Common taxation system: advantages and disadvantages, transition

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

When opening an individual entrepreneur or any company, every entrepreneur faces a difficult choice. He must decide which tax regime he will use. As a standard, after registration, a general taxation system is established, which is complex and unusual. It has to pay and calculate a lot of fees. But it does have some advantages. It is considered indispensable if the main target audience of the selected business is companies working with VAT.

Mode concept

This system is basic, so there are no restrictions or exemptions for entrepreneurs who decide to switch to this regime. Taxpayers have to report to the Federal Tax Service on various types of taxes. Additionally, you will have to transfer insurance premiums to different funds for yourself and all employed workers.

The general system of taxation of individual entrepreneurs or different companies can be used. For such taxpayers, only some of the taxes levied differ.taxes.

The nuances of BASIC

The amount of taxes paid depends on the direction of work. For each fee, you will have to draw up appropriate reports and declarations, so immediately after starting work, you should take care of the official registration of a professional accountant. Accounting is required.

There are no restrictions when choosing this mode for enterprises or individual businessmen. You can employ any number of hired specialists, expand your business, increase production volumes, increase profits or change the direction of work.

How to go?

The transition to OSNO is considered the easiest. This is due to the fact that initially, after registration, all firms and entrepreneurs by default must report precisely under this regime. If initially an individual entrepreneur or a company works according to other systems, then the transition to the general taxation system involves the transfer of a corresponding notification to the Federal Tax Service. This can only be done at the beginning of the year, so the document is submitted before January 15 of the next year.

If, after registration, no actions are performed by the entrepreneur, then he continues to work according to the BASIC.

The notification of the transition to the OSNO is simply a statement on the basis of which an individual entrepreneur or company is deregistered as a payer of another tax regime, for example, simplified tax system, UTII, PSN or UAT. After the approval of this application, there is an automatic transition to the BASIC.

Also switch tothe general system of taxation is carried out if, in the course of work, the company ceases to comply with the requirements of the previously chosen taxation regime. In case of loss of the right to work under the simplified system, it is required to contact the Federal Tax Service with the appropriate notification. This must be done within 15 days after the loss of this right. If this action is not performed, the transition will still be carried out, but the entrepreneur may be held administratively liable.

Mode Benefits

Using OSNO has both pluses and minuses. Any entrepreneur before choosing a specific mode must evaluate all the positive and negative parameters of the decision. The applicable general taxation system has the following advantages:

• if a company or individual entrepreneur pays VAT, then they become more attractive for cooperation for various large counterparties who are also involved in transferring this tax to the Federal Tax Service, since under such conditions it is possible to reduce payments to the budget;
• there are no restrictions on switching to this mode, so companies can employ any number of employees, increase business, and also work in any legal direction;
• may be combined with other simplified regimes to optimize taxation.

Due to the above pluses, it is often relevant to apply BASIC.

System flaws

But there are some disadvantages of the BASIC. Tothis includes having to pay numerous fees.

It is required to draw up and submit to the Federal Tax Service a lot of reports and documents, so you cannot do without the skills of a professional accountant.

When is it appropriate to use the mode?

The tax general system of taxation is considered optimal for use in situations:

• company or individual cannot meet the requirements of simplified systems;
• required to work with VAT, otherwise large and necessary contractors refuse to cooperate;
• the activity of the enterprise is preferential, so you can use significant concessions from the state when calculating income tax;
• an entrepreneur can independently prepare reports and maintain accounting records due to the availability of relevant skills and experience, so the choice of this mode is relevant.

Therefore, this system is often chosen due to the many advantages and unique opportunities that entrepreneurs and companies can use.

What taxes do I need to pay?

Most often the choice is between the general taxation system and the simplified tax system. OSNO can be used by both individual entrepreneurs and firms. When using this mode, one has to face the need to calculate and pay a lot of fees. According to the general taxation system, taxes are listed:

• personal income tax or income tax. If athe system is chosen by the entrepreneur, then he pays personal income tax on the income received in the amount of 13%. The basis for the calculation is the entire income received by the entrepreneur, and also takes into account the personal income of the individual entrepreneur and all funds paid to employees. If the mode is selected by the company, then with OSNO it is required to calculate income tax. To do this, the profit itself is initially calculated, for which all expenses for doing business are deducted from the income. The total rate is 20%.
• VAT. This tax is considered the most important when choosing this mode. For general cases, its rate is 18%, but when selling food or items intended for children, the rate is reduced to 10%. The tax base is represented by the value of goods or services.
• Property tax. It is used if entrepreneurs in the process of work use different assets registered in ownership. For them, it is required to determine the cadastral price, from which 2.2% is charged annually. Additionally, it is required to submit a declaration to the Federal Tax Service every year.
• Land fee. It is used exclusively in the presence of land in the property. The amount of the fee depends on the decision of the regional authorities, but the rate varies from 0.3 to 1.5 percent.
• Transport tax. Applies to car ownership. The amount of payment depends entirely on the capacity of the existing machine. The fee is paid annually, and for individual entrepreneurs the calculation is carried out by employees of the Federal Tax Service, but companies are required to independently perform all the necessary calculations.

Optionalit is necessary to transfer insurance premiums for the entrepreneur himself and all employed workers. Other taxes may apply, depending on the chosen line of business. This includes the mining levy, the water tax, and the excise or fee for the use of wildlife.

Often work on the general system of taxation is required. VAT is the most important tax, as some large companies prefer to cooperate exclusively with contractors who pay this fee. Only under such conditions can you apply to the Federal Tax Service for a refund of the fee.

Nuances and rules for calculating and paying personal income tax

This tax is required to be paid for themselves only by individual entrepreneurs. Additionally, it is transferred for all officially employed workers. For this, 13% of the income received is determined. Under such conditions, companies and individual entrepreneurs act as tax agents, so they must independently calculate this fee for their employees.

All receipts of money from which personal income tax is levied are listed in Art. 208 NK. This type of fee is not charged from travel, accountable money or material assistance. For Russian citizens, a rate of 13% is used, and in other cases it is 30%.

The tax is paid quarterly until the 15th day of the month following the quarter. It is allowed to pay the full amount at the end of the period, so advance payments are not mandatory. Pen alties are not charged forno advances.

VAT calculation rules

When using the general taxation system, taxpayers must pay VAT. It is represented by an indirect fee charged based on a mark-up on the goods sold.

VAT can be:

• domestic, when goods are sold in Russia;
• import, accrued on goods imported into the country.

To determine the tax base, the full or partial cost of goods is taken into account. Multiple rates can be used:

• 0% in case of export goods;
• 10% when selling food, baby products, books or medicines;
• 18% applies in other situations.

If the income from the entrepreneur's activities for 3 months is more than 2 million rubles, then a special application can be submitted, on the basis of which the individual entrepreneur is exempted from the need to pay this fee.

Funds are required to be transferred quarterly by the 25th of the next month.

Reporting

Each entrepreneur who decides to apply the OSNO must take into account the need to submit many different documents to the Federal Tax Service. According to the general taxation system, reports may differ for individual entrepreneurs and firms:

• VAT declaration is submitted electronically quarterly by the 25th of the next month;
• personal income tax declaration is submitted annually until April 30, and the document is submitted in the form 4-personal income taxto the Federal Tax Service within 5 days after receiving the first profit;
• additionally required IP to conduct KUDIR;
• you must submit annual reports on insurance premiums for yourself and employees;
• book of purchases and sales used for VAT calculation;
• Companies on the OSNO submit an annual income tax return until March 28 of the next year.

Due to the need to compile and submit numerous documents to the Federal Tax Service, this taxation regime is considered complex and specific.

Conclusion

The general taxation system for LLCs and individual entrepreneurs is often considered a relevant and profitable choice. When choosing such a regime, the need to pay a large number of taxes is taken into account, as well as often submit different reports and declarations to the Federal Tax Service. Therefore, it is required to have specific knowledge or skills, and if an entrepreneur does not have them, then from the very beginning of work, they will have to hire a full-time accountant.