Taxation systems for an individual entrepreneur
Taxation systems for an individual entrepreneur.
Pravelon’s lawyers are increasingly faced with questions from our clients regarding taxation when registering an individual as an entrepreneur. We decided to talk about the most important tax aspects.
What taxation systems are there when registering an individual as an entrepreneur?
Pravelon’s lawyers answered frequently asked questions about taxation groups when registering an Individual as an entrepreneur. Also, we advise you to seek the help of qualified lawyers when starting your own business. Pravelon has over 20 years of business registration experience.
Simplified taxation system
The simplified taxation system is divided into 3 groups of single taxpayers.
Each of the groups has its own category of activities, the percentage of tax and certain restrictions on the types of future activities of an individual entrepreneur.
I group:
Type of activity — Retail trade and personal services.
Tax: Single tax - up to 10% of the subsistence minimum once a quarter;
Unified social contribution - 22% of the minimum wage once a quarter;
Frequently asked Questions :
What is the maximum allowable income per year for an individual entrepreneur of the 1st group?
The maximum allowable income per year is 1 million hryvnia.
Can I hire employees as an individual entrepreneur of group I of the simplified taxation system?
According to the legislation of Ukraine, you do not have the right to hire workers being in this group of the simplified taxation system.
When does an individual entrepreneur of the 1st group have to pay tax?
According to the legislation of Ukraine, the tax must be paid before the 20th day of the current month.
Does an individual entrepreneur of the 1st group need to keep a book of income records?
Yes, group I sole proprietorship must keep an income ledger.
When do I need to file a single tax return?
The declaration is submitted once a year within 60 calendar days from the beginning of the year (from January 1 to March 30).
Can I be a VAT payer?
Based on the legislation of Ukraine, you cannot be a VAT payer as an individual entrepreneur of a simplified system.
II group:
Type of activity - Provision of services: to individuals or single taxpayers; production, sale of goods; catering business.
Tax: Single tax - 20% of the minimum wage once a quarter;
Unified social contribution - 22% of the minimum wage;
Frequently asked Questions :
What is the maximum allowable income per year for an individual entrepreneur of the 2nd group?
Your maximum allowable income per year is 5 million UAH.
Can I hire employees as an individual entrepreneur of group 2 of the simplified taxation system?
Yes, you have the right to hire up to 10 employees.
When does an individual entrepreneur of the 2nd group have to pay a single social contribution?
The unified social contribution must be paid within 20 days after the end of the calendar quarter. ERUs are also paid for each employee.
Does an individual entrepreneur of the 2nd group need to keep a book of income records?
Yes, the FLP of the 2nd group must keep a book of income records.
Can I be a VAT payer?
No.
III group:
Type of activity - production, sale of goods, provision of services to the population, all subjects of taxation (payers of VAT, enterprises and entrepreneurs on the general taxation system).
Tax: Single tax - 3% or 5% of the amount of income once a quarter;
Unified social contribution - 22% of the minimum wage once a month;
Frequently asked Questions :
What is the maximum allowable income per year for an individual entrepreneur of the 3rd group?
Your maximum allowable income per year is 7 million UAH.
Can I hire employees as an individual entrepreneur of the 3rd group of the simplified taxation system?
It is possible to work with single taxpayers - sole proprietors and legal entities. Unlimited number of employees.
When does an individual entrepreneur of the 3rd group have to pay a single social contribution?
The tax must be paid every quarter within 10 calendar days after the filing of the tax return.
Can I be a VAT payer?
Yes.
Does an individual entrepreneur of the 3rd group need to keep an income book?
Yes, if an individual entrepreneur is not a VAT payer, then an income accounting book must be kept;
If it is a VAT payer - a book of income and expenses.
When do you need to file a declaration?
Within 40 calendar days after the end of the calendar quarter.
General system of taxation
The most important thing to know about the general taxation system is that taxes are paid not from the income of an individual entrepreneur, but from his profit.
A certain list of activities involves an exclusively general system of taxation.
Tax : Tax on personal income 18% of the minimum wage quarterly;
Military tax - 1.5% of the minimum wage once a quarter;
Unified social contribution - 22% of the minimum wage once a quarter;
Frequently asked Questions:
What is the maximum allowable income per year for an individual entrepreneur of the general taxation group?
The maximum allowable income is 5 million hryvnia per year.
Can I hire employees as an Individual Entrepreneur of the General Taxation System?
Yes. The number of employees is unlimited.
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