At MONOPOLY.Business we pay special attention to this point. One of the project participants approached us with questions about taxes, we told him all the nuances and decided to share with everyone in this article. Read it and take notes!
I don’t understand anything about taxes. Tell us, what is the difference between the General Tax System (GTS) and the Simplified Tax System (STS)?
GTS is the main system of taxation, the accounting and methods of calculation for which are a little more complicated than in the Simplified Tax System (STS).
If you work under the GTS, you have to pay:
- VAT — value added tax. A form of withdrawal of a part of the cost of the run to the state budget. That is, for example, if the cost of transportation is 120,000 rubles, then 20,000 rubles is VAT, which must be paid.
- Property tax.
- Profit tax (20% of the difference between the revenue received without VAT and economically justified costs without VAT).
- Insurance premiums.
If you have the Simplified Tax System (STS), you pay income tax only. That is, there are no taxes such as VAT and property tax.
There are two types of STS:
- STS Income — 6% on all revenue of the individual entrepreneur (8% if the limit is exceeded).
- STS Revenue minus expenses — 15% on the revenue reduced by the amount of expenses. Expenses need to be documented. The list of expenses that reduce revenue is regulated by the Tax code. Not all expenses (even documented ones) can be deducted from revenues.
- Insurance premiums.
Why do I have to work with the GTS? I was told that in transportation it is possible to use the STS, it’s easier…
Some members of MONOPOLY.Business want to work with the STS, because they have heard about the benefits of this system, but in the project one is allowed to work only with the GTS. The reasons are as follows.
For example, if an entrepreneur wants to carry the goods of large companies, the chance of cooperation is minimal. Such freight owners work only with VAT, and as a consequence, require the same conditions from the carriers.
Also, if IE works on a simplified basis, then the proposed fare for the run will be as much as 20% lower! After all, the tax for it will pay the freight owner. It turns out that he will think that he saved on his taxes, but in the end he received much less money.
On the plus side: if you work with the GTS, you can set off VAT from such expenses as, for example, fuel, vehicle rent, repair fund and other expenses, where there is this tax. But you will need to confirm your expenses with documents. It turns out that with the GTS you can take goods at a good price, and return some money from taxes. And there is no such thing in the STS.
Why have you decided that the STS is not profitable? My colleague works this way.
If IE is just working in the market as a carrier, he can use the STS. But in MONOPOLY.Business the earning model is built in such a way that the entrepreneur can only receive the revenue he wants using the GTS.
There was a case where a project participant initially worked under the STS, and this led him to unpleasant consequences. Now he owes a considerable sum to the tax authorities, and because of this he can no longer participate in MONOPOLY.Business. This is because he no longer has the funds to run his business.
Let’s see what this looks like with a real example.
|Revue||614 800||102 467||512 333||0|
|Fuel||217 572||36 262||217 572||36 262|
|Repairs||36 750||6 125||36 750||6 125|
|Tires||13 000||2 167||13 000||2 167|
|Leasing||181 486||30 248||181 486||30 248|
|Total saving on VAt credit||74 801||0|
|Personal income tax||14 104||0|
|Total saving||62 197|
|Profit||94 389||32 192|
It all seems to make sense, but what if I have questions? I can’t know everything, and there’s no one to help
In fact, an accountant can always help you. If you have any questions, you can contact him/her. So before making any decisions, contact your specialist right away.
Because if you do something wrong, you’ll spend a lot of time fixing it. And in general, it’s better to reinsure yourself and ask in advance, say, «Can I use STS?» or «How the GTS is better? We are sure that you will be told and helped.
Also, do not forget that the accountant is also a person. And very busy. So if you make him/her some kind of request or make a decision, write all this to the mail. That way, the information won’t be lost.
Each project participant can ask questions about MONOPOLY.Business, and they will do their best to answer them. Professional help is always useful. And possession of information these days is one of the sources of success.