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Opening an income tax file, how do you do it? What are the steps? How do you calculate the taxes? These are the questions asked by clients who come for initial advice on starting a business. In order to put things in order, we must first explain what it really means to start an independent business.
Every opening of an independent business starts first and foremost with VAT. It can be an exempt or licensed business. An exempt business does not pay VAT at all. In addition, he is not entitled to receive any tax refunds for his expenses. When he receives his money from the parties with whom he works, he must issue a receipt. At the beginning of each year, the exempt business must submit to the VAT authorities a report regarding the previous year’s income as an exempt business. This can be done until January 31.
In contrast to an exempt business, a licensed business pays 17% VAT. On the other hand, VAT does entitle him to recognized expenses. (Unlike an exempt business who is not entitled to this). When he receives money from customers, he must issue an invoice or receipt.
Tax calculation is calendar, that is, for the period from January to December of that year. A tax return is filed in the following year, meaning that for 2016 a tax return will be filed during 2017.
When an independent file is opened, and in accordance with the expected revenue cycle, the Income Tax determines advances that must be paid every two months for the income. These advances are paid on account of the tax for that year and must be checked during the year that they are not lower than the estimated tax for that year. When you pay more than required, you receive a refund, after filing a report, the amount of money is linked to interest and linkage. Compared to an exempt dealer, a licensed dealer pays 17% VAT. On the other hand, VAT does entitle him to recognized expenses. (Unlike an exempt dealer who is not entitled to this). When he receives money from customers, he must issue an invoice or receipt.
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