All taxes and payments for individual entrepreneurs can be divided into four main categories:
- Fixed insurance payments “for yourself”.
- Taxes and insurance contributions from employee salaries
. - Taxes depending on the chosen taxation system
. - Additional taxes and payments (depending on the type of activity
).
We talked about changes in tax systems in 2021 in this article.
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Insurance premiums for individual entrepreneurs “for themselves”
An individual entrepreneur must pay insurance premiums “for himself” (fixed payments) under any taxation system, even if he does not conduct any activity and does not receive any profit. If an individual entrepreneur works alone (without employees), then he must pay contributions only “for himself.”
During 2021, an entrepreneur needs to make 2 payments:
| For pension insurance | For health insurance | Total |
| RUB 32,448 | RUB 8,426 | RUB 40,874 |
Also, individual entrepreneurs whose annual income for 2021 will be more than 300,000 rubles will have to pay an additional 1% of the amount of income exceeding these 300,000 rubles until July 1 of the next year.
For more details, see the page about fixed payments for individual entrepreneurs.
Payment of taxes for individual entrepreneurs using a simplified tax system (USN)
On the simplified tax system, individual entrepreneurs pay a single tax, replacing personal income tax (income tax) and VAT (value added tax) - that’s why the system is called simplified. The tax is calculated based on the results of the year. The individual entrepreneur himself chooses the object of taxation: “income” (all receipts to the cash desk and to the current account) or “income minus expenses.”
If the object of taxation is only on income, the rate is 6%. The individual entrepreneur is obliged to transfer advance payments to the budget throughout the year. Such a system will reduce the tax on contributions to the Pension Fund for yourself and your employees. If they are, then the tax reduction is possible by 2 times.
An example of tax calculation for the 1st quarter. The income of the individual entrepreneur was 300,000 rubles. Insurance premiums - 6000 rubles. The advance amount will be: (300,000 – 6000) * 6% = 17,640 rubles.
If the simplified tax system is “income minus expenses,” then the rate is 15%. Here, an individual entrepreneur cannot reduce the tax on contributions paid to the Pension Fund for himself and his employees, but these contributions are taken into account as expenses. The minimum tax amount is 1% of the income of an individual entrepreneur.
An example of calculating an advance payment “income minus expenses”. During the tax period, the individual entrepreneur received income of 20,000,000, expenses amounted to 19,000,000. We calculate the tax as follows:
- Tax base: 20,000,000 – 19,000,000 = 1,000,000 rubles.
- Tax amount: 1,000,000 * 15% = 150,000 rub.
- Minimum tax: 20,000,000 * 1% = 200,000 rub.
Since the minimum tax is greater than the calculated tax amount, the individual entrepreneur must pay it. Some regions are reducing the rate from 15% to 3%.
Taxes and contributions from employee salaries
An individual entrepreneur can hire workers under labor and civil law contracts (contractor agreement, contract for the provision of services and others, for one-time work or work that does not require compliance with internal regulations).
It is important to understand that when hiring an employee, an individual entrepreneur takes on additional costs and responsibilities:
- Calculates and withholds personal income tax on income paid to its employees. Once a month (the day after payment of wages), an individual entrepreneur is obliged to transfer personal income tax to the tax office, acting as a tax agent.
- Pays insurance premiums. Contributions for employees are paid every month, based on the size of insurance premium rates multiplied by employee salaries.
Learn more about taxes and insurance payments for employees.
Read about how to find out about tax debts here.
note
, from 2021, all insurance premiums, both fixed and for employees, are paid according to the details of the Federal Tax Service of the Russian Federation. This is due to the transition of the administration of insurance premiums to the introduction of the Federal Tax Service from 2021.
Patent system (PSN)
The patent system can be applied if the following conditions are met:
- the regime has been introduced in the region where the activity is carried out;
- number of employees (for activities at PSN) no more than 15 people;
- income does not exceed 60 million rubles. in year.
Specific types of activities for which PSN is applied are prescribed in the law of the constituent entity of the Russian Federation. PSN cannot be used when trading certain excisable goods and goods subject to mandatory labeling.
To switch to PSN, you need to submit an application to the tax office 10 days before the transition date. A patent is issued for any number of days, but not less than 1 month within one calendar year.
For each type of activity you need to purchase a separate patent. If you carry out “patent” types of activities and activities that cannot be transferred to a patent, you will have to combine PSN and OSNO (STS). For example, if you trade through a pavilion in a shopping center and through an online store, then a patent can only be acquired in relation to retail trade through the pavilion. Trade through an online store will be taxed according to OSNO or simplified taxation system.
Taxes
- Cost of a patent (replaces personal income tax, property tax, VAT).
The rate is 6% of potential income (potentially possible income).
Potential income does not depend on actual income. It is established by regional law depending on the type of activity.
An example of calculating the cost of a patent per year
Retail trade with a sales area of 20 m2 in the city of Yaroslavl.
Potential income for 2021 = 35,000 (per 1 m2) × 20 (m2) = 700,000 rubles.
The cost of a patent for the year = 700,000 × 6% × 1.589 (deflator coefficient for 2021) = 66,738 rubles.
If a patent is valid for less than a year, its cost is calculated in proportion to the number of days.
An example of calculating the cost of a patent for less than a year
If you receive a patent not for a year, but for 9 months (January-September).
Patent cost for 9 months. = 66,738 / 366 × 274 = 49,962.33 rubles.
You can calculate the cost of a patent using the Russian Federal Tax Service Calculator.
The cost of a patent cannot be reduced by insurance premiums paid. But there is a bill according to which, from 2021, the cost of a patent will be reduced by individual entrepreneurs’ contributions for themselves and for their employees, similar to the simplified tax system “Income”.
Payment deadlines:
- patent term up to 6 months inclusive - payment before the end of the patent term;
- patent term from 6 to 12 months inclusive - payment of 1/3 no later than 90 days, 2/3 no later than the end of the patent term.
There is no reporting on PSN.
- Property tax - only on property taxed at cadastral value (business and shopping centers, offices, catering and retail premises). The list of objects is established by the subject of the Russian Federation.
Peculiarities
- An individual entrepreneur is required to keep records of income in the Individual Income Book on the PSN.
- It is necessary to pay VAT and submit reports when voluntarily issuing VAT invoices, importing goods, purchasing from foreign entities, leasing state property.
- There is an opportunity not to pay tax - tax holidays.
simplified tax system just in case
PSN does not apply to all activities, but only to certain types of activities. Therefore, in addition to PSN, there is always a main mode. This is OSNO or USN. The main mode will apply if:
- The individual entrepreneur violates the restrictions on the use of PSN;
- The individual entrepreneur carries out transactions not related to patent activities (wholesale sales with a patent for retail trade);
- if the patent was not received for a full calendar year.
In order not to end up on OSNO, you need to submit a notice of transition to the simplified tax system for all activities and an application for PSN for certain types of activities.
Taxes depending on the chosen taxation system
In total, there are five tax regimes for individual entrepreneurs (one general and four special):
- The general taxation system is OSN;
- Simplified taxation system - simplified tax system;
- Patent taxation system - PSN;
- Unified agricultural tax - Unified Agricultural Tax.
- Professional income tax – NIP.
You can learn more about each tax regime in force in Russia on this page.
Tax regimes for individual entrepreneurs
In Russia, small businesses can choose which tax system to work on - general or special. Special tax regimes have another name - preferential. Tax rates here are lower than in the general system, in addition, it is possible to further reduce the calculated tax. Let's look at each preferential regime in more detail.
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Simplified taxation system
Simplified is called the most popular special regime for individual entrepreneurs. Indeed, the simplified tax system allows you to engage in almost all types of business activities, if you comply with the limits on annual income and number of employees.
There are two objects of taxation on the simplified tax system - “Income” and “Income minus expenses”. Each of them has its own tax rate and tax calculation procedure.
Most individual entrepreneurs without employees choose the first option - simplified tax system Income. The advantages of this regime are not only the low tax rate (6% of income), but also the ability to reduce tax without restrictions by the amount of insurance premiums paid for oneself.
For example, in 2021, an entrepreneur transferred 42,000 rubles in insurance premiums for himself, and the calculated tax on an income of 500,000 rubles amounted to 30,000 rubles. In this case, the tax is completely reduced due to the contributions paid, so there is no need to transfer anything to the budget.
In another version of the simplified tax system, the tax rate is higher, but only the difference between income and expenses is taxed. In addition, in many regions the standard rate of 15% is reduced for some types of activities to 10% or even 5%.
True, keeping records on the simplified tax system Income minus expenses is more difficult than on the simplified tax system income. It is allowed to take into account only expenses from the list established by the Tax Code of the Russian Federation, and all expenses must be properly documented.
Prepare a simplified taxation system declaration online
Patent tax system
PSN can only be used by individual entrepreneurs. This mode differs significantly from the simplified tax system:
- It is not the real, but the potential income of an entrepreneur that is taxed;
- it is possible to obtain an individual entrepreneur patent only for certain types of activities;
- the patent is valid only in the territory of the municipality where it was issued.
From 2021 on PSN, the transferred insurance premiums may reduce the cost of the patent. But at the same time as this benefit, some regions have significantly increased the amount of income from which the cost of a patent is calculated. You can find out how much a patent will cost here.
Unified agricultural tax
The Unified Agricultural Tax is designed to support agricultural producers, fishing industries and those who provide them with certain services. Only certain entrepreneurs involved in agriculture and fishing have the right to work under this regime.
At its core, the Unified Agricultural Tax is similar to the simplified taxation system Income minus expenses, but the rate here is not 15%, but only 6%. However, from 2021, agricultural tax payers must also pay VAT when selling their products. But if you have a small income, you can get an exemption from paying this tax.
Professional income tax
This is a new tax regime for individual entrepreneurs, which in 2021 is already in effect throughout the Russian Federation. An entrepreneur without employees whose annual income does not exceed 2.4 million rubles can become an NAP payer. In addition, there are the most stringent restrictions on types of activities. For example, you cannot engage in trading in the usual sense.
If an individual entrepreneur switches to paying tax on professional income, then he is not required to pay insurance premiums for himself. However, in this case, he will not be able to count on an insurance pension. The income of an NPA payer is taxed at different rates, depending on who pays for its services:
- 4% when receiving payment from individuals;
- 6% when receiving payment from organizations.
General taxation system
If the individual entrepreneur has not chosen any of the special regimes, then he will work on the general taxation system (OSNO). Here is the most complex accounting and high tax payments:
- Personal income tax at a rate of 13%;
- VAT at rates from 0% to 20%.
However, there are opportunities for tax optimization here too. Thus, you can be exempt from paying VAT if the entrepreneur’s income does not exceed 2 million rubles for three months. And part of the personal income tax paid can be returned if the individual entrepreneur purchased housing. An income tax refund is possible up to 260,000 rubles for expenses on an apartment and up to 360,000 rubles for mortgage interest.
Additional taxes and payments for individual entrepreneurs
Certain types of activities require the payment of additional taxes. These include:
- Tax on the production and sale of excisable goods.
- Mineral extraction tax (MET).
- Water tax for the use of water bodies.
Individual entrepreneurs with special permits and licenses, in addition to additional taxes, must also carry out:
- Regular payments for the use of subsoil.
- Fees for the use of wildlife objects.
- Fees for the use of aquatic biological resources.
Note
: Additional taxes, fees and charges must be paid regardless of the tax system in which the individual entrepreneur is located.
Read about how to pay taxes and fees online here.
