UTII system: application procedure, reporting, pros and cons

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Any entrepreneur who starts his own business can independently choose a taxation system. For this, the requirements of local authorities, the direction of activity and the planned income from work are taken into account. The UTII system is considered an ideal choice for novice businessmen who prefer to work in the field of providing services to the population or retail. When using this mode, multiple fees are replaced by one type of tax. It is considered easy to calculate and also does not change over time. It is not affected by the amount of income received.

Nuances of the system

All aspiring entrepreneurs should understand the different tax regimes that are allowed to use in the chosen line of business. How does the UTII system work? The main features of the mode include:

• calculation of the fee is based on a special physical indicator, estimated return and regional coefficients;
• the tax rate remains unchanged if the physical indicator does not change;
• fee will have to be paid quarterly;
• once a quarter, a declaration is submitted to the Federal Tax Service;
• as a physical indicatormay be the size of the retail space or the number of seats in passenger transport.

The tax under this regime is considered easy to calculate, so entrepreneurs often decide to do the calculations and fill out the declaration on their own. This allows you to save a significant amount of money on hiring an accountant.

Which taxes are being replaced?

The UTII system offers the opportunity for entrepreneurs to pay only one fee. They replace other types of taxes, which include:

• income tax and personal income tax;
• tax on property used in the course of business;
• VAT.

Using this system has both pros and cons. Most often, representatives of small and medium-sized businesses choose the simplified tax system and UTII. With the help of such regimes, it is possible to significantly reduce the tax burden, as well as simplify the accounting of enterprises.

Pros of the regime

The main advantages of the system include:

• UTII taxation system can be applied by both individual entrepreneurs and companies;
• significantly simplifies the process of keeping records, since even the entrepreneur himself can fill out the declaration;
• the amount of tax paid to the budget does not in any way depend on the profit received, therefore, with a significant income, an entrepreneur can pay a small amount of funds;
• replaced by a single fee of somewhat complex taxes, which further reduces the tax burden;
• ifan entrepreneur does not conduct business for one quarter, then it is possible to calculate the tax only on the basis of the actually worked period of time.

Due to these advantages, many entrepreneurs, whether newbies or experienced businessmen, prefer to issue UTII.

System flaws

Although UTII has many undeniable advantages, some disadvantages of such a regime stand out. These include:

• if firms or individual entrepreneurs work with companies that apply VAT, then it will not be possible to reduce costs through VAT refunds;
• there are numerous requirements for individual entrepreneurs and firms that wish to switch to this mode;
• a fixed amount of tax is considered not only a plus, but also a minus, since if an entrepreneur does not have income from activities, he will still have to transfer the due amount of funds to the Federal Tax Service;
• you need to register directly at the place chosen for doing business.

Such shortcomings lead to the fact that not all entrepreneurs can take advantage of the simplified regime.

Who can transfer?

Before you apply for the transition to this regime, you should study the OKVED codes that fall under UTII. Only in this case, you can understand in which field of activity you can work in order to switch to this taxation system. The main payers of this tax are enterprises operating in the field of trade, provision of services to the population or passenger transportation.

It won't workuse the mode under the following conditions:

• the company is large, so it makes a significant profit from its activities;
• the company employs more than 100 people in one year;
• entrepreneur specializing in catering, education, medicine or welfare services;
• in the company more than 25% of the authorized capital belongs to other enterprises;
• it is not allowed to switch to UTII for companies that specialize in leasing gas stations for rent;
• trade is carried out in a room with an area of more than 150 square meters. m.

Therefore, before starting work, you should evaluate the possibility of using the UTII system to calculate the tax.

How to go?

Since 2013, the transition to this regime can be carried out by each entrepreneur on a voluntary basis. You can use the system only if the chosen field of activity meets the requirements of the regime. The transition is possible in the following situations:

• if only an LLC or an individual entrepreneur is registered, then it is necessary to apply for the transition to this mode within 5 days after registration;
• if an entrepreneur works on the basis of basic, then the transition to UTII is allowed at any time;
• if an individual entrepreneur works under other modes, for example, under PSN or STS, then the transition is allowed only from the beginning of the year, therefore, by January 15, a corresponding notification must be sent to the Federal Tax Service.

Violation of these requirements may lead to the fact that the entrepreneur willbrought to responsibility. If he does not notify the employees of the Federal Tax Service in a timely manner about the transition to a simplified regime, then he will have to calculate a lot of taxes based on the OSNO.

When is the right to use UTII lost?

Each entrepreneur must understand the UTII system and the procedure for its application. In some situations, firms and individual entrepreneurs may lose the right to use this system. This is possible in the following cases:

• company stops working on activities that comply with this regime;
• violation of the basic condition for work on UTII;
• the region decides to abandon this regime.

If firms or individual entrepreneurs for various reasons lose the right to use the UTII system, then they must send a relevant notice to the Federal Tax Service within 5 days, on the basis of which the taxpayer is deregistered.

Main Activities

The UTII taxation system for an LLC is only suitable if the company chooses suitable activities for work. The same requirement applies to individual entrepreneurs. The mode is most often used in the following situations:

• provision of household services;
• lease of car park;
• car storage in paid parking;
• passenger and freight transportation, but the company should not have more than 20 vehicles registered;
• retail trade, but the sales area cannot be larger than 150 sq. m;
• repair,service or car wash;
• trading without a trading floor;
• providing veterinary services;
• sale of goods through non-stationary outlets;
• provision of housing for temporary use, but the area of the premises cannot be more than 500 square meters. m;
• distributing advertisements using various structures or vehicles;
• renting out a plot of land where a trade organization or a catering establishment will be located.

A complete list of activities can be found in Art. 346.26 NK.

Operating rules

STS and UTII are considered the most popular taxation systems. If an entrepreneur chooses an imputed tax, then he takes into account the rules of activity:

• firms and individual entrepreneurs can independently create their own unique accounting policies;
• during the calculation, the basic return calculated for each type of activity is taken into account, and a special physical indicator is also taken into account;
• necessarily an entrepreneur must be engaged in maintaining a cash book;
• combination of UTII with other regimes is allowed.

The combination of the general system and UTII is most often used. In this case, the company for a certain line of work can calculate VAT in cooperation with the main counterparties.

When is it beneficial to use the system?

The UTII tax system has many important advantages for every entrepreneur or head of a company. But not always the use of such a mode isbeneficial. It is advisable to use it only in the following situations:

• the activity of an entrepreneur is profitable, so his profit is growing regularly, but the tax remains unchanged, which allows you to receive a significant net profit;
• opening a small business, so there is no need to deal with complex accounting and preparation of specific and numerous reports;
• for start-up entrepreneurs, the choice of such a system is considered optimal, since at first they can independently calculate the tax, as well as draw up declarations, which will reduce the cost of remuneration of a professional accountant.

But before applying to the Federal Tax Service for the transition to this regime, you should make sure that the planned activity will really be profitable. This is due to the fact that even if there is a loss, you will have to pay a correctly calculated tax, since it does not depend on the profit received. Therefore, at first, entrepreneurs usually work according to the OSNO. The transition from the common system to UTII can be carried out at any time of the year, so after receiving the optimal profit, you can use the simplified regime.

Tax payment rules

Before switching to UTII, every entrepreneur must understand the rules for reporting and tax calculation. Most often used in retail UTII. The rules for paying imputed tax include:

• the tax period is a quarter;
• funds are paid by the 20th day of the month following the end of the quarter;
• in addition, every three months it is required to submit a declaration for this regime to the Federal Tax Service;
• If the day represented by the due date is a weekend or holiday, the due date is advanced by one business day.

If a delay is detected even within one day, the entrepreneur will have to pay a fine and pen alties. Therefore, businessmen should responsibly approach their duties for the timely transfer of taxes.

Nuances of drawing up and submitting a declaration

Filling out the UTII declaration is considered a simple and fast process. Therefore, the procedure is often implemented directly by the entrepreneur. The following information is included in this document:

• information about the entrepreneur;
• date of documentation generation;
• basic return;
• coefficients set by the local authorities of each region;
• tax calculation;
• immediate amount of the fee payable by the due date.

Filling out the UTII declaration can be carried out using special programs issued directly by the Federal Tax Service. In such programs, it is enough to enter the necessary information about the physical indicator, basic profitability and regional coefficients in order for automatic calculation to be performed. After that, the main lines in the declaration are filled in by the program.

With the help of such a program, you can easily print the finished declaration or submit it electronically. Reporting on UTII is simple andfast to fill. Completed documentation is to be submitted by the 20th day of the month following the end of the quarter. If the reporting is not submitted to the department of the Federal Tax Service within the established time limits, then this is the basis for the calculation of fines and pen alties.

How is it calculated?

The tax is calculated based on a special formula. Information is entered into it regarding what characteristics the selected field of activity has. For example, if UTII is used for retail trade, then the size of the trading floor should be used as a physical indicator.

During the calculation, the following formula is used:

tax amount=(basic profitability of the businessK1 (adjustment coefficient)K2 (local coefficient set by the regional administration)physical indicator of the business / number of days in a monthactual number of days in a month during which the entrepreneur worked for selected directiontax rate.

The tax rate is standard 15%, but the local authorities of each region, if necessary, can reduce this figure. The fee can be calculated independently or with the help of special calculators.

Can the fee be reduced?

Any entrepreneur wants to reduce the tax burden in various ways in order to pay a smaller amount. When using UTII, you can use some tricks to reduce the tax paid. These include the following methods:

• if an entrepreneur works without the involvement of employees, then you can reducethe tax base for imputed tax for 100% of the paid contributions to the Pension Fund and other funds;
• if there is at least one employed worker for whom the entrepreneur pays funds to the PF and other funds, then the tax base can only be reduced by 50% of the contributions transferred.

There are many illegal ways in which unscrupulous businessmen reduce the amount of tax. All of them violate the requirements of the law, therefore, if such actions are revealed, entrepreneurs are held accountable. It is used as a punishment not only a significant fine, but also the suspension of activities. When hiding income on a particularly large scale, even imprisonment may be provided.

Activity risks

When choosing UTII, an entrepreneur must prepare for some risks. These include:

• Even if the activity does not generate any income, it will be impossible to submit a zero declaration, so in any case, you will have to pay a fixed amount of tax to the budget.
• If conditions change during work, so the individual entrepreneur will not be able to apply UTII, then you will have to switch to OSNO or STS within 5 days after violating the conditions for using UTII.
• If an activity is selected that does not comply with this regime, then it will be impossible to use the system, but if the entrepreneur submits UTII declarations and pays an imputed tax, then if such a violation is detected, the employees of the Federal Tax Service will recalculate, so you will have topay additional taxes to the Federal Tax Service under the OSNO.

The use of this mode should be done by every entrepreneur with extreme caution so as not to face the negative consequences of using UTII.

How does work on UTII stop?

Each entrepreneur can apply this taxation system on a voluntary basis. If a decision is made to switch to another regime, then for this it is necessary to submit the necessary application to the department of the Federal Tax Service in a timely manner.

Organizations submit an application to the tax service in the form of UTII-3, but individual entrepreneurs draw up an application in the form of UTII-4. Documentation is transferred within 5 days after the termination of work on UTII. If this requirement is violated, the management of the Federal Tax Service may decide on the need to recalculate the tax for the entire period of the entrepreneur's work under the simplified regime.

Conclusion

UTII is considered an affordable and interesting taxation regime. This system can be used by both entrepreneurs and various organizations. To use the mode, certain requirements and conditions must be met. A single tax replaces several types of fees, which significantly reduces the tax burden and simplifies accounting.

Entrepreneurs should understand how the amount of the fee is calculated correctly, as well as in what ways it can be reduced. In addition to paying tax, it is required to submit a quarterly declaration to the FTS department in the prescribed form. Only with proper accounting can you avoid the accrual of fines and pen alties.