Is it normal to incur a loss in a sole proprietorship?
Yes. A loss can occur, especially during the first years of activity. Investments and start-up costs may temporarily exceed your income. This is often a temporary situation.
Loss in a Sole Proprietorship? Here’s how to declare it correctly
15/09/2025
A year in which your expenses exceed your income can happen—even in a well-managed business. This situation is not unusual, especially during the start-up phase or after a significant investment. In fact, a business loss can offer a tax advantage. When correctly declared, it can reduce your taxable income. Discover how losses are treated for tax purposes and how to declare them properly to avoid issues with the tax authorities.
Declaring your losses in three steps
If your self-employed activity ends with a negative result, the tax authorities will offset this loss against your other income in a specific order.
Step 1. Offset against your other professional income
First, the loss is deducted from your other professional income in the same year.
If you run your business alongside a salaried job, the loss will automatically be deducted from your salary.
Example
You work as a teacher and earn an annual salary of €35,000.
At the same time, your online shop records a loss of €5,000.
When your taxes are calculated, your taxable income will be reduced to €30,000.
As a result, you will pay less tax.
Step 2. Offset against your partner’s income
You may not have other professional income, or it may not be sufficient to fully absorb the loss.
In that case, the tax authorities will offset the remaining loss against the income of your spouse or legally cohabiting partner, provided you file a joint tax return.
Step 3. Carry forward to future years
If a loss still remains after the first two steps, it can be carried forward to future years.
There is no time limit. The loss can be deducted from future profits from your self-employed activity.
In your tax return, this amount must be mentioned under:
“Previous losses and deductible expenses” → “Previous professional losses still deductible”
Code 1349-09 / 2349-76: “Losses not yet deducted.”
PIA Go! supports you during challenging periods as well
Not every business year ends with a profit. Losses are also part of the reality of running a business.
PIA Go! does more than record your income and expenses. The platform also allows you to track your results and anticipate tax consequences. With clear reports, you gain a precise overview of your business performance and can adjust your strategy accordingly.
And if your financial year ends with a loss, PIA Go! accountants help ensure it is correctly declared in your tax return.
Klaar om te starten met PIA Go!?
Maak vandaag nog een afspraak en ontdek hoe eenvoudig boekhouden kan zijn.
FAQ
Do I have to pay taxes if my business records a loss?
No. If your result is negative, you do not pay taxes on your self-employed activity. The loss may even reduce your taxable income.
How can a loss reduce my tax bill?
The loss is first deducted from your other professional income. If you also receive a salary, your taxable income decreases, meaning you pay less tax.
Can I offset my loss against my partner’s income?
Yes. If your own income is insufficient to absorb the loss, it can be offset against the income of your spouse or legally cohabiting partner, provided you file a joint tax return.
What happens if there is still a remaining loss after these offsets?
The remaining loss is carried forward to future years. It can be deducted from your future profits until it is fully used.
Where should I mention this loss in my tax return?
You must declare it under “Previous losses and deductible expenses.”
More specifically under code 1349-09 / 2349-76 for professional losses not yet deducted.
Do I need to calculate the amount to carry forward myself?
No. The tax authorities automatically apply the order of offsetting. However, it remains useful to track your results in PIA Go! to keep a clear overview of your situation.
What happens if my business records a loss every year?
Losses can accumulate and be carried forward to future years. If this becomes a structural situation, it is advisable to analyze your business with your accountant to improve profitability.
Can my accountant handle these steps?
Yes. With PIA Go! Comfort or ComfortMax subscriptions, PIA Go! accountants ensure the loss is correctly processed in your tax return.
How can PIA Go! help if you incur a loss?
PIA Go! does more than record your income and expenses. The platform also shows your results in real time. This allows you to quickly see if a loss is approaching and adjust your strategy. If the financial year still ends with a negative result, we ensure the loss is properly treated for tax purposes.
Written by Charlotte Backelandt , Marketing & Content Specialist,
reviewed by Tom Castelein, Personal Income Tax Expert.
reviewed by Tom Castelein, Personal Income Tax Expert.