Uuden yrittäjän verkkoseminaari 10.1 · Entrepreneur Guide. Setting up a business - start-up...
Transcript of Uuden yrittäjän verkkoseminaari 10.1 · Entrepreneur Guide. Setting up a business - start-up...
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Setting up a business, and the Tax Administration’s registers
Accounting
Basic information on VAT
Basic information on income taxation
We’ll help you!
Being an employer
Setting up a business
Support for starting your own business is provided for example by Enterprise
Finland’s business advisors and local Enterprise Agencies
Apply for a start-up grant before you submit a start-up notification
Read more at: tax.fi/newbusiness
Remember: bank account, accounting and insurance
Hiring an accountant or an accounting firm for your business is recommended
Setting up a business - choosing the company form
• A self-employed person who owns and runs a business.
• Liable for the financial obligations and debts of the business with all their assets. Entrepreneur
(self-employed person)
• Founded by two or more persons or companies
• Ay: All partners are liable for the obligations of the partnership with all their personal assets.
• Ky: General partners are liable for the obligations of the partnership with all their personal assets, while limited partners’ liability is limited to their percentage share
of ownership.
General partnership (ay) Limited partnership (ky)
• Independent taxpayer
• Founded by one or more persons or companies.
Limited liability company (oy)
Cooperative
Planning of business operations
Entrepreneur Guide
Setting up a business - start-up notification
Submit a start-up notification to the Business Information System BIS
(ytj.fi)
A Business ID is issued for the business and will be available in the BIS after
around 2 days
Request entry in registers; processing time approximately 3 weeks
– Trade register maintained by the Finnish Patent and Registration Office (PRH)
– Registers maintained by the Tax Administration: Prepayment Register, VAT Register and
Employer Register
Check the video! Requesting entry in registers
Prepayment Register
Being in the Prepayment Register indicates that the business pays its taxes
promptly and correctly.
When your business is found in the Prepayment Register, the invoice payer – or
the buyer of your services – does not have to withhold tax (cf. wage payment).
Precondition of tax credit for household expenses
If your business neglects to pay taxes
or file tax returns, the Tax Administration can remove it
from its register.
So when your business is in the register, it means it
has met its tax liabilities.
■ You can check the business’s register status in the BIS.
After you have registered your business...
Study carefully the letter you receive from you. The letter contains
– information about your business’s registration
– instructions for filing and paying taxes
– the Tax Administration’s bank account numbers and a business-specific reference number
for self-assessed taxes. The reference number is also available in your business’s MyTax
service.
If you have registered your business in the VAT Register or the Employer
Register, mark the due dates of returns and contributions in your calendar.
– You can also find the dates are on tax.fi and in MyTax
You must keep filing returns even for periods when your business has no
business activity or does not pay any wages.
Basic information on accounting
The obligation to keep accounting records applies to all businesses
It is important for a business to keep reliable up-to-date
accounting records.
Provisions on accounting are found in the Accounting Act.
The main purpose is to calculate the net income, keep the
business’s and its owners’ cash flows separate, and provide
information about the business’s financial status.
We recommend that you engage the services of an accounting
firm or an accountant.
The obligation to keep accounting records applies to all businesses
Accrual-based double-entry accounting
For every transaction, the source and use of the money are recorded. The
entries show the reason for the transaction and the account used.
Every transaction must be recorded on at least two accounts.
Exception: Entrepreneurs (=self-employed individuals) may use
cash-based single-entry accounting. In this case, the accounting
period must be a calendar year.
Taxation is based on the accounting records
Transactions are entered in the accounting records in chronological order
and by subject matter. Cash payments are entered without delay.
Accounting records must be kept in such a manner that the required tax
returns and other notifications (such as VAT returns) can be drawn up on the
basis of up-to-date information.
The business’s income tax for the accounting period is calculated from the
business income recorded in the books, adjusted in accordance with
provisions in tax legislation.
>> Read more: Kirjanpidon ABC (Basics of accounting)
(Taloushallintoliitto)
Basic information on VAT
What is VAT?
1. VAT is a consumption tax that the seller collects
from the buyer by adding it to the sales price of goods or services.
2. Your business cannot keep the VAT but must remit it to the
government.
3. VAT is a self-assessed tax, filed and paid according to the
business’s tax period.
All those who sell or rent out goods and services in the conduct of business, or are
engaged in similar activities, are liable to pay VAT.
• Exceptions: turnover of less than EUR 10,000 and e.g. non-profit organisations.
• VAT reverse charge is applied in the construction sector and scrap metal
industry.
VAT rates
General VAT rate: most goods and services
Food, animal feed, restaurant and catering services
Books, pharmaceuticals, exercise services, film shows,
entrance fees to cultural and entertainment events,
passenger transport, accommodation services, and
royalties for broadcasting services
24%
14%
10%
VAT register
Anyone liable to pay VAT must register for VAT.
VAT must be filed and paid regularly
according to the company’s tax period – every month, every three months
or once a year.
+ VAT
All those who sell or rent out goods and services in the
conduct of business, or are engaged in similar
activities, are VAT liable.
Operations outside VAT taxation
Not all lines and sectors of business are VAT liable
Examples:
– selling and renting real estate
– healthcare, medical care and social services
– education and training services specified in the VAT Act
– financial services and insurance services
Your business cannot be registered for VAT if you operate only in the above
sectors. Consequently, you are not entitled to deduct VAT on the purchases
made for the business.
Examples of VAT rates
Small-scale business and VAT?
Registration is not necessary if you estimate that your business’s turnover will
be less than €10,000 during the accounting period (12 months).
– Make a good estimate of your turnover, so that you do not
have to pay VAT retrospectively.
VAT relief, when turnover is €30,000 or less.
– You can apply for VAT relief in the accounting period’s last VAT return.
You can register your business for VAT even if your turnover is less than
€10,000.
You can deduct the VAT on the purchases you have made for your taxable
business activity.
+ VAT
How to calculate and file VAT
Example
The price of the product you sell is €1,000 excluding VAT.
The general VAT rate of 24% applies.
VAT of 24% is added to the price, i.e.
1,000 × 24/100 = €240.
The price including VAT is €1,240.00.
For further guidance, visit tax.fi
Check out the video!
New entrepreneur:
Value-added tax
Reporting value added tax
You report VAT and pay taxes in accordance with your business’s tax period.
Your business must file a return for each tax period – even when it has not had any activity.
As a rule, the tax period for self-assessed taxes is always one calendar month.
– Returns must be filed and tax paid on a monthly basis.
Businesses can apply for an extended tax period, which may be:
– three months (quarter): turnover max. €100,000
– calendar year (VAT): turnover max. €30,000.
VAT is a self-assessed tax.
‘Self-assessed’ means that you must calculate and file the tax on your
own initiative.
How to calculate and file VAT
What is the due date for filing and paying taxes?
NOTE: The tax return must arrive at the Tax Administration by the due
date.
The general due date for
filing and paying VAT
is
the 12th day
What is the due date for filing and paying?
January February March
12th day
VAT is filed and paid in the second month following the tax period.
VAT is a self-assessed tax, so you must calculate it by yourself and
check the due date. Bank details, such as bank account numbers and
reference numbers, are available in MyTax.
Example, tax period one month:
VAT
E-filing
You can submit tax returns in the Tax Administration’s MyTax e-service or
directly through certain accounting software.
Start using MyTax (tax.fi/mytax).
Making corrections
If you find an error in the tax return you have filed, you can correct it by
filing a replacement return for the tax period concerned.
Also state the reason for the correction in the replacement return.
There is also an alternative method for correcting minor errors: if the error
is less than €500, it can be corrected or recognized in future returns.
Errors must be corrected without undue delay.
Don’t worry!
Oops, I made
a mistake…
Filing late
If you file a return late, a late-filing penalty will be imposed. The late-filing
penalty is calculated from the day following the due date until the day we
receive the return.
If the tax return is not filed by the due date, the Tax Administration will estimate
the amount of tax to be paid.
In addition, you will be imposed a punitive tax increase for neglecting your
obligation to file a tax return.
Neglecting the obligation to file a tax return is also sufficient grounds for the Tax
Administration to remove your business from the Prepayment Register.
Late-filing penalty
1–45 days over 45 days
€3 per day,
up to €135
Late-filing
penalty is
not imposed
+2%
of the amount of tax
filed late
Max. €15,000
per tax period /
tax type
First tax return
for the period
Replacement
return
+2%
of the amount of tax
filed late
Return filed late
Note: Unpaid taxes accrue interest for late payment (7% in 2019)
Basic information on income taxation
Take care of your business’s prepayments
Prepayments are income taxes paid in advance.
Businesses make prepayments based on an estimate of their income
for the accounting period. As an entrepreneur, you are expected to
make the estimate by yourself.
Business income is what remains when your business’s deductible
expenses are deducted from its taxable income.
– Taxable income includes, for example, income from the sales of your
business’s products and assets.
– Deductible expenses include the expenses for the production of income,
such as wages, rents and purchases made for the business.
Apply for prepayments in MyTax.
Making prepayments
You will find the decision on your prepayments in MyTax, and it will also be sent
to you by post.
The decision contains the information you need to make payments: amount of
tax, due date and reference number.
The due date for prepayments is the 23rd of the month.
If you are a self-employed individual, the amount of tax also depends on your
other income and benefits.
Number of instalments: how often are prepayments made?
How to make a prepayment: how are prepayments made?
Changing prepayments
1. During the accounting period: follow the amount of prepayments. Request
changes to your prepayments, if necessary.
If your business income is higher than your original estimate, request higher
prepayments. This helps you to avoid back taxes, for example.
If your business income is lower than your original estimate, you can request
lower prepayments.
2. After the accounting period:
Make an additional prepayment, if necessary: you can apply for an additional
prepayment multiple times, up until your tax assessment process has been
completed
Additional prepayments are a way of supplementing withholdings or
prepayments after the end of the tax year. Request additional prepayments in
MyTax
Tax return
Tax return forms and due dates vary with the type of business.
e.g. entrepreneurs, or self-employed persons (5), partnerships (6A)
Tax returns must be filed by the due date, see: important dates
Study carefully the instructions for filling in the appropriate tax return (tax.fi)
Tax return
E-filing recommended: fewer mistakes and step-by-step guidance
– corporate entities (Oy, etc.), associations and foundations: return must be filed
electronically for example in MyTax
– partnerships and entrepreneurs, or self-employed persons can file
in MyTax starting mid-January 2019
via Ilmoitin.fi
via the Tyvi service
by filling in an online form on lomake.fi (only entrepreneurs, or self-employed)
Example: Tax on entrepreneurs’ business income
BUSINESS INCOME
DIVISIBLE BUSINESS INCOME
PART TREATED AS CAPITAL INCOME
(20% of net assets or,
at the taxpayer’s request, 10%)
PART TREATED AS EARNED INCOME
(the remaining part or, at the taxpayer’s
request, whole business income)
-
=
BUSINESS EXPENSES
- 5% DEDUCTION FOR
ENTREPRENEURS5% DEDUCTION FOR
ENTREPRENEURS
Company form and taxation
Read more about differences and
details of income taxation for different
company forms on tax.fi.
Different types of companies are taxed in
different ways.
Tax payments and refunds
Paying taxes
Whenever you pay taxes, you must
have the following information at
hand:
– amount of tax
– Tax Administration's bank account number:
– taxpayer- and tax-type-specific reference
number
– due date
You can pay your taxes
– in MyTax
– In your online banking service
– as an e-invoice or direct payment (real
estate tax and income tax)
– in cash, for example in a bank.
You will find the payment details on
the tax decision and in MyTax.
Other taxes, such as VAT and
employer's contributions, are self-
assessed taxes and you must pay
them on your own initiative. You must
calculate the amounts and check the
due dates.
If you have financial difficulties, you
get more time to pay if you wait for
payment reminders or apply for a
payment arrangement in MyTax.
Payments are allocated based on the reference number
Different tax types have different reference numbers. The reference number
determines which tax a specific payment is used for. Tax types that have their own
reference numbers include:
– income taxes (e.g. prepayments, additional prepayments and back taxes)
– self-assessed taxes (e.g. employer's contributions and VAT)
In different situations, other reference numbers may also be used, such as a
reference for overdue taxes or for a payment plan.
You can check the reference numbers in MyTax or in the payment instructions
printed in the tax decision. If you receive a tax summary containing a payment
reminder, you can also find the reference number there.
You will not receive a tax decision on self-assessed taxes, such as employer's
contributions. You can find the reference number for self-assessed taxes in MyTax.
Tax refunds are used for taxes
Tax refunds to individual taxpayers and
entrepreneurs are paid between July and
December. You can check the date of
payment and the amount of refund in the tax
decision or in MyTax.
Your refund is used for the payment of your
taxes starting from your assessment end date
until the 4th day of the following month.
– Your tax refund is used for your existing unpaid
taxes immediately on the tax assessment end
date.
– During this period, the refund is also used for
upcoming taxes on their due dates.
If the refund covers all the taxes in this
period, you do not have to pay the tax. If, on
the other hand, the refund covers your taxes
only in part, you must pay the difference
between the taxes and the refund on the due
date. Real estate tax is an exception: refunds
are not used for real estate tax this year.
A self-employed individual’s personal tax
refunds are used for the payment of their
business’s taxes. Tax refunds are also used
for taxes included in a payment arrangement.
Submit a bank account number
In order to pay tax refunds, we need the bank account number of your business.
Submit a bank account number or report any change of bank account number in
MyTax.
Note that an individual taxpayer may only have one bank account number in the
Tax Administration records. If you are a self-employed person, this applies to
you. So you cannot have a different bank account number for your business in
our records.
If you do not submit a bank account number, the refund will be paid through a
money order via the OP Bank. When you are cashing a money order, OP
collects a service charge according to their price list, which is why we do not
pay refunds of €15 or less as a money order.
Summary of tax payment status
A payment reminder is included in your tax summary, if your information for the
past month shows that you have unpaid
– income taxes (back taxes, prepayments or additional prepayments)
– self-assessed taxes (e.g. VAT or employer’s contributions)
– inheritance tax
– gift tax.
The payment reminder included in the summary contains payment details and
late-payment interest calculated up until the date of the summary. If you pay
taxes after the due date, check the amount of late-payment interest in MyTax.
You will receive 1 to 3 payment reminders for unpaid taxes in your tax
summaries. You will always be notified in your tax summary before we transfer
your overdue taxes to enforcement.
Summary of tax payment status
You will also receive a tax summary when your tax refund has been used to pay
your taxes. MyTax gives you more detailed information on how your tax refund
has been used.
Businesses and corporations also receive a summary when their payments are
used for taxes.
The tax summary for the previous month is available in MyTax at the beginning
of the following month.
Note that the tax summary, generated at the end of the month, is a summary of
the payment transactions of the past month. More up-to-date information is
available in MyTax.
And further ...
Play fair – don’t forget the receipt!
When your business sells goods or services, you must give the buyer a
receipt or invoice indicating the amount of VAT.
The buyer may need it, for example, in order to deduct VAT.
What information must a receipt include?
entrepreneur’s name, contact details and Business ID
date of issue, and identification number
number or amount and type of goods / type of services
amount received, including VAT and VAT rate
Further information and a receipt template are available on tax.fi: Don’t
forget the receipt!
Tax debt certificate?
When you conclude agreements in your business’s name, you may
need a statement of taxes paid / a tax debt certificate.
– The tax debt certificate shows whether the business has fulfilled its
obligation to file and pay taxes.
You can order a certificate online in MyTax
– You can also make a standing order for the whole year and receive a
certificate once a month.
Don’t forget you can also check companies’ register entries in
Business Information System BIS (at ytj.fi)
In the event of financial difficulties
Businesses may have financial difficulties from time to time.
If they meet certain conditions, they can apply for a payment
arrangement.
A payment arrangement must be requested before unpaid taxes are
transferred to the enforcement authority for recovery.
A request for payment arrangement can be submitted in MyTax.
Read more at tax.fi: Payment arrangement
Suomi.fi messages
Suomi.fi messages is a service maintained by the Population
Register Centre. Suomi.fi messages is designed for
communication between citizens and public authorities. It has
replaced previous official messaging services.
The Tax Administration adopted Suomi.fi messages on 1
November 2018.
If you activate Suomi.fi messages, the Tax Administration will no
longer send you letters on paper. Your tax mail will be
transmitted to MyTax instead. The Suomi.fi service sends you a
message whenever you have new tax mail in MyTax.
TAXATION CHANGES
E-filing
You must log in to be able to take care of your tax matters in our e-services.
Individual taxpayers can usually log in with their online banking codes.
You can also authorise an accountant to take care of your company’s tax
matters.
You can grant an authorisation in the Suomi.fi e-Authorisation service.
How to grant authorisation
Brief summary
Brief summary: starting business operations
Tax Administration’s registers
Star-up notification to BIS (ytj.fi)
Business ID
to Trade Register(Finnish Patent and Registration Office)
to the Tax Administration’s registers
Start-up notification
Corporate income taxation
• Prepayment of tax based on estimated
income
• Tax return after the end of the accounting
period
refund of prepayment or back taxes
Filing and paying taxes
• Prepayment register
• VAT Register
• Employer Register
If your business
activities change,
submit a notification of
changes on ytj.fi
VAT
• according to the business’s tax period,
which is usually one month
• general due date the 12th of the month
Employer’s contributions
report to the Incomes Register within 5
days of payment
general due date the 12th of the month
Start using MyTax for your business
You can use MyTax to file and pay self-assessed taxes, and to
keep track of your business’s status. MyTax also reminds you of
due dates.
When you have activated Suomi.fi messages provided by the
Population Register Centre, you will receive an e-mail whenever
you have a new message waiting for you in MyTax.
How we support new entrepreneurs
We will help you!
We want to support new entrepreneurs
to make sure they can handle their tax
matters correctly right from the beginning.
Because of this, we provide guidance on
multiple channels.
tax.fi/newbusiness
Set of newsletters for new entrepreneurs
A tax information package
directly to your e-mail
– three newsletters within a couple of weeks,
the first one upon subscription
– includes useful tips for finding more detailed
instructions on tax.fi
– also in Swedish and English
Subscribe at: tax.fi/newbusiness or tax.fi/newsletter
Webinars
Videos
Tax Administration’s YouTube channel
e.g. for new entrepreneurs
registration, basic information about VAT,
acting as an employer
recorded webinars
several webinars
on different topics
You can find all our future webinars at:
Events and webinars
Webinar slides & material: Tax.fi
Don’t hesitate to contact us!
Service numbers
Tax.fi
> Chat
Business as an employer
Employer Register
Regular or temporary employer? Regular employers must register with the
Employer Register.
Regular employer
When you pay wages
• regularly to at least two people or
• simultaneously to at least six people with
temporary or short-term employment
contracts
Temporary employer
When you pay wages
• regularly to only one person and
• to no more than five employees whose
employments last less than a calendar year
Guidance:
Business as an
employer
Being an employer Employers have obligations related to wage payment. Tax must be withheld
from wages, and the employer’s health insurance contribution must be paid on
the basis of the wages.
Employer’s contributions are self-assessed taxes.
– Report to the Incomes Register within five days from the payment.
– Pay to the Tax Administration by the 12th day of the month following the month of wage
payment.
Reports to the Incomes Register must be submitted electronically.
Check the video:How to file employer's
contributions
Check the video:New entrepreneur – Acting
as an employer
Filing and paying employer’s contributions
Regular employer
– Earnings payment report on every wage earner to the Incomes Register by the 5th day after
wage payment
– The employer's separate report to the Incomes Register by the 5th day of the calendar month
following wage payment (employer-specific summary)
– Separate report also in the case of no wages payable
Temporary employer
– Earnings payment report on every wage earner to the Incomes Register by the 5th day after
wage payment
– Separate report to the Incomes Register only when wages have been paid
Due date on the 12th of the month following wage payment
Start using Palkka.fi
Palkka.fi is free payroll software for small businesses. You can use it to
calculate your employees' wages, including personnel expenses.
The service generates payslips and other accounting vouchers and saves
them in an archive.
Palkka.fi also has a feature that automatically sends information on employer
contributions to the Incomes Register.
Learn more at Palkka.fi »