cases where sales are intentionally concealed. It does not mean that the additional tax will be reduced even if you falsify the tax return, so be sure to make the final tax return accurate.
Changing storage requirements
Retention requirements for electronic books have changed and it is now possible to introduce electronic books with minimal requirements. Until now, complicated requirements have been required, so the relaxation of storage requirements is a major point in the revision of the Electronic Book Storage Law.
Three minimum requirements must be met:
- Prepare system-related documents, etc. (system overview, system specifications, operation manual, administrative processing manual, etc.)
- Equip the storage location with programs, displays and printers, and their operation manuals, so that they can be quickly output on screens and in writing in an orderly format and clear conditions.
- Be able to respond to requests by tax officials to download electromagnetic records based on the right to question and inspect
This may seem like a complex requirement, but the bottom line is that you should keep your manuals, etc., and have the information readily available. If you use dedicated software or cloud services, the manual is open to the public, so save the manual and save the link so that you can check it at any time.
In addition, you may be required to print the information you are recording on the screen or in writing. Ideally, you should have your printer ready for printing.
In addition to the requirements listed above, there are six requirements, and if all of them are met, they are treated as an “excellent electronic ledger”. I will omit specifics, but if you are aiming for an excellent electronic ledger, you need to meet even more detailed requirements.
Review of searchable items
Information is required to be searchable to quickly find information stored electronically. Since this search item was complicated, only the minimum search conditions were used in this revision. Below is a summary of before and after the revision.
- Before revision: It is possible to search by transaction date, account item, transaction amount, and other major record items according to the type of report.
- After revision: Can be searched by transaction date, transaction amount, and business partner
In the past, it was necessary to be able to search from many items, but now there is no problem if you can search from three items. If there are many search items, it is necessary to register a lot of information, which takes time and effort in terms of operation, but after the revision, it is now possible to save with just SIMPLE ALIMATION
Elimination of due diligence requirements
Good paperwork requirements for storing electronic books have been removed, making it easier to store electronic books. In particular, office work has been simplified when digitizing paper books.
For example, before the revision, after scanning paper receipts, someone else needed to check whether the contents were correct. It took time and effort to check, and it was necessary to keep the paper to check. This is a preposterous rule and the reason why freelancers find it difficult to deal with electronic ledgers.
However, most of these administrative procedures have been abolished due to the revision of the Electronic Book Preservation Law. There are some rules to ensure the authenticity of bookkeeping, but there are almost no administrative rules.
How should freelancers respond to revisions?
I explained what points should be understood after the revision of the Electronic Book Preservation Act. Next, we will explain what freelancers should do based on the revised content.
Install a system that meets your requirements
It is possible to complete compliance with the Electronic Ledger Storage Act on a single PC without installing a system, but if you are unsure about doing this on your own, it is advisable to install a system that complies with the Electronic Ledger Storage Act. . In recent years, it seems that many people are using accounting software and cloud services for final tax returns, so it is important to select one that is compatible with them.
It is easy to think that major software and cloud services are compatible, but there are quite a few services that are not compatible at this time. Most of the services have announced plans to support them by 2024. it won’t work.
Also, even if it is compatible with electronic books, there are cases where it is not compatible with excellent books. Since the Electronic Book Preservation Act consists of multiple requirements, it is important to evaluate which requirements are met.
Store data for electronic transactions
If electronic trading is on the rise at the moment, save that data. The revision of the Electronic Book Preservation Law requires the preservation of electronic transaction records at a minimum. Try to save it as data instead of printing it.
For example, in recent years, there have been an increasing number of cases where invoices and receipts are created electronically and sent as PDF files. If you are doing such a transaction, do not delete it and keep it together in a specific folder. It is also possible to import data into dedicated software or cloud services.
In addition, what is sent in electronic data must be stored in electronic data. If you digitize the paper, save the digitized data instead of the paper.
Let’s go paperless as much as possible to comply with the revision of the Electronic Book Preservation Law. Invoices and receipts should not be provided in printed form, but as electronic data as explained above.
Of course, freelancers have no choice but to comply with client requests. Therefore, it may be difficult to digitize completely. However, from now on, clients will also need to comply with the Electronic Book Preservation Law, so it should be digitized as a whole.
Also, for parts that continue to be exchanged on paper, try to digitize as much as possible. The Electronic Bookkeeping Act allows scanning and digitizing printed matter. It is possible to comply with the Electronic Book Storage Law by advancing the digitization of the parts that need to be exchanged on paper.
It is okay to respond with plenty of time until 2024
Although the Electronic Book Storage Act has been revised, it is not mandatory at this time. From January 1, 2024, it must be stored electronically, and at this time, it can be stored as before. Therefore, consider that it is okay if you do not respond immediately.
However, in the future, it will be necessary to respond, so it is important to respond in a planned manner. Try to avoid the busy season and introduce systems and equipment.
Some of you may say, “It’s been a while since I became a freelancer, so I don’t know how to set it up.” If you find yourself in such a situation, don’t react right away, think about the timeline and proceed with a reasonable response.
I explained the revision of the electronic book storage law that also affects freelancers. It must be done by January 1, 2024, and freelancers who have not yet done so will be asked to plan. You don’t have to rush to do it right now, but you will need to do it eventually, so do it while you have your hands on it.
As a minimum response, it is required to save electronic data such as invoices and receipts. Ideally, all data should be stored electronically, so make sure you have a scanner or other equipment in place.
Also, books should be created electronically. There is no problem with the issuance by Excel or Word, but if you feel uneasy about handling it by yourself, consider introducing software or cloud services.