FinanceTaxes

Taxation of small business

The government is striving to improve the economic situation in the country. This is facilitated by the development of small and medium-sized businesses. In order to facilitate the formation and functioning of small enterprises in terms of the number and scale of activities, a special system for taxing small businesses is envisaged.

In the framework of assistance to small business enterprises, the authorized state body provides an opportunity to choose one of three existing methods of calculating and collecting mandatory amounts to the budget and non-budgetary bodies. So, a legal entity can use a standard and simplified system, as well as taxation of imputed income. Russian legislation divides all existing methods into two groups:

  1. General tax collection system
  2. Special tax collection system

An entrepreneur or an organization has the right to decide independently on the choice of a particular regime. Taxation of small business, acting as a simplified system, must be supported by the desire of a legal entity in the form of an application that is submitted to the tax service.

If the use of a special system is not documented, then the general or traditional one is automatically applied. Under this system, companies are required to provide periodic reporting, which fully discloses all expenditures incurred in cash and revenues derived from the sale of finished products. The main taxes that must be paid to the state are:

  • VAT
  • Tax on profits and property of a legal entity. An exception is a form such as individual entrepreneurship.
  • Personal income tax

Special taxation of small business involves the payment of a single tax, which includes a list of several of their types, depending on a certain type of activity. For example, in the agro-industrial sector, the ECA is paid, that is, a single agricultural tax. In this case, it can be levied only on enterprises that are engaged in the direct production of new products, rather than selling them or reselling them at higher prices. Owing to ECCN, organizations do not need to pay income tax, either on profits, property tax of organizations or individuals and, of course, VAT (value added tax).

The state support of small business is aimed at the organization of special conditions, within which it becomes easier for institutions to fulfill their mission. Taxation of small business on the basis of a simplified system is carried out only at the request of a legal entity.

The object of taxation is the income or income of the organization, less the costs incurred. The calculation of the tax is carried out using the product of the established interest rate and the object. The rate is differentiated and depends on the amount of profit received for each reporting period. As a rule, it is from 5 to 15 percent.

Transition to another system can occur only after submitting an application to the tax authority and at the end of the calendar year.

The taxation of small business for individual entrepreneurs is carried out through payment of a patent (a document that gives the right to carry out its own activities). There is a specific list of certain activities, which includes 69 items.

In this area, there are benefits in the form of deductions of insurance amounts and pension contributions. The duration of the patent can range from several months to a year. That is why the tax service provides an opportunity to choose another system at the beginning of each month.

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