Do individual entrepreneurs need to pay personal income tax for themselves? Does an individual entrepreneur pay personal income tax for himself and for his employees?

Does the individual entrepreneur pay personal income tax for himself? This question often arises among businessmen. Individual entrepreneurs can use the following modes to pay income from profits:

• simplified taxation system - simplified taxation;
• OSNO - taxation according to the general regime;
• UTII - single tax on imputed income;
• taxation of activities under a patent (PTS).

Whether an individual entrepreneur must pay personal income tax for himself needs to be clarified according to the tax regime he has chosen.

Income tax for an entrepreneur using the simplified tax system

According to the law, tax agents working under the simplified taxation regime do not have to pay personal income tax. But this only applies to income received from running a business that is subject to the simplified tax system. And it does not cancel the taxpayer’s duty to make personal income tax payments for businessmen on a “simplified” basis at the rates and in the cases specified in paragraphs 2, 4, 5 of Art. 226 Tax legislation.

Profit declared by an entrepreneur for types of activities included in the Unified State Register of Individual Entrepreneurs is not taxed. Income received from business types not included in the Unified State Register of Individual Entrepreneurs is considered by tax inspectors as benefits earned by ordinary individuals and is subject to taxation at 13%.

It is possible to reduce this amount by claiming your right to a tax deduction.

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Special cases of personal income tax payment by entrepreneurs

An entrepreneur pays personal income tax (monetary or material) on income in the form of prize gifts received from participation in various promotions offered by commercial outlets or manufacturers of goods, from an amount exceeding 4 thousand rubles.

Cash profits generated from loans are taxed.

This income is calculated as 2/3 of the current Central Bank rate minus the monetary equivalent specified in the loan documents. In the case of a foreign currency loan, profit in monetary terms must be calculated from the 9% rate minus the amount of interest specified in the documents (regulated by Articles 212 and 224 of the Tax Legislation).

An individual entrepreneur pays personal income tax for himself in the following cases:

1. When receiving profit at an interest rate from bank deposits (ruble or foreign currency). Ruble income is calculated based on the Central Bank rate plus 5 percentage points. Foreign exchange - at a rate of 9%.
2. From dividends received in case of participation in other associations.
3. From profits earned from foreign sources.
4. From funds from which, for some reason, income tax was not withheld (Article 228 of the Tax Legislation).

An individual entrepreneur who has an obligation to pay income tax is obliged to pay the fee no later than July 15 of the year following the reporting year, having previously submitted an income declaration to the tax authority by April 30.

If external workers are hired, the entrepreneur is recognized as an agent and must pay tax contributions on their income. From Russian citizens - 13%, from foreign citizens - 30% and, in accordance with the law, draw up documents of the declared sample for the tax inspectorate.
Money withheld for tax payments must be credited to budget funds on the next day after the payment of salaries (Letter of the Ministry of Finance dated March 14, 2013, number 03-0405/8-216).

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Personal income tax for businessmen on OSNO

Individual entrepreneurs conducting business under the OSNO regime are required to pay personal income tax on profits earned by the types of activities declared in the Unified State Register of Enterprises. The calculation of the tax base and tax contribution is described in Chapter. 23 Tax Code. According to it, for persons with individual entrepreneur status, it is proposed to pay personal income tax in two ways:

Transfer in advance, after receiving a notification from the tax office:

• payment for the previous six months is due by July 15;
• Payment for the third quarter is due by October 15;
• You must pay for the fourth quarter by January 15th.

Based on the data submitted to the tax office, after they are corrected, an additional payment or possible refund of incorrectly calculated payments is made.

1. Translation using the advance method has clearly established deadlines. Therefore, an advance not paid on time entails the imposition of a penalty (Article 75 of the Tax Code of the Russian Federation).

Advance contributions paid by persons with the status of an entrepreneur under the OSN regime are calculated according to actual or estimated income minus the deductions assumed by Art. 218, 221 of the Tax legislation and shown in the income tax return of individuals and merchants for the previous tax phase.

After calculating the advance, a payment notification is generated and sent to the businessman. If it is not received, no debt appears. This is stipulated by the letter of the Ministry of Finance dated April 15, 2011, number 03-04-05/3-266.

1. The transfer or additional payment is made due to the correction of data if it changes.

If they have changed by more than half, then the individual entrepreneur needs to declare income in Form 4-NDFL to adjust the advance payments. An individual entrepreneur is obliged to submit a declaration based on the results of 12 months to the Federal Tax Service no later than April 30. The fees included in the declaration minus advance amounts must be included in the budget no later than July 15 inclusive.

An individual entrepreneur has the right to deductions that relate to income subject to taxes specified in the Tax Code (clause 1, article 220).

In case of spending on charitable purposes, optional pension insurance, expensive treatment and training, an individual entrepreneur is given the right to social deductions.

Do not forget that in case of losses from activities during the tax period, the tax base is not reduced.

Personal income tax must be paid by all citizens. Individual entrepreneurs are included in this category.

An individual entrepreneur can work under different taxation systems. Most often, activities are carried out using the simplified tax system, standard mode, UTII, as well as patent obligations.

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Depending on which system is used by the businessman, it is determined whether the individual entrepreneur pays personal income tax. It is important to find out the procedure for withholding and transferring taxes in 2019.

Methods and systems

An individual entrepreneur can use one of the tax systems to choose from during his work.

Among them, the most common are:

• simplifiedSystem();
• general mode (OSNO);
• UTII, in which tax is levied on imputed income;
• patent

To find out whether an individual entrepreneur pays personal income tax, it is important to know the tax regime and the features of its application. When choosing a general system, personal income tax is mandatory. Payment is made in several ways.

An entrepreneur can make advance payments after receiving receipts sent by the Federal Tax Service. Taxes for the first half of the year must be paid by July 15. For the third and fourth quarters, payments are due by October 15 and January 15, respectively.

At the end of the year, a declaration is submitted to the tax authorities. According to the document, the need for additional payment or return of money from the treasury is determined.

If an advance payment is delayed, a penalty may be charged. The norm is reflected in Article 75 of the Tax Code of the Russian Federation.

Advance contributions are determined in accordance with the information provided in the previous declaration. Tax authorities should focus on Articles 218 and 221 of the Tax Code of the Russian Federation. It is important to take into account deductions.

Things to consider

In accordance with Article 227 of the Tax Code of the Russian Federation, personal income tax is paid by both ordinary citizens and individual entrepreneurs. The latter must be officially registered, but not considered a legal entity, and also receive income in the course of their activities.

Calculation and payment of tax are carried out by individual entrepreneurs independently. Payment is sent no later than July 15 of the following reporting year.

You don't need to make a one-time deposit. The taxpayer must make several payments throughout the year. The amount is determined by tax authorities based on the data specified in the previous declaration.

How to find out if an individual entrepreneur pays personal income tax

In accordance with Article 227 of the Tax Code of the Russian Federation, individuals who have the status of an individual entrepreneur are required to pay personal income tax. If a citizen has an obligation to pay, the tax authorities will calculate the amount and send a notification to the individual entrepreneur. The new document is submitted no later than one month before the payment deadline. If funds are not deposited on time, a penalty will be charged.

According to the law, an individual entrepreneur has the right to pay personal income tax on both general income and expenses, for which there is documentary evidence. Thus, you can take as a basis not only income, but also expenses. Taxation then applies only to part of the income.

To determine this value, an individual entrepreneur will need to make calculations. They are regulated by Chapter 25 of the Tax Code of the Russian Federation. It reflects the main costs that you can focus on.

Payment of personal income tax is possible if:

• development of natural resources;
• production of products or provision of services;
• support of the production process;
• maintenance, repair of main equipment and machinery;
• research developments;
• voluntary and compulsory insurance.

A feature of the calculations is the inclusion of state duty in expenses. Therefore, when paying personal income tax, a significant reduction in the amount of payment is possible.

There are some cases when the payment of personal income tax is not provided. This is possible under the simplified tax system, when individual entrepreneurs are exempt from paying property and income taxes.

If an entrepreneur uses the general mode, he needs to switch to the simplified mode. He will be able to forget about paying personal income tax forever.

In case of accounting according to OSNO, the tax is mandatory. At the same time, the individual entrepreneur does not have to pay only for himself. If he has employees, 13% tax is also deducted from them.

Personal income tax is not provided for under the patent system. Businessmen must contribute a certain amount, which is specified in the patent.

Who should contribute for?

Personal income tax is paid by the entrepreneur independently. Also, if employees work for a businessman, personal income tax is paid on their income.

For myself

An entrepreneur cannot independently conclude an employment contract. Therefore, a question arises regarding the payment of personal income tax.

In accordance with Letter No. 358-6-1, prepared on February 27, 2009, and Article 129 of the Labor Code of the Russian Federation, wages are considered remuneration for labor activity. It refers to incentive payments.

The Civil Code of the Russian Federation (Article 2) reflects the procedure for carrying out business activities. It is associated with a person receiving a certain income. The law states that operations carried out by an entrepreneur are not considered labor activity.

In this case, the profit that a person receives in the course of work is subject to taxation. Therefore, if you use the general regime, you are required to pay personal income tax for yourself. Exceptions are situations when taxation is carried out under simplified or imputed regimes.

For employees

If an individual entrepreneur employs other persons, then personal income tax is required to be paid on their income. 13% tax is withheld and transferred from the amount accrued as wages.

Thus, with a salary of 10 thousand rubles, the tax will be 1 thousand 300 rubles. The remaining funds are transferred to the employee in the form of salary.

During the calculations, the employer needs to take into account deductions. They are required, for example, if employees have minor children.

Algorithm and calculation example

When using the general tax system, deductions are calculated using the following formula:

N = (Exp. – Exp. – Deut.) * Stav

The reporting period for calculations must be considered 12 months. If the registration of an individual entrepreneur occurred at the beginning of the year, but the activity was started later, the countdown is carried out from the moment the work began.

When calculating personal income tax, you need to focus on the following algorithm:

1. First, all income in the reporting year is grouped to determine rates for them. Standard taxation is carried out at a rate of 13%. For non-residents, 30% of income applies. In case of receiving income in the form of interest on mortgage bonds, a 9% rate is applied. When you receive a winning from a profit of more than 4 thousand rubles, 35% tax is deducted.
2. Next, expenses for the current year are determined. They are also grouped according to species.
3. At the next stage, the amount that reduces the tax base is calculated. The deduction can be applied to income taxed at a 13% rate.
4. It is necessary to determine the amount of the tax fee. If one activity requires different rates, then each type is calculated separately.

To clarify the calculation procedure, you need to consider the example of paying taxes by an entrepreneur who does not have employees.

Individual Entrepreneur Stolyarov sells vegetables and fruits.

In 2019, he received income:

In May, Stolyarov paid for his son’s education in the amount of 75 thousand 300 rubles.

• When determining business tax, a rate of 13% is taken into account. The deduction from 815 thousand 123 rubles will be 50 thousand rubles. The calculation is 815123 - 50000, and the result is multiplied by 13%. The tax is 99 thousand 465 rubles 99 kopecks.
• When selling an apartment, no tax is paid. This is due to the fact that the individual entrepreneur had the rights to it for more than three years.
• Dividends received by an entrepreneur are subject to taxation at a rate of 13%. The tax will be 13 thousand 759 rubles 85 kopecks.
• The final annual personal income tax amount is 113 thousand 225 rubles 84 kopecks.

What does the duty refer to?

Obligations to pay taxes on personal income are formed taking into account the application of taxation regimes:

Special modes

Payment of personal income tax is not provided if the individual entrepreneur switched to the simplified tax system or the patent system before the start of the reporting period. Also, deductions are not made when applying UTII from income from activities that are indicated in the register.

In some cases, individual entrepreneurs, even under special regimes, must pay taxes:

• if you receive a loan from another individual entrepreneur or legal entity at a rate of 0%, the tax is determined based on the savings obtained from the difference between the interest;
• in case of receiving dividends during participation in a joint-stock company, personal income tax is withheld from the individual entrepreneur’s funds by the tax agent;
• when an entrepreneur sells his property, the tax payment procedure is similar to ordinary individuals;
• if an entrepreneur wins more than 4 thousand rubles in the lottery, tax must be paid;
• Personal income tax is calculated when receiving income from foreign companies;
• the debt may be written off for amounts that were not declared in a timely manner.

The main condition for excluding the payment of tax is the implementation of the activities specified during registration. If deviations are observed, personal income tax is included in the budget.

The procedure for calculating personal income tax is reflected at the legislative level. Therefore, it is important to carefully study the rules of law to find out whether you need to pay tax.

Attention!

• Due to frequent changes in legislation, information sometimes becomes outdated faster than we can update it on the website.
• All cases are very individual and depend on many factors. Basic information does not guarantee a solution to your specific problems.

Personal income tax is one of the most important and mandatory types of tax. It must be paid by every citizen of the Russian Federation who receives a profit. And although this tax is mandatory for everyone, many are often interested in the question, does an individual entrepreneur pay income tax under the simplified tax system?

Payment of personal income tax must be made within a certain period of time by both entrepreneurs and employees. This requirement most often confuses many businessmen who decide to switch to a simplified taxation system.

Individual entrepreneurs who do not want to spend a lot of time preparing reporting documentation most often think about using this taxation system. The only document that must be completed and submitted to the tax office in a timely manner is the declaration.

Having decided to use the ONS, an entrepreneur is faced with a choice. He must choose the tax rate. Each has its own advantages. Thus, tax deduction at one rate is carried out on the net amount of income, while another type of rate provides for tax deduction on total profit. After choosing a rate, all work with reports for the entrepreneur ends here. One of the tax rates used under the simplified tax system eliminates the need to pay a number of other taxes, including mandatory personal income tax.

And although when using the simplified tax system a merchant is not required to pay this tax, there are situations when, when using the simplified system, he still needs to make transfers of funds under personal income tax. The Tax Code of the Russian Federation says: when applying the “simplified taxation”, the individual entrepreneur uses one of the rates presented in this taxation system, namely 15% or 6%. These rates allow you to avoid paying other taxes.

When does a simplifier need to pay personal income tax?

Most often, a simplifier is faced with the mandatory payment of this type of tax when receiving profit from an activity that is not included in the list of the simplified tax system and the Unified State Register of Individual Entrepreneurs. But there may be other reasons. One of them is winning an amount exceeding 4,000 rubles. An entrepreneur can receive it by taking part in a promotion held by the manufacturer or trade organizations in order to increase interest in the products offered.

You will also need to pay tax in a situation with a borrowed amount taken from a financial institution. It is worth noting that in this case the tax rate paid will be 2/3 of the interest rate that was reflected in the refinancing agreement. This tax requirement applies to the amount borrowed in government currency. But if the amount was taken in foreign currency, then the personal income tax amount is taken from the difference obtained between the rate used, specified in the contract document, and 9%.

An individual entrepreneur working under the simplified tax system must also pay personal income tax in the case of interest and dividends received from foreign currency deposits. The rate used to calculate personal income tax is different in each deposit situation. In most types of profits, 13% is applied, but in some cases other interest rates are used. Thus, winnings received in a promotion or lottery are taxed at a rate of 35%.

Personal income tax payment

Every individual entrepreneur working under the simplified tax system, but who has received profit from a type of activity that is necessarily subject to personal income tax, has to deal with personal income tax. It is not difficult to understand the scheme for individual entrepreneurs working on the general taxation system with personal income tax. It provides for quarterly transfer of funds for the specified tax.

Simplified people who have received income eligible for personal income tax pay tax a little differently. In this case, it is transferred once a year until April 30 of the new year following the expired tax period. In addition to paying personal income tax, the individual entrepreneur is also required to submit a tax return with information about personal income by this deadline.

It is worth noting one more small nuance regarding deductions. Merchants operating under the simplified system are deprived of the right to apply for a deduction, even if there are compelling reasons for this procedure. But when paying personal income tax, the simplifier has the right to carry out the tax refund procedure. To do this, he will only need to prepare the appropriate documentation.

Wage-earners

Despite the fact that the simplified tax system eliminates the need to pay personal income tax, individual entrepreneurs also have to deal with it when hiring employees. By going through the registration procedure to obtain employer status, an individual entrepreneur becomes a tax agent for the workers he hires. With the receipt of this status, among his responsibilities, in addition to paying the simplified tax system, there is also the transfer of tax amounts to the budget for the employees working for him.

Despite the fact that the businessman in this situation is obliged to transfer personal income tax from the income of employees, he himself pays it only in the case of income received from sources and activities not included in the simplified tax system list.

The second part of the Tax Code of the Russian Federation gives a clear answer to the question of whether an individual entrepreneur should pay personal income tax for himself. In light of the fact that the popularity of this form of commercial activity is extremely high among the population, the answer to this question is relevant. Below we will take a closer look at how the taxation system used by individual entrepreneurs affects the fact of personal income tax payment. We will also answer the question of what to do if the tax system of an individual entrepreneur has changed during the tax period.

Tax system

1. STS (simplified taxation system). If the individual entrepreneur is in this special type of tax calculation, then, in accordance with Art. 346.11 (part 3) of the Tax Code of the Russian Federation, he is exempt from paying personal income tax in all cases when it comes to income received from business activities.
2. OSN (general taxation system). If an individual entrepreneur conducts business activities within the framework of the OSN, then, in accordance with Art. 227 of the Tax Code of the Russian Federation, individual entrepreneurs pay personal income tax for themselves - three times a year they must make advance payments for personal income tax (July 15, October 15 and January 15 of each year). Also, annual personal income tax is paid no later than July 15 of the year following the reporting year. The annual amount of personal income tax is calculated taking into account previously paid advance payments.
3. Transition from simplified tax system to OSN. If the tax period began for an individual entrepreneur within the framework of the simplified tax system, but at some point it exceeded the limits of 60 million rubles provided for in paragraph 4 of Art. 346.13 of the Tax Code, then such an individual entrepreneur is obliged to independently recalculate the tax base and begin paying personal income tax according to the general rules.

Thus, the payment or non-payment of personal income tax by an individual entrepreneur is determined by the taxation system applied by him. Under the conditions of applying the simplified system, there is no need for payments, but in the general system there is.

Personal income tax is classified as direct tax deductions. It is calculated as a percentage of income. To accurately answer the question of whether an individual entrepreneur pays personal income tax for himself, you need to know what method of taxation he uses (for example, there is a big difference - simplified tax system or OSNO). The procedure for calculating and paying personal income tax in 2018 remained the same as in 2017.

When working in special modes

But there are a number of exceptions that provide for the payment of personal income tax for individual entrepreneurs in 2018 and under these special regimes. These include the following situations (see table).

The need to pay in accordance with the general procedure

If the individual entrepreneur has not switched to any of the special regimes and works for OSNO, then he must pay personal income tax. The question of whether the individual entrepreneur pays personal income tax for himself does not arise here.

Article 227 of the Tax Code of the Russian Federation provides for the payment of personal income tax in the form of advance payments within the following established periods:

• before July 15 – for the first six months;
• until October 15 – for the third quarter;
• until January 15 – for the fourth quarter (payments are made in the next year following the reporting period).

Transfers are made in accordance with notifications received from the Federal Tax Service. Tax specialists, when making calculations, are guided by data on the estimated profit of the individual entrepreneur.

After the end of the reporting period, the entrepreneur himself makes a calculation of the exact amount of personal income tax paid. In this case, income and expenses for the entire year are taken into account. Do not forget: the individual entrepreneur must transfer the amount of calculated personal income tax minus advance payments to the treasury by July 15 of the next reporting year.

EXAMPLE
If for 2018 a merchant makes advance payments totaling 45 thousand rubles, and the amount he later calculated turns out to be equal to 63 thousand rubles, then he will have to pay another 18 thousand rubles to the treasury no later than the mentioned period.