Revenues from business activities - how to settle them?
Business income is not only pure profit, flowing into the taxpayer's pocket. Revenues constitute the basis for calculating income tax, which every entrepreneur (and not only) should pay to the office. So how to document and account for business income?
Revenue from business activities - definition
For a definition of business income, please refer to the Personal Income Tax Act. Pursuant to Art. 14 sec. 1, the amounts due are considered revenues - even if they were not actually received - after excluding the value of the returned goods, granted discounts and discounts.
If the entrepreneur is an active VAT taxpayer, then in his case the income will be the amount due less the VAT due.
When does business income arise?
Art. 14 of the PIT Act - this time sec. 1c. According to it, income from business activity arises on the day the item is delivered, the property right is sold or the service (also in part) is provided. However, this moment may not be later than the issuance of the invoice or payment of the amount due.
Importantly, advances and prepayments are not treated as income - they generate tax liability only in VAT. The entire amount of the order is considered revenue only when the service is provided or the goods are delivered to the recipient.
On the other hand, if the service is performed in a continuous manner and is billed in specific settlement periods, the date when the revenue arises is the last day of such period, specified in the contract or invoice. Importantly, such a settlement period cannot be longer than one year.
What is other business income?
Under the mysterious concept of other revenues, there are revenues mentioned in Art. 14 sec. 2 of the PIT Act. Such revenues should be reported in column 8 of the KPiR and are usually accrued on the date of payment. Belong to them:
- income from sale of fixed assets and intangible and legal assets used for the needs related to economic activity and in running special departments of agricultural production;
- grants, subsidies, subsidies and other gratuitous benefits received to cover costs or as reimbursement of expenses;
- exchange differences;
- received contractual penalties;
- interest on funds in bank accounts maintained in connection with the activity performed;
- the value of received benefits in kind and other gratuitous benefits, calculated in accordance with Art. 11 sec. 2-2b, subject to article 22. 21 sec. 1 paragraph 125;
- received compensation for damages related to assets related to the conducted business activity or running special departments of agricultural production.
Income from business activities - documenting
There are several ways to document your income. Most often they depend on who was the buyer of the service or good.
Revenue received from companies
When selling goods or services to other companies, the entrepreneur is obliged to issue an invoice. The document should be made in two copies - one for the buyer, the other for the taxpayer himself.
The entrepreneur has until the 15th day of the month after the month in which the sale took place to issue an invoice. If the taxpayer has received a prepayment or an advance payment prior to the delivery of the goods or the provision of the service, then the advance invoice must be issued by the 15th day of the month after the month of receipt of such receipt.
Sale to private persons - install a cash register
The basic principle is that sales to non-business individuals and flat-rate farmers should be documented by means of a cash register. The entrepreneur is obliged to issue a fiscal receipt, which he then passes to the buyer. The invoice is issued only when the buyer so requests.
Periodic reports - daily or monthly - are used to record the income from the cash register, which are the basis for accounting.
As indicated above - the cash register is the basic rule, but there are some exceptions to it. In accordance with par. 3 sec. 1 point 1 of the Ordinance on exemptions from the obligation to keep records with the use of cash registers for entrepreneurs whose sales to private persons and farmers did not exceed PLN 20,000 during the year, may take advantage of the exemption from the cash register. If the business was established during a given tax year, the limit should be calculated proportionally to the time of running the business.
In addition, there are additional exemptions, the so-called objective (the above is called subjective). In accordance with the annex to the regulation, the exemption from the cash register, regardless of the limit, applies to, for example:
- telecommunication services,
- financial and insurance services,
- real estate market services,
- rental and management services of own or leased real estate,
- services provided by member organizations,
- real estate delivery,
- land lease and land for perpetual usufruct,
- sale of air transport tickets as well as meals and goods on board airplanes.
How to document income from natural persons in case of dismissal from the cash register? In this case, the entrepreneur should establish a record of non-accountable revenues and keep it at the place of business. The basic elements of the records are:
- consecutive number of the entry,
- date of obtaining income not documented with invoices / bills,
- the amount of income,
- in the case of a seller who is an active VAT taxpayer - also distinguish between tax rates and the value of VAT and individual rates, so that it is possible to correctly calculate VAT on its basis.
At the end of the day, the entrepreneur should summarize the revenues obtained and enter them into the accounting records with one entry.
It is worth remembering that there are also situations where no exemption from the cash register will apply. Pursuant to the regulation, exemptions do not apply to:
engine parts (PKWiU 28.11.4),
internal combustion engines of a kind used for propulsion of vehicles (PKWiU 29.10.1),
bodywork for motor vehicles (PKWiU 29.20.1),
trailers and semi-trailers; containers (PKWiU 29.20.2),
parts of trailers, semi-trailers and other vehicles without mechanical drive (PKWiU 184.108.40.206), parts and accessories for motor vehicles (excluding motorcycles), not classified elsewhere (PKWiU 220.127.116.11),
internal combustion piston engines of a kind used in motorcycles (PKWiU 30.91.3),
radio, television and telecommunications equipment, excluding electron tubes and other electronic components as well as parts for apparatus and devices for sound and image manipulation, antennas (PKWiU ex 26 and ex 27.90),
photographic equipment, excluding parts and accessories for photographic equipment and accessories (PKWiU ex 26.70.1),
goods made of precious metals or with the participation of these metals, the supply of which cannot benefit from the exemption from the tax referred to in article 2. 113 paragraph. 1 and 9 of the Act of March 11, 2004 on tax on goods and services, hereinafter referred to as "the Act",
CDs, DVDs, audio cassettes, magnetic tapes (including video cassettes), floppy disks, memory cards, cartridges and other analog or digital data carriers containing recorded data or stored computer software packages, including those sold with a license to use,
products intended for use, offered for sale or used as motor fuels or as additives or admixtures to motor fuels, regardless of the PKWiU symbol,
tobacco products (PKWiU 12.00), alcoholic beverages with an alcohol content above 1.2% and alcoholic beverages containing a mixture of beer and non-alcoholic beverages with an alcohol content exceeding 0.5%, regardless of the PKWiU symbol, with the exception of goods delivered in the manner specified in item 42 of the Annex to the Regulation;
provision of services:
passenger transport in road communication, with the exception of transport mentioned in item 15 and 16 of the Annex to the Regulation,
transport of people and their hand luggage by taxis.
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Revenue from business activities - mail order sales
Sales in the shipping system - using postal or courier services - are also subject to specific regulations in the field of documenting revenues. As long as the payment has been made entirely by mail, bank or credit union, then such sale is also exempt from the cash register.
The condition here is, however, that the records and evidence clearly indicate what the sale concerned and on whose behalf it was made. At the same time, if the mail order sale concerns one of the revenues for which a cash register is obligatory, the exemption will not apply in this case as well.
Therefore, for documented income, it is possible, as a rule, to issue regular invoices, because although the buyer is a private person, the seller is still obliged to have his data.
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