A few tips on how to pay low taxes - get to know them!

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People who have decided to start their own business are well aware of how much money they have to give to the tax office every month. Income tax and VAT are the main levies that consume a significant part of the company's revenues. For many entrepreneurs it may seem surprising to learn that there are legal ways to pay lower taxes. What's more, saving on them does not have to be associated with magical and complicated activities - all you need is a general understanding of the possibilities offered by tax regulations and choosing the perfect solution for your own company. So the entrepreneur can do to pay low taxes?

The amount of the advance payment for income tax does not always depend on the income

There is no need to inform anyone about the necessity to pay advance income tax every certain period (month or quarter). It is a basic obligation of all taxpayers who earn income, regardless of its amount.

The amount of taxes paid will depend on the amount of income obtained - the more an entrepreneur earns, the more tribute he has to pay to the account of the tax office. However, this is not always the case - if the owner of the company decides to pay the advance income tax in a simplified form, then throughout the tax year he will pay the advance in one, predetermined amount.

How do you know how much the down payment will be? Its amount is calculated on the basis of the tax shown in the annual tax return submitted in the previous tax year. Thus, if the taxpayer in 2017 decides to use the simplified method of settlement, the tax return for 2015, submitted in 2016, will be taken into account. The tax amount from the tax return should then be divided into 12 months, and the result obtained will be the amount of the advance payment.

Importantly, in order to be able to pay a simplified advance payment for income tax, you must show income from previous years. If, in the declaration from the year immediately preceding the intention to select the simplified advance, the taxpayer did not show any income, the previous year is taken into account. In a situation where there was no income at that time, and thus no tax, it becomes impossible to use the simplified form. For this reason, the choice of the simplified advance payment cannot be made by the entrepreneur who opened his business in the current or previous tax year.

How to start using the simplified advance payment? First of all, the taxpayer should notify the head of the competent tax office about his choice by February 20 of the new tax year. If this deadline is exceeded, it is necessary to stick to the current method of income tax settlement.

The advance payment in a simplified form is paid by the taxpayer until he decides to change it again. This means that at the end of the tax year, the entrepreneur still has the right to use the permanent form, and does not have to re-submit the application.

Apart from the calculation method, the simplified advance payment does not differ from that calculated classically, monthly or quarterly. The taxpayer is obliged to pay the amount due to the tax office by the 20th day of each month for the previous month.

What are the benefits of paying the advance income tax in a simplified form? First of all, it allows the greatest tax burden to be shifted to the end of April of the following year. The money that remains in the company's pocket can be used for various types of investments and increasing the company's working capital.

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You don't have to pay tax every month

Both in the case of income tax and VAT, it is possible to pay on a monthly and quarterly basis.

The basic billing periods are months. However, small taxpayers and entrepreneurs who start a business and did not run a business in the two years preceding the establishment of the company can take advantage of quarterly tax settlements. It should be noted that this choice does not change the method of tax calculation, but the date of its payment. This means that entrepreneurs choosing quarterly payment of taxes are obliged to settle their liabilities to the tax office by the 20th day of the month (for income tax) and by the 25th of the month (for VAT) after a given quarter.

How do I start paying my taxes on a quarterly basis? When it comes to income tax, people who set up a business check the appropriate boxes when filling in the CEIDG-1 application (point 19). Also, entrepreneurs who have the right to use this solution, and who have settled monthly or in a simplified manner, change the form of paying income tax in the CEIDG-1 application by February 20 of the year in which the quarterly settlement is to apply.

In the case of VAT, the matter is a bit more complicated. Persons who, when setting up a business, register as payers of tax on goods and services must decide whether they want to pay it monthly or quarterly. If the entrepreneur decides to use the quarterly settlement system, he should complete the VAT-R form and mark item 44, item 1 and item 51. Submitting such filled-in VAT-R automatically gives the new entrepreneur the right to settle VAT every quarter.

What if the entrepreneur has decided to settle VAT on a monthly basis and now wants to change his decision? It is possible to switch to quarterly VAT 4 times a year. For this purpose, a VAT-R application should be submitted with data update by the 25th day of the second month of the quarter for which the quarterly settlement will be made for the first time. The entrepreneur should consider this decision carefully, because the return to monthly VAT settlements is possible only after one year of settlements in the quarterly system.

What does this solution give you? Quarterly settlements mean that the entrepreneur has cash at his disposal, which he would have to pay to the account of the tax office during the monthly settlement. There are many possibilities of its use. Moreover, by choosing quarters instead of months for settlement periods, an entrepreneur can more easily maintain the financial liquidity of his company.

It is also a perfect solution for companies where costs and revenues are distributed unevenly in individual months. Thanks to the payment of levies every quarter, the entrepreneur has more time to collect cost invoices, thanks to which it will be easier for him to maintain financial balance.

Low taxes and tax breaks

Persons starting a business activity have the right to take advantage of discounts for newly established companies. The first is a tax relief for small taxpayers as part of de minimis aid. The second is the payment of insurance premiums on preferential terms.

Small taxpayers, ie entrepreneurs whose gross sales revenues do not exceed EUR 1,200,000, and taxpayers who start their business in a given tax year, are entitled to a one-off depreciation under the de minimis aid. The limit in this case is EUR 50,000 per year. Moreover, within 3 years the amount of de minimis aid (also for other reasons) may not exceed the amount of EUR 200,000.

It should also be noted that one-off depreciation charges under de minimis aid apply to fixed assets included in group 3-8 of the Classification of Fixed Assets, excluding passenger cars.

The tax office should be notified about the use of the relief, which is a one-off depreciation under the de minimis aid (an appropriate application has been created for this purpose). On this basis, a de minimis aid certificate will be issued. Importantly, the lack of such a certificate does not deprive the entrepreneur of the right to make one-off depreciation write-offs, however, it may make it impossible to obtain other aid (co-financing for the purchase of fixed assets or employee training).

We convert the limit amounts into zlotys according to the average euro exchange rate announced by the National Bank of Poland on the first business day of October of the year preceding the tax year, rounded up to PLN 1,000.

The relief that can be used by a starting entrepreneur is, as already mentioned, the possibility of paying preferential insurance premiums. This is a significant help for young companies, because spending on ZUS also absorbs a large part of the profits.

What is this relief? In the first 24 calendar months from the commencement of economic activity, the entrepreneur may pay lower ZUS contributions. The basis for the calculation of contributions for the insured's retirement and disability pension insurance is the declared amount, however not lower than 30%. the amount of the minimum wage.

This relief does not apply to entrepreneurs who:

  • as part of their activities, they provide the same services to the former employer that they provided for two years before the date of commencement of this activity,
  • conduct or have conducted non-agricultural activity during the last 60 calendar months prior to the commencement of economic activity.

It is worth noting that the use of preferential ZUS contributions is associated with savings of about PLN 600 per month. How to use the discount? Within 7 days from the commencement of business activity, the entrepreneur should report to the relevant contributions in his ZUS branch. If running a business is his only occupation, then he / she submits the ZUS ZUA form (application for insurance of the insured person). The choice of preferential premiums is determined by selecting the insurance title code: 05 70.

What does an entrepreneur gain from the benefits described above? First of all, the financial liquidity of the company increases. One-off depreciation also means a reduction in the tax base, and thus also a lower income tax. Paying preferential ZUS contributions is a significant saving. Thanks to these solutions, the entrepreneur has additional funds at his disposal, which he can use in many different ways.

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Lower taxes - get creative into costs

When paying income tax according to general rules, the amount of advance payments is calculated as a percentage of the tax base. The lower it is, the lower the tax is. However, the tax base is calculated, inter alia, as the difference between the revenues achieved and the costs.

According to the definition, the cost of obtaining income is an expense that is used to earn income or to maintain (secure) its source. Such a construction of the definition means that the settlement of costs often depends on the individual interpretation of officials. Therefore, it is worth considering whether a given purchase is necessary and whether it is worth including it as tax deductible costs.

What can an entrepreneur "throw into the costs"? There is a group of expenses that are typical costs of people running a business. These can certainly include: expenses for transport (such as the purchase of a vehicle, fuel for a car, spare parts, maintenance services, season tickets for public transport, single tickets), expenses for office equipment and equipment (such as telephone, computer, office supplies), rent, rent, utilities, telephone subscriptions, purchase of internet domains, interest on a company loan.

There are also many expenses that can be considered income related, but with the appropriate reasoning. Due to the fact that it is the taxpayer's responsibility to prove the expenditure incurred with the income generated, it is worth considering carefully before including such a “questionable” purchase in tax deductible costs. Nevertheless, the entrepreneur may consider as a company cost, e.g. purchase of a bicycle, depreciation of his own apartment in the part in which it is used for business purposes, foreign trips, cleaning agents, fees from PayPal services, exchange rate differences, insurance, education, etc.

It is very important that the entrepreneur who keeps the accounting of his company on his own should know the basic principles of conducting the KPiR, regarding the correct documentation of incurred expenses and the time limits for allocating individual costs to costs. Also, the owner of the company, using the services of an accounting office, should pay attention to the level of services provided by them. Unfortunately, it is quite common to encounter "thoughtless" deduction of all cost invoices provided by the client as tax deductible expenses, without investigating whether these expenses are actually related to the business.

It is also worth mentioning the possibility of including costs incurred before starting a business activity as costs. This applies to both expenses related to the purchase of goods, equipment, payment of registration fees or renting a flat. Also, fixed assets that were purchased before starting the activity may be entered into the register of fixed assets, and depreciation write-offs from their value may constitute tax deductible costs in subsequent periods.

Wise planning of corporate expenses and knowing what and how can be “thrown into costs” can significantly affect the amount of taxes paid by lowering the tax base.

As you can see, there are many legal ways to pay low taxes. It is true that not all of them are available to everyone, but it is worth looking for an ideal solution for your own company. After all, increasing the company's financial liquidity and funds for additional investments are issues of the importance of which no one needs to be convinced.

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