Business costs - how to increase them?

Service-Tax

Each person who wants to start their own business at the beginning thinks about the subject of activity, its nature and the future market. The key element in the initial phase, in addition to a well-formulated business plan, may also be the calculation of future profits and possible costs. The further the company's vision is, the more stable and better prepared it may be for possible market fluctuations. When estimating future profits and losses, it is important to determine what fixed costs of running a business will be necessary to ensure its proper functioning.

Costs related to starting a business

Setting up a business in terms of formalities does not involve high costs. A future entrepreneur in the initial process of establishing a company must register it by submitting an application for entry in the Central Register of Economic Activity, the so-called CEIDG -1 application. On the basis of the submitted application, the following are carried out at the same time:

  • entry in the national official register of national economy entities (REGON);

  • identification application to the head of the tax office (NIP);

  • statements on the choice of the form of taxation with personal income tax;

  • application to the Social Insurance Institution of the entrepreneur as a contribution payer.

Submitting the CEIDG-1 application from 2015 is free of charge.

Despite the CEIDG - 1 application submitted as part of the submitted application and the declaration of the contribution payer to the Social Insurance Institution, it is still necessary to register for insurance on the forms ZUS ZUA or ZUS ZZA, respectively. If the entrepreneur decides to register for VAT after submitting the application, then he must still submit the VAT-R form to the selected tax office (submission of the VAT-R is possible when submitting the CEIDG-1 application). The submission of these applications is also free.

After completing the formalities, there are additional issues that affect the proper functioning of the business, including:

  • additional permits and certificates - depending on the specifics of the business, it may be necessary to have, for example, excise duty, a permit or an official certificate. The amounts to be paid for this type of document may vary from PLN 30 to PLN 60 depending on the number and type of certificate;

  • making a company stamp - although having a company stamp is not required by law, it becomes an element desired by some contractors. The cost of making such a stamp is about PLN 30;

  • opening a company bank account - it is not necessary for sole proprietorship. You might as well use a private account. However, when using a private account, officials will be able to view all private transactions at the time of tax audits, which may not necessarily be necessary. The possible costs of maintaining an account only in the corporate part may be difficult to separate and include in the appropriate amount in the KPiR. The cost of setting up a company account depends on the bank's offer and can range from PLN 0 to about PLN 200.

Incurring the above-mentioned costs is necessary for the future business to function properly. However, these are not the only costs of running a business that the future entrepreneur will have to bear.

Costs of running a business - company seat

As a rule, every self-respecting company should have its own headquarters. Its place may depend on the specifics of the conducted activity. For example, if your business is going to be a service-driven business, it is likely that all you need is a desk and a computer. If, on the other hand, the company is involved in the trade of goods, it will be necessary to have a warehouse. Renting commercial premises for sole proprietorship can often turn out to be uneconomical. The prices of the premises depend mainly on the size and location and may range from PLN 2,000 to even PLN 8,000 or more (the price depends on the city and region).

If the location of the seat is not important, it is worth thinking about the outskirts of cities where prices are lower or about your own apartment. In the case of sole proprietorships with a service profile, more and more entrepreneurs choose an apartment for their seat. Depending on the size of the premises, a separate room or a part of it can be separated for the needs of the conducted activity.

If you decide to run a business in a private apartment, you should report this fact to the commune office. As a rule, with regard to the declared space intended for activity, in the case of a separated room, it will be necessary to pay a higher property tax (due to the conversion of the separated space from residential to usable space).

This solution is generally beneficial to the entrepreneur because he can include in corporate costs charges such as electricity, rent or internet used for business purposes. At the same time, it should be remembered that the company costs should include only the proportional amount of the fee, in the part relating only to the conducted activity.

Example. 1.

Mr. Stanisław runs a sole proprietorship in his private apartment with a total area of ​​100 m2. For the purposes of the business, he separated a room with an area of ​​30 m2. At the end of the month, Mr. Stanisław received a electricity bill in the amount of PLN 200. How much of this bill can Mr. Stanisław take into account in corporate costs?

The area used for business activity is 30% of the flat area, which means that the electricity bill can be included in company costs in the amount of 30%:

PLN 200 x 30% / 100% = PLN 60

Mr. Stanisław may include in the KPiR the amount of PLN 60 as payment for electricity.

In the case of running a business related to trade in goods, it may be necessary to have additional space - a warehouse. If a private apartment does not have enough space, the solution may be to rent a suitable room. The prices for renting warehouse space may vary significantly. The criterion determining the price may refer to the area, location and standard as well as the period for which the lease agreement will be concluded. Basically, the longer the contract, the lower the prices may turn out to be. The average price per 1 m2 may range from PLN 15 to even PLN 100 or more. The estimated costs of running a business will therefore vary depending on the needs and specificity of the business, which may also be affected by the location of its seat.

Means of transport used in the activity

Most companies, depending on the specificity of their business and its needs, also use passenger cars or trucks. Entrepreneurs thinking about buying a vehicle are looking for favorable sources of financing. Operating leasing is very popular. It is a very beneficial form of financing company assets. As a rule, in the case of operational leasing, the car (until repayment and purchase) remains the property of the lessor, while the lessee settles the costs of leasing installments on a monthly basis. Increased costs of running a business cause a reduction in revenues and, consequently, a reduction in the tax liability. When the last installment is repaid, the entrepreneur has the option to buy the vehicle for ownership, most often for a symbolic value. In addition to operating leasing, there is also a financial leasing, where the vehicle becomes the property of the entrepreneur upon payment of the first installment. It can then be entered into fixed assets and depreciated over time. The write-offs made under the selected amortization plan constitute tax deductible costs, respectively in each month of their accrual. Upon payment of the last installment, the leased object automatically becomes the property of the lessee.

Another solution is also the use of a private vehicle in business based on the kept records of vehicle mileage. For this purpose, the entrepreneur has the right to include in costs only those expenses related to the vehicle that are within the limit specified by the mileage. In this way, private journeys are separated from company journeys.

The last necessary element that should be taken care of when deciding to run a business is the method of accounting. In this case, there are two options: you can use the offer of an accounting office or you can do the accounting yourself. The price for the provision of accounting services is also ambiguous and most often depends on the number of documents generated. A relatively economical option may be to conduct accounting yourself using online programs. In this case, the program for independent bookkeeping wfirma.pl is worth recommending. As part of the selected Online Accounting package, you can independently conduct KPIR and complete and send tax declarations without leaving your home. In addition, as part of the package, customers have the opportunity to consult experts in the field of technical and substantive support, and can use an extensive knowledge base in the form of articles on accounting and tax issues. With a small amount of generated documents, choosing online accounting can turn out to be very beneficial, not only in terms of price, but also in the time saved.

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Cost minimization, profit maximization

After completing all the formalities related to starting a business, you can start running a business. However, it should be remembered that a proper estimation of costs and future profits is necessary to achieve success and maintain a stable position in an ever-changing market. If the only reason that prevents you from starting a business is the lack of sufficient funds, you should think about an appropriate source of financing. Such a source may turn out to be not only a private pocket, but also funding from the state budget or EU programs. In order to support entrepreneurship, poviat labor offices offer co-financing from the Labor Fund for starting a business. As a rule, the program covers unemployed people who start a business and receive non-returnable funds after meeting the conditions (specified by the offices). The money obtained under the subsidy must be spent on the purpose related to the establishment of the business, so it can be used to purchase the necessary equipment, e.g. a computer or printer. Additionally, it should be emphasized that the received funds are non-returnable only on the assumption that the activity will be continued for at least one year. Therefore, it is worth going to the nearest employment office to obtain information on available funds before creating your own business plan.

In summary, the costs of running a business depend largely on the subject of activity. When deciding to start a sole proprietorship, it is worth thinking about future profits and losses. In addition to revenues, costs that can be adequately minimized are of great importance in running a business. This may be mainly influenced by running a business in a private apartment, using a private vehicle for business purposes, as well as using subsidies from the poviat labor office. A big advantage of the subsidy is also the fact that it does not constitute company income, which means that the amount received is not subject to taxation, while the purchased equipment in net value may constitute a tax cost. In addition, new entrepreneurs can take advantage of the preferential period for ZUS contributions. Pursuant to the Business Constitution, entrepreneurs who start a business in the first 6 months are exempt from paying the social contribution, while for 2 years they may pay lower contributions. In relation to the above, starting your own business may turn out to be more profitable than working full-time.