Unprofitability of the enterprise
When talking about the losses of an enterprise, it is customary to separate two very important concepts (see table).
| Concept | Explanation |
| Accounting loss | When calculating it, the real results of entrepreneurship are taken into account. In this case, all proceeds from the activity and expenses incurred as a result of it are taken into account. |
| Tax loss | It differs from an accounting loss in that when calculating it, not all types of income and expenses are taken into account, but only those that “simplified” can recognize in accordance with the Tax Code of the Russian Federation. |
Note that not all entrepreneurs choose the option of paying tax according to the simplified tax system on income reduced by expenses. Some people opt for a simpler option from an accounting point of view. So, if you choose to pay tax exclusively on income, then the question of whether to pay the simplified tax system can be answered unequivocally: yes, always.
This is due to the fact that such “simplifiers” do not display their expenses in tax accounting. And as a result, it is impossible to come to a loss. If a company or individual entrepreneur works on the simplified tax system “income minus expenses,” then it makes sense to understand the situation of receiving a loss.
Let's consider this situation.
Example:
Kroshkin M.I. in the first quarter he had accrued tax (income-expense X 15% = 3,600 rubles, he paid it in advance. At the end of the six months he also had accrued tax (income-expense) X 15% = 9,500 rubles. But the results of the year were disappointing, and his expenses exceeded his income.
In this case, 1% of the total annual income is taken 26,500.00 - 3,600 (advance payment for the first quarter) - 9,500.00 (advance payment for the half-year) = 13,400.00. We received the amount of the minimum tax that must be paid at the end of the year.
Clauses 6 and 7 of Article 346.18 of the Tax Code of the Russian Federation allow you to take into account the difference between the simplified and minimum tax for the previous year. The difference between the simplified and minimum tax, which was calculated and paid at the end of 2021, can be included in 2020 expenses.
Documents that confirm the size of the loss and the amount by which the tax base will be reduced for each tax period must be kept during the entire period of reducing your tax base for the loss (paragraph 7, clause 7, article 346.18 of the Tax Code of the Russian Federation), and then for another four years after the loss has been written off. The loss can be taken into account within 10 years following the year in which it occurred (paragraph 2, paragraph 7, article 346.18 of the Tax Code of the Russian Federation).
Be careful when determining income and expenses, since not all income and expenses are reflected in tax accounting, but only those that meet the criteria for recognizing income and expenses under the simplified tax system listed in Art. 346.15-346.17 Tax Code of the Russian Federation.
When you transfer the final tax amount for the year, please note that the budget classification codes for advance payments and the minimum tax of 1% in 2021 are the same: 182 1 0500 110
Impact of loss on simplified tax
If your business's expenses on the simplified tax system exceed its income, you don't have to make an advance payment for the corresponding periods. This applies to a quarter, half a year and nine months. But in case of a loss at the end of the whole year, the situation is somewhat different.
There is a concept of minimum simplified tax. Its size is equal to one percent of only income for the entire year. You will have to pay it even if the activity is generally unprofitable throughout the year.
For more details, see “Minimum tax on the simplified tax system in 2016.”
Keep in mind: from 2021 there will be no separate BCC for the minimum tax on the simplified tax system “income minus expenses”. see also
If you did not take into account the loss received in the previous year, then its value can be used to reduce the tax base in the current or subsequent periods. This allows you to reduce the amount of profit received by the amount of losses that were received in the previous year. You can also take into account losses that occurred at least a few years ago.
Please note that advance contributions to the simplified tax system do not depend on losses incurred in previous years. They will still have to be done, because the negative effect of other years can only be taken into account after summing up the results of the entire year.
We also remind you that a past loss can reduce the simplified tax this year only if it was received using the simplified tax system “income minus expenses.” If you changed the object of taxation, then you will no longer be able to take into account previous losses.
How to offset advance payments with the minimum tax simplified tax system?
During the year, an entrepreneur using the simplified tax system is obliged to calculate and pay advance payments to the simplified tax system to the Federal Tax Service. There are situations when, after summing up the work for the year, it turns out that despite the fact that in the first three months, six months, nine months advance payments were accrued and paid for the individual entrepreneur, at the end of the year it turned out that expenses exceeded income. It turns out that you need to pay a minimum payment. But advance payments have already been transferred to the budget.
What to do in this case? Don't worry, in this case the advance payments will go towards reducing the minimum tax. But this issue will not be resolved automatically. According to clause 4 of Article 78 of the Tax Code of the Russian Federation, an entrepreneur must submit to the Federal Tax Service at the place of registration an application for crediting advance payments in favor of the minimum tax of the simplified tax system. The application must be submitted no later than 10 days before the deadline for tax payment at the end of the year.
If the result of the previous year’s work was a loss, this does not mean that there is no need to pay advance payments, because losses are taken into account only at the end of the calendar year. In this case, you can only take into account the loss that was received during the period of application of the simplified procedure with the object “income minus expenses”. After all, a simplifier can change his object of taxation annually (clause 2 of Article 346.14 of the Tax Code of the Russian Federation).
The article has been edited in accordance with current legislation 12/17/2019
How to confirm your losses
When, under the simplified tax system, expenses are greater than income , the Tax Code provides for the possibility of taking into account losses incurred during the year to reduce the tax base for another 10 years. If this period has passed, then it will no longer be possible to take into account the loss.
If you wrote off all your losses for a certain reporting year, then for another four years you will have to keep all the documentation confirming the legality of such actions. In the event of an inspection, you are required to provide the inspector with the necessary information.
You should store not only supporting documents, but also information on the amount of loss for all tax periods. To prevent inspectors from having questions and difficulties, it is better to systematize such papers and files and place them in separate folders.
Also see “STS since 2017: how the limits on income and fixed assets will increase.”
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21.11.2016
How is the budget formed?
The state budget , contrary to popular belief, is not a pile of money in the treasury of a single country. In fact, a budget is a financial plan drawn up for a specific period of time (for example, a year) and includes planned expenses and expected income. For clarity, let’s compare the state budget with the family budget.
Let's say we have a young family where each spouse earns 25,000 rubles a month. The total total income will be 50,000. Of this, part of the money will be spent on housing and communal services, food, clothing, the Internet, and so on. Perhaps some of the money (even if small) will be set aside. To ensure that expenses do not exceed income, the family is forced to plan their expenses in advance. They know that at the end of each month everyone will receive a salary, and they have a rough idea of how much money they can spend in the next month.
Such planning is a real budget plan .
With the state, things are similar, only the amounts are much larger, there are many different sources of income, and there are even more items of expenses. Individual regions, cities and villages, public organizations and commercial companies have their own budgets.
Where does the deficit come from?
Sometimes actual costs may exceed those planned, for example, due to unforeseen circumstances. Likewise, income may decline. In the midst of the coronavirus pandemic, a significant share of businesses around the world were, at best, making less profit , and at worst, incurring losses . Widespread restrictions and administrative barriers led to companies going bankrupt and, as a result, not paying taxes . As a result, revenues to state budgets turned out to be lower than planned, and expenses, on the contrary, increased (for example, a lot of money had to be allocated to fight the epidemic). The situation is twofold: on the one hand, states spend a lot and introduce all sorts of restrictions, and on the other hand, as a result of these same restrictions, in the long term, enterprises will not pay taxes because they will go bankrupt, and a deficit will appear in the budget.
Of course, a deficit can also arise as a result of a poorly planned budget by officials, unsuccessful spending, sudden military expenditures, an excessively high tax burden, or, for example, a high public debt and its untimely repayment.
The state budget
The state budget is formed taking into account state revenues, that is, funds coming from the following sources:
- taxes paid by organizations and citizens;
- non-tax, but mandatory fees - all kinds of excise taxes, duties, fees, income from foreign economic activity, and so on;
- other income - for example, from government funds.
Every year, states predict in advance how much money they will have in the budget, and based on this amount, spending is planned. States spend money on a variety of needs, including social, economic, military, scientific, foreign policy, and so on. In the end, they spend money on maintaining the state apparatus itself, which exists only through our taxes and other payments.
How much tax do we REALLY pay?
What is a budget deficit?
When the state has accumulated enough money within the budget, it begins to spend it according to a predetermined plan. This process is called budget implementation. As a result, three scenarios are possible:
- Budget surplus is a situation when you spent less money than you received in the form of income.
- A balanced budget is when you spent as much money as you received in the form of income.
- A budget deficit is the same situation when, for various reasons, you spent more than you received in the form of income.
Budget deficit = budget expenditures > budget revenues.
The limit was exceeded by an individual on NAP
If a “physicist” has lost his self-employed status due to excess income, he has two options:
- Stop business activities, that is, do not receive money from clients until the end of the year, and from the beginning of the year register again as self-employed (if there are no debts remaining under the NAP).
- Immediately register an individual entrepreneur and choose any other suitable taxation regime during registration: OSNO, simplified tax system, unified agricultural tax, PSN. For part of the year as an individual entrepreneur, you will have to pay fixed insurance premiums. It will be possible to switch to the NAP only from the beginning of next year.
All income within the limit for the current year will remain the income of the self-employed; there will be no fines or additional charges.
If you worked under contracts with legal entities or individual entrepreneurs, you need to inform them about the loss of your self-employed status so as not to set them up. Most likely, your contracts with them have such a clause. If customers continue to pay you as a “physician” after exceeding the income limit, they will have to withhold personal income tax and pay insurance premiums for you. Not everyone agrees to this, so you need to warn them and agree on how you will cooperate further. The best option is to register as an individual entrepreneur using the simplified tax system at 6% and enter into an agreement as an individual entrepreneur.
A “physicist” can at any time voluntarily abandon the NAP and immediately register an individual entrepreneur using the simplified tax system or another regime.
