Projects, diagrams, drawings
What does it mean that a company operates without VAT? Why is it not profitable for VAT payers to work with organizations without VAT? How to work as an individual entrepreneur with VAT

What does it mean that a company operates without VAT? Why is it not profitable for VAT payers to work with organizations without VAT? How to work as an individual entrepreneur with VAT

Open an LLC without VAT — a real task, but for this it is important to choose the right tax payment regime. It is no secret that a lot depends on the form of taxation of the enterprise, the type of activity and other factors. Below we will consider what taxes are provided for an LLC (depending on the area of work), as well as how to avoid VAT (if required).

Subtleties of taxation, or what taxes LLCs pay

Paying taxes in the course of business is the obligation of any LLC. At the same time, the founders of the company have the right to independently make a choice in favor of a suitable option. The size of tax payments and the success of the company in particular depend on the correctness of the decision made. That is why it is important to raise the issue of taxation at the stage of drawing up a business plan. Of course, in the future it is possible to re-register an LLC using the simplified tax system without VAT, but this will require time.

Below we will consider the tax regimes that operate on the territory of the Russian Federation, and also highlight the main rates:

BASIC. For this option, tax is imposed on added value, profit, as well as the average annual price of the property. In this taxation option, 20% is levied on profits, from 0 to 18 percent VAT (depending on the services provided or goods sold), as well as a company property tax of 2.2%.
simplified tax system (option - “Income”). If we are talking about this taxation regime, here taxes are taken only from the profit received (the company’s costs are not taken into account). The general parameter is 6%, but in regions the rate can be reduced to 1% (by decision of local authorities).
simplified tax system (option - “Income minus expenses”). Under this regime, taxes are levied on the difference that is obtained between the profit received and the proven costs of the enterprise (must have justification). If the minimum tax is paid, the profit received is used as the tax base. Based on the Russian Federation as a whole, the rate is 15%, but in regions the percentage can be reduced to 5%. The lower payout threshold is 1%.
UTII- an option for paying taxes (imputation), when payments are not related to the organization’s actual profit. Here the tax rate in the Russian Federation is 15%, but in the regions it is often reduced to 7.5%.
Unified agricultural tax- a type of taxation when the difference between the profit received by the LLC and proven costs is taxed. 6% is taken from the resulting number.

From the above, it is clear what taxes LLCs must pay for each of the taxation options. At the same time, it will not be possible to clearly answer the question of what expenses the company expects. This aspect is influenced by many factors - the type of activity, the chosen form of making payments to the Federal Tax Service, the region, the amount of profit, and so on. Total costs may vary several times.

Our lawyers know The answer to your question

or by phone:

Is it possible to work without VAT?

Now let’s consider whether it is possible to open a company without VAT or switch to the form of tax payment of interest. As noted earlier, much depends on the chosen tax option. Let us consider them in more detail in relation to the tax levied on added value.

Combination of OSN and UTII

If an enterprise combines two modes, namely general and “imputed”, the profit received by the LLC under UTII is not subject to VAT. To avoid paying tax, it is necessary to create separate VAT records for the general and imputed forms. To solve this problem, two conditions must be met:

If, to work under “imputation”, a company or entrepreneur (IP) purchases goods or uses services with VAT, the amount of this tax must be taken into account in the price of goods (services). This applies to fixed assets, as well as assets of an intangible nature.
If, to work on the general form (OSN), an LLC or individual entrepreneur uses services or purchases goods including VAT, its amount is taken for deduction (the rules are prescribed in the Tax Code of the Russian Federation).

There are also expenses for which it is not possible to separately account for VAT. As a result, you will have to separate this tax for the “imputation” and the general form. This cost category includes office space rental and utility payments. As a result, the amount of VAT is distributed taking into account how these goods are used in each of the areas of work. We must not forget about the need to submit a VAT return before the 25th (the report is submitted once a quarter).

If a company operates on a simplified basis, it is not required to pay some taxes (including VAT). By the way, individual entrepreneurs also do not pay property tax and personal income tax. But in practice, there are options when “private owners” (individual entrepreneurs) and LLCs are forced to pay VAT. This category includes:

Import of goods to the Russian Federation.
Issuance by the tax payer of an invoice where VAT is indicated.
Conducting transactions under a joint work agreement, as well as a trust management agreement (if the property is located in the Russian Federation).

In these cases, preparation of returns including VAT and payment of this tax is mandatory.

If a partner (supplier) when working on the simplified tax system enters VAT in the invoice, the LLC on the simplified tax system that receives the goods has the right to pay it. This is due to the fact that VAT is a tax paid by the supplier, not the company. The recipient of the simplified goods does not have to pay VAT. Moreover, the goods purchased in this case are sold without tax.

According to the law, LLCs and individual entrepreneurs on the simplified market do not have to pay VAT. If the buyer asks to issue an invoice taking into account this tax, this is not prohibited by law, but then he will have to pay the amount including VAT, and also submit a declaration to the Federal Tax Service (at least in electronic form).

Tax agents

In the case of tax agents, the latter must pay VAT and submit reports (declarations). In addition, companies can also fulfill similar obligations. A tax agent is forced to pay VAT if he purchased goods or used the service of a foreign enterprise that is not registered with the Federal Tax Service of the Russian Federation, and also sells goods that are transferred by a foreign company. In addition, you will have to pay VAT if you purchase property from a bankrupt enterprise, or when renting or purchasing state property.

Beginning entrepreneurs often do not know which tax regime to prefer and how to organize their activities and accounting. Working with VAT traditionally raises many questions. This tax is recognized by experts as one of the most difficult to understand and calculate. However, reading the legislation and analyzing important nuances will help you avoid mistakes and problems with fiscal authorities.

Value added tax is a powerful tool for regulating the national economy and the most important item of budget revenue. Its key feature for payers is the possibility of reimbursement. In fact, only a percentage of the amount added as a result of the transaction to the original cost of the goods is paid to the budget.

These are legal entities and individual entrepreneurs operating within the borders of Russia. A wide range of transactions are subject to tax:

sale of goods, provision of services;
work in the field of installation and construction;
realization of property rights;
free transfer of products for own needs, etc.

Companies and individual entrepreneurs that have switched to special taxation systems: the patent system, UTII or simplified tax system are exempt from transferring and calculating tax. Small enterprises whose total three-month revenue does not exceed 2,000,000 rubles are entitled to receive VAT exemption.

Pros and cons of working with VAT

There is an opinion that the activities of a VAT payer company are less profitable than the activities of a legal entity or individual entrepreneur exempt from this tax. This position is superficial: transferring taxes to the budget gives the company certain advantages. These include ease of finding buyers.

When a company operating on OSNO cooperates with a simplified company, it cannot deduct input VAT: the supplier does not allocate it and does not issue invoices. The buyer’s tax obligations are not reduced, and in fact, “simplified” goods turn out to be more expensive than competitors’ products under the general regime. To become attractive to potential clients, an organization exempt from VAT has to reduce prices, which is not possible in all cases.

The disadvantage of working with VAT is the complex calculation procedure, the need for accounting and reporting. Often, for these purposes, a small company has to hire an accountant, and a large company has to hire a whole department of specialists.

To understand how the amount of tax to be transferred to the budget is calculated, let’s look at a simple example. Company A is engaged in the retail sale of building materials. She purchased a consignment of goods from her counterparty, wholesaler “B”, at a cost of 200,000 rubles. The amount of VAT is 36,000, the total amount of payment for the transaction is 236,000 rubles.

Having displayed the materials in the store, “A” quickly found retail buyers to whom she sold the products at a 50% markup. The price included VAT equal to:

236,000 * 1.5 * 0.18 = 63,720 rubles.

To determine the amount of budgetary obligations, firm A should subtract input VAT from output VAT. We get:

63 720 – 36 000 = 27 720.

This is a tax on the value that the company added to the original value through a purchase and sale transaction.

The calculation of VAT is the responsibility of the taxpayer companies themselves. Postings and calculations are made on the basis of primary documentation - invoices. All documents issued and received from customers are registered in the Sales Book and Purchase Book, respectively. The difference between the book data forms the budget obligation.

It is important that accounting entries and calculations are completely correct. If the tax inspectorate discovers errors during the audit, it has the right to apply penalties to the company.

If you find an error, please highlight a piece of text and click Ctrl+Enter.

When working with contracts, you can come across the notes “excluding VAT” and “VAT not subject to” when determining the contract price, shipping documents, and invoices. In this article we will tell you the difference between “Without VAT” and “Not subject to VAT” and what wording to indicate in the documents.

What does “excluding VAT” mean?

Indication in the documents “excluding VAT” means that the sales price does not include tax. Organizations that make such a note do not pay tax or are temporarily exempt from paying it.

Companies operating under special regimes - simplified tax system, unified agricultural tax, ENDV, PSN and companies combining several regimes () are exempt from paying VAT. Special regimes are convenient because they replace a number of taxes, including VAT.

Companies and individual entrepreneurs on the OSN can also sell goods and provide services without tax if they comply with the quarterly revenue limit and do not produce excisable goods. Revenue received for 3 consecutive months should not exceed 2 million rubles. By exceeding the limit, the taxpayer will lose the opportunity not to pay tax.

What documents to collect to obtain VAT exemption

Organizations and entrepreneurs seeking to avoid paying tax, under the terms of Art. 145 of the Tax Code of the Russian Federation submit tax documents:

notification of the exercise of the right to tax exemption;
extract from the balance sheet and data from the financial results report;
extract from the accounting book (for individual entrepreneurs);
extract from the sales book.

Prepare and send a set of documents to the tax office by the 20th day of the month in which the benefit began to be applied. You can use the benefit received for at least a year, unless the conditions are violated.

Working without VAT has many advantages: there is no need to calculate and pay tax, prepare a declaration and fill out a purchase book. But at the same time, working without tax may be unprofitable, because when concluding an agreement with an organization that does not pay VAT, the buyer will not be able to receive a deduction, so many counterparties choose companies that pay tax in the general manner.

What does “VAT exempt” mean?

An extensive list of goods, works, services and transactions exempt from VAT is given in Article 149 of the Tax Code of the Russian Federation. Here are the operations exempt from tax (a number of operations from the list require a license; if an organization does not have one, it cannot apply tax exemption):

sale or transfer for one’s own needs of religious literature and paraphernalia;
banking operations performed by banks (except for collection);
sale of folk arts and crafts;
services of insurers and non-state pension funds;
lotteries held by decision of government authorities;
sale of industrial products containing precious metals, scrap and waste;
sales of rough diamonds to processing enterprises;
transfer of goods, property rights, provision of services within the framework of charity;
sale of tickets and subscriptions by physical education and sports organizations;
loan and repo transactions;
other operations listed in clause 3 of Art. 149 of the Tax Code of the Russian Federation.

Here are the goods, works and services exempt from tax:

medical, sanitary, cosmetic, veterinary services and goods;
care services for the disabled, elderly and sick;
child care and leisure services;
funeral goods and services;
food products produced by educational and medical institutions;
transportation of the population;
sale of postage stamps, envelopes, postcards and other postal products;
warranty service of equipment;
restoration and restoration of historical buildings, monuments and cultural objects;
others listed in paragraph 2 of Art. 149 of the Tax Code of the Russian Federation.

Only companies that work in their own interests and not in the interests of others under agency agreements, commission or commission agreements have a chance to be exempt from VAT. Another important condition is to separate and separately account for taxable and non-taxable transactions.

Invoice without VAT, when and who applies

An important difference between firms exempt from tax under Art. 145 of the Tax Code of the Russian Federation, from special regime officers - the need to issue invoices marked “without VAT”. They need to prepare invoices when selling services, goods and work, as well as when receiving advance payments from customers, and register the invoice in the sales ledger.

In addition, such invoices can be prepared by organizations and individual entrepreneurs in special regimes or carrying out operations and selling goods exempt from taxation under Art. 149 of the Tax Code of the Russian Federation. They have no obligation to issue invoices, but they have the right to do so, for example, at the request of the buyer. The seller, at his own discretion, agrees or refuses such a request, but he will not receive any obligations and will not lose anything. To do this, fill out the document correctly. Previously, invoices indicated “VAT exempt”, but now fields 7 and 8 are marked “Without VAT”. They are not required to register the invoice in the sales book, but if they wish to register the document, the right is retained.

The counterparty who received an invoice without VAT does not enter the document into the purchase book, since there is no tax in it. If there is no tax, there is nothing to deduct, and you will not be able to use it even if you have completed documents.

Indication of VAT in the contract

When drawing up an agreement, indicate the subject of the agreement, the transaction price, the payment procedure and VAT. Indicating the contract price without VAT may lead to an increase in the price by the amount of tax. If you are not required to pay tax, indicate “excluding VAT” or “not subject to VAT” and the basis for tax exemption.

When a seller applies a special regime and is exempt from VAT, he indicates in the contract with the buyer a price marked “VAT exempt”; a similar note is left by companies performing transactions exempt from tax under Art. 149 of the Tax Code of the Russian Federation. The contract must make reference to the fact that the selling organization is exempt from paying tax. As a rule, there are no conflict situations in this case, since there is no need to calculate VAT, and it is not necessary to allocate VAT in the contract price.

Taxpayers who do not pay tax based on Art. 145 of the Tax Code of the Russian Federation, when selling goods, invoices must be drawn up without allocating VAT. At the same time, “Without VAT” is written on the documents, and a similar note is put in the contract. The seller organization must make a reference in the contract to the basis on which the benefits were received and confirm the right to them with relevant documents.

The cloud service Kontur.Accounting is suitable for companies using special regimes that are exempt from VAT. Keep records together with your colleagues, calculate salaries, generate reports and send them via the Internet. Consultants are ready to help in difficult situations.

Individual entrepreneurs have nothing against working with legal entities, but LLCs often resist such cooperation. What is the reason, what risks do legal entities see for themselves in relations with individual entrepreneurs? Why might such cooperation be unprofitable for an LLC? Are there ways to level out the negative aspects so that all objections are removed? What can an individual entrepreneur do for this?

Most often, LLCs raise two blocks of objections to working with individual entrepreneurs:

Let's consider the “stumbling blocks” between individual entrepreneurs and LLCs and possible ways to overcome them.

“IP is not serious”

The organizational and legal form of a legal entity is considered more complex compared to individual entrepreneurship. Beginning businessmen usually register as individual entrepreneurs because they are afraid of a more responsible attitude to accounting reporting, difficulties in managing cash, and some aspects of registration. For IP It is not necessary to have your own accountant, cash register, or even a bank account. Not all individual entrepreneurs get a seal for their company, because the law does not oblige it to be used. When making payments, they do not always have to issue an invoice to the counterparty. No one can prevent an individual entrepreneur from stopping his activities at any time. And most importantly, individual entrepreneurs most often use special tax regimes.

In its turn, OOO considers his degree of responsibility higher. A legal entity has its own accounting department. The founders of an LLC cannot calmly dispose of the proceeds, but only cash them out through legal means and receive dividends. In the vast majority of cases, LLCs are VAT payers. Therefore, legal entities prefer to cooperate with companies of “equal” status.

How to overcome objections from individual entrepreneurs and LLCs

If it’s just a matter of psychological distrust, then overcoming it is not so difficult. The most important concern of counterparties, from which mistrust in individual entrepreneurs needs to be removed, is the financial responsibility of individuals.

“What if the individual entrepreneur closes without fulfilling its obligations?”

On the one hand, it is true that it is much easier for an individual entrepreneur to terminate its activities than an LLC, and the liability to the tax authorities is less. But, on the other hand, an individual entrepreneur is a specific person who has a passport and registration, so he will not be able to disappear without a trace, even after closing the enterprise. In addition, the individual entrepreneur is financially responsible with all of his property, and not with the authorized capital, like an LLC. Usually this is expressed financially in a larger amount than the minimum for a legal entity of 10 thousand rubles. Therefore, in the event of unfulfilled financial obligations, much larger funds can be recovered from an individual entrepreneur than from an LLC, and it is much easier to sue an individual.

“It’s not profitable for us”

The language of numbers is much more specific and unforgiving, and the economic factor, unlike the psychological one, can become a more serious barrier to cooperation between individual entrepreneurs and LLCs. But even it is not absolutely insurmountable, which we will analyze below.

IP in the vast majority of cases, they are subject to special tax regimes that provide for different approaches to accounting reporting, and, most importantly, to the payment of value added tax. Entrepreneurs - individuals most often choose the simplified tax system, as this tax system has the least tax burden and simplifies accounting reporting. But VAT cannot be reimbursed under this tax system. Therefore, having paid for a product or service that contains VAT, the payer of the simplified tax system will have to reimburse the amount of this tax to the budget by filing the appropriate declaration. “Misappropriation” of the VAT amount is punishable by fines and penalties for late payment of tax.

OOO in turn, they mainly work under the general system (OSNO), where payment of VAT is mandatory. By purchasing goods with VAT from a supplier, the LLC will reimburse this 18% in the future through tax deductions. If they purchased a product or service from a VAT non-payer, they will not have the right to a tax deduction, and they will have to pay VAT on the entire turnover. If a product is purchased for subsequent sale, then its purchase without VAT is a direct loss. Therefore, they prefer not to break the “chain” of suppliers and buyers, each of whom is a value added tax payer.

Options for individual entrepreneurs

If an individual entrepreneur on a simplified tax system wants to cooperate with an LLC on OSNO, then it has several schemes under which a legal entity can agree to such a relationship.

Cooperation in the “VAT-free” area. Not every type of transaction requires the allocation of VAT. For example, rental of small premises, repairs, decoration, services of auditors, couriers, outsourcing, purchase of office supplies and other services are not subject to VAT. Therefore, an LLC may well enter into contracts with an individual entrepreneur for the provision of such services, without taking into account VAT.
Exclusive supplier. If an individual entrepreneur has no competitors in his niche in the local market, then the LLC cannot dictate terms to him regarding the taxation system. Sometimes it is more profitable for legal entities to receive services or goods from a local supplier, even without VAT, especially if they are small in volume, accounting for only a small percentage of the LLC’s turnover. This will not affect profits.
Issuing an invoice with VAT. A “simplified” entrepreneur can issue an invoice to an LLC, including VAT. Of course, you need to file a tax return for this tax. It would seem that there are no problems. However, LLCs have problems when trying to return such VAT from the budget. Most often, you will have to go to court to do this, although, as practice shows, court decisions are made in favor of legal entities.
Price reduction by the amount of VAT or more. To ensure that the LLC does not overpay the 18% VAT that is included in the price of the goods, and then expects their return within a year, an individual entrepreneur using the “simplified” can initially reduce the price. If a product is purchased by a legal entity not for resale, then it is even more profitable for it to initially pay less and not have to worry about returning it from the budget. Of course, this scheme is not suitable for subsequent sales, since in this case VAT will have to be paid, since it will not be possible to deduct it from the purchase amount. For such a scheme, individual entrepreneurs will have to reduce prices by more than 18%, because with the usual markup it is easier for a legal entity to interact with VAT payers according to proven schemes. But the savings may make them change their minds.
Transition to OSNO, opening an LLC. If transactions with LLCs can be planned on a large scale and on an ongoing basis, it makes sense for individual entrepreneurs to think about changing the tax regime. Some entrepreneurs establish an LLC, without ceasing the activities of an individual entrepreneur, using each legal form for the most profitable transactions.

Of course, it is easier for enterprises to cooperate with “their own kind,” that is, those that are on the same tax regime, so that VAT does not stand between them as an economic obstacle.

However, discrimination on the basis of taxation must still be eradicated from the modern market.

A small business forced to adapt to the requirements of an LLC by switching to OSNO incurs additional accounting and tax expenses, and due to inexperience, may find itself at risk of fines and penalties.

In turn, it is unlikely that legal entities will be able to develop successfully by completely refusing to cooperate with small entrepreneurs.

Therefore, a reasonable balance of interests is necessary, which can be achieved through negotiations and mutual compromises.

But then you’ll have to keep TWO accounting departments, one of which is complicated (for me) And, what’s even more annoying, pay the same fees twice! For myself, I decided to close the individual entrepreneur, leaving the LLC

"5. Transition to OSNO, opening an LLC. If transactions with LLCs can be planned on a large scale and on an ongoing basis, it makes sense for individual entrepreneurs to think about changing the tax regime. Some entrepreneurs establish an LLC, without ceasing the activities of the individual entrepreneur, using each legal form for the most profitable transactions.” - Why should an individual entrepreneur open an LLC? Individual entrepreneurs also work for OSNO.

Or am I mistaken about something?

The bottom line is that an individual entrepreneur can work either on OSNO or on the simplified tax system; both modes cannot be combined. If there is a need to work with VAT, but there is no desire to lose the simplified tax system, then the solution here is to open an LLC on OSNO. The simplified tax system will remain on the individual entrepreneur.

I don’t understand why an LLC with VAT is not profitable to work with an individual entrepreneur/LLC without VAT

After all, VAT is paid directly, or through the supplier of goods/services.

USN 500, 30 rub. Their price is based on cost. 400 and extra charges 100, 30.

OSN 500, 30 rub. They have VAT and the price is based on 400 seestas. 85 nat and 15, 30 (18% of 85).

500.30 (purchase price) + 199.70 - added value (margin) + 35.95 VAT (18% of added value). The final buyer, in the end, purchased 2 pens from us for 735.05 rubles each.

1. ENTERPRISE (P) with a general taxation system (GTS) purchased timber from an individual entrepreneur with a simplified taxation system (STS) at a price = 1000 rubles. (Price is final without VAT).

2. Having made boards from it, P., increasing the price by 1000 rubles, formed the price of his goods without VAT = 2000 rubles. But since it pays VAT 18%, the price including VAT = 2440 rubles. (VAT = 440 rubles).

3. LLC purchased these boards from P. at a price including VAT of 2440 rubles. (price excluding VAT 2000 rubles), manufactured carpentry, increasing the price excluding VAT by 1000 rubles, received the price of his goods 3000 rubles excluding VAT. But since he is obliged to pay VAT 18% of the proceeds, the price including VAT will be 3660 rubles.

1. An individual entrepreneur with a simplified taxation system (STS) purchased timber from an enterprise also with a STS at a price of 1000 rubles. (Price is final without VAT).

2. Having made boards from it, the individual entrepreneur increased the price by 1000 rubles, and received the price of his goods 2000 rubles. (Price is final without VAT).

3. The LLC purchased these boards from an individual entrepreneur at a price of 2000 rubles, manufactured joinery, increasing the price without VAT by 1000 rubles, and received the price of its goods for 3000 rubles. without VAT.

But since he is obliged to pay VAT 18% of the proceeds, the price including VAT will be 3660 (VAT 660 rubles)

The LLC pays VAT = 660 rubles. Revenue from the LLC after paying VAT = 3000 rubles. Gross value added (GVA) = 1000 rub. (cost + profit).

In the 1st and 2nd cases there is no difference.

1. An individual entrepreneur with a simplified taxation system (STS) purchased timber from an enterprise with a general taxation system (GTS), i.e. pays VAT at a price including VAT of 1220 (price without VAT 1000 rubles + VAT 220 rubles). The price is higher because the company pays 18% VAT.

2. Having made boards from it, the individual entrepreneur increased the price by 1000 rubles, and received the price of his goods 2220 rubles. (1220 rub. +1000 rub.) (Final price excluding VAT).

3. The LLC purchased these boards from an individual entrepreneur at a price of 2220 rubles, manufactured joinery, increasing the price excluding VAT by 1000 rubles, and received the price of its goods for 3220 rubles. without VAT. But since he is obliged to pay VAT 18% of the proceeds, the price including VAT will be 3930 rubles.

The LLC pays VAT 710 rubles. Revenue from the LLC after paying VAT = 3220 rubles. Gross value added (GVA) = 1000 rub. (cost + profit).

In addition, in the 2nd case, the LLC is forced to increase the selling price including VAT by this amount, which makes the product less competitive in a market economy.

The largest breasts in the world belong to Chinese woman Ting Hiafen from the village of Chang. Each of her breasts weighs 10 kilograms and hangs 48 cm. Fame came to her at the age of 14. According to Ting Hiafen, due to such huge breasts, she experiences a lot of discomfort.

How can an individual entrepreneur work with VAT?

Bookmarked: 0

At the beginning of entrepreneurial activity, beginners are interested in whether an individual entrepreneur can work with VAT? Many entities conduct activities under the OSN. At the same time, they do not know how to correctly purchase goods from a legal entity, whether it is necessary to bill and pay VAT. Relations between potential partners may develop differently depending on whether the individual entrepreneur operates with or without VAT. When considering the issue of an entrepreneur’s work, you can find legal ways not to pay this type of tax.

Tax payment accounting scheme

After registering as an individual entrepreneur, a business entity automatically becomes a taxpayer. If a special regime is selected, for example, the simplified tax system, then VAT will be removed from the businessman until he switches to OSNO. When an individual entrepreneur works with VAT, he includes it during the production and sale of products, when performing work.

The Tax Code defines the circle of entrepreneurs who pay this tax. An individual entrepreneur can work with VAT, especially if he plans to cooperate with enterprises. This tax is also paid when importing goods through the territory of the Russian Federation, regardless of the taxation system used.

Can an individual entrepreneur operate without VAT? There are ways of doing business in which economic activities can be carried out without paying value added tax.

How do tax rates differ for individual entrepreneurs?

The tax is considered in three variants. The declaration must be submitted by the 20th of each month. You need to pay it every month. If quarterly revenue exceeds RUB 1 million, monthly reports must be submitted. How can I find out what rate is applied to different types of activities?

0% rate is applied for exported goods;
the list of 10% includes (food products, children's products, books and printed materials, medical products and medicines);
in all other cases the rate of 18% applies.

Why LLCs don’t want to cooperate with individual entrepreneurs

Sometimes entrepreneurs consciously work for the OSN. Therefore, it is important to know how to work as an individual entrepreneur with an LLC with VAT. There is interaction between counterparties working with VAT. When opening a business, they choose OSN, and then switch to working with VAT. This is convenient if you need to issue a tax-inclusive refund when the supplier issues an invoice. The tax burden will become greater if an individual entrepreneur without a special tax system does this on his own.

There are situations in which tax is reduced through deductions. This category includes:

organization working with VAT;
purchasing goods or services;
after the purchase they were placed in the parish;
the contract was concluded and executed correctly.

If all points are met, the tax can be reduced. According to the law, the reduction is made after paying the tax to the budget.

How does individual entrepreneur work without VAT?

Businessmen are interested in how to operate an LLC with an individual entrepreneur without VAT? For example, in Belarus LLCs operate only with VAT. They strive to enter into an agreement with a company of equal status. Distrust in individual entrepreneurs arises due to fragile financial responsibility.

The LLC operates on OSN, so paying taxes is their responsibility. By purchasing goods from a supplier, the business owner returns 18% through tax deductions. Cooperation with individual entrepreneurs without VAT involves paying tax on all turnover. Consequently, the purchase of goods for sale will become unprofitable. Therefore, cooperation occurs along a chain in which each organization pays value added tax.

Whether an entrepreneur works with or without VAT, you can cooperate with an LLC on a general tax basis by choosing one of the possible schemes. When concluding an agreement with an individual entrepreneur with or without VAT, how do you know which types of activities should be focused on for positive cooperation? You can come up with a diagram. For example:

Scope of work without tax. There are transactions that can be concluded without the allocation of tax. This includes (repairs, courier services, subcontracting, renting small premises, purchasing office supplies).
Exclusivity of the goods or services offered. If the individual entrepreneur has no competitors for the goods offered, then buying a small volume is profitable and without loss of profit.
Issuing an invoice with VAT. Conducting a business under simplified taxation involves including the added tax in the invoice issued to the LLC. The only negative is that the other party may have difficulties in returning taxes from the budget. Often this is done only through the courts.
The businessman will reduce the price by exactly the amount equal to the value added tax. This option is suitable for purchasing goods not for sale, since this will be unprofitable for a legal entity. The price will have to be reduced by more than 18%, which the LLC can return within a year.
Go to OSN and open an LLC. When making ongoing large transactions, many individual entrepreneurs do this, without ceasing the activities of the initially opened business. The legal form can be used to make profitable transactions.

How to work as an individual entrepreneur with VAT on OSN

Once it becomes clear whether an individual entrepreneur can work with VAT, it is worth considering the procedure and conditions for doing business on the SST. This system is relevant for wholesale sales. An invoice with separately allocated tax is issued to the client. At the end of the reporting quarter, all data is entered into the sales and purchases book. There are pros and cons here. Among the advantages are long-term cooperation with large companies, which brings good profits. There are also disadvantages:

when keeping records, it is necessary to use personal income tax for payment, calculating it using the cash method;
Accounting is required to be kept and stored for 5 years;
submit a tax return once a quarter;
a businessman is subject to a large tax burden.

Added tax for individual entrepreneurs under the simplified tax system

Entrepreneurs who do not know which taxation system is optimal for conducting business choose a simplified option in order to avoid paying VAT. Here it is possible to work under a commission agreement and issue invoices to the client. It is important not to delay filing your return and paying taxes. There is no book of sales and purchases. With the simplified tax system without VAT, you need to pay at the same time:

from 5 to 15%, if there are income and expenses;
6% of profit if there are no expenses.

If the system is simplified, can an individual entrepreneur work with VAT? The answer is negative. An entrepreneur can choose a tax calculation scheme. The first option is chosen if the business involves large expenses. If they are not there, you should go with the second option.

How to work as an entrepreneur on UTII

A certain type of activity involves working on a specific taxation system. In wholesale trade I work for OSN. You can select a special mode. But an individual entrepreneur on UTII cannot work with VAT with all types of activities. However, with such a tax system it is possible to reduce insurance premiums. With UTII, a fixed tax is paid. The payment amount is affected by:

room size;
number of workers or vehicles.

With UTII the tax is fixed. With a single retail tax, this option is quite profitable. If you receive a high profit, the tax amount will be small.

Are there ways to avoid paying VAT?

It is believed that there are no legal grounds for circumventing tax payment. However, entrepreneurs know legal ways to get rid of it. In the first case, you can reduce the amount of revenue on the basis of Article 145 of the Tax Code of the Russian Federation. Another way is to increase spending. For this purpose, the company purchases equipment and carries out repair work. You can use leasing payments. You can be exempt from paying tax on the first day of any month. Documents must be submitted to the tax office. You will need:

data from the sales book;
information on income and expenses from KUDiR;
a copy of the invoice journal.

If the appeal is satisfied, the enterprise can remain in this regime for 1 year. Then the documents need to be collected again. When choosing a taxation system during registration, it is important to remember what reports the entrepreneur will have to submit in accordance with the deadlines.

Beneficial partnership: how to work as an individual entrepreneur with an LLC

How to work as an individual entrepreneur with an LLC in order to comply with all the necessary rules? Entrepreneurs cannot always become partners, because they have different organizational and legal forms. Disagreements and misunderstandings often arise between them. Especially when calculating tax amounts.

Cooperation with individual entrepreneurs

The work of an LLC with an individual entrepreneur does not always work out successfully, since these forms of business often cannot find a common language in order to conduct good and profitable cooperation. Negative attitudes usually come from the limited liability company.

The fact is that they find problematic aspects in the systems for calculating value added tax, especially in cases where an individual entrepreneur uses a simplified tax regime. Therefore, they have difficulties during settlement transactions when the entrepreneur’s tax is determined.

However, these arguments are irrelevant at the present stage, since certain changes have been made at the legislative level. They make it possible, from a regulatory point of view, to carry out cooperation in a safe and fairly convenient way. We must pay tribute to individual entrepreneurs who show themselves on the positive side when interacting with other organizational and legal forms. They usually act as reliable business entities. An important role is played by their obligation to answer for all debts with all property objects in their ownership. In this case, it is not even necessary that the property be involved in the process of the ongoing economic activity.

Effective partnership

The work of an LLC with an individual entrepreneur can be quite effective and bring good and profitable results in the form of impressive amounts of profit. This result can be ensured through a special document, which is concluded between the specified organizational and legal forms. This is a special civil law agreement that needs to be signed by two organizations. Both parties must have licenses that allow them to engage in one activity or another.

An individual entrepreneur does not have to give up the simplified taxation system to cooperate with an LLC. The possibility of reducing the base for calculating tax amounts is determined by the type of taxation system of a limited liability company. If the LLC applies the simplified tax system, then transactions with individual entrepreneurs must be justified and confirmed. For this purpose, a certain list of documentation is prepared. Therefore, it is more profitable for an LLC to work with a general regime.

How to operate an LLC with an individual entrepreneur without VAT? The specified tax amounts will be taken into account if the business partner also makes VAT payments. In practice, entrepreneurs who are involved in activities subject to value added tax are quite rare. Hence the conclusion: an enterprise that purchases goods from an individual entrepreneur or interacts under various contracts will not be able to receive deductions.

Tax deductions are returned only to those companies to which the supplier issues an invoice. The document highlights the amount of value added tax. The individual entrepreneur will have to pay the same amount of funds himself. When a transaction is concluded involving third parties, the tax payment is made by an intermediary and a committee. Tax is deducted from the total amount of funds paid as compensation.

About tax payments

The payment of funds, which is provided for in the text of the agreement concluded with an individual entrepreneur, does not require personal income tax, and there is no need to pay single taxes. These rules apply when the service is included in the unified state register of individual entrepreneurs and is reflected in the document on the implementation of state registration measures.

If a lease agreement is signed with a person engaged in business on an individual basis (the leased object is, for example, a computer), then the enterprise has the right to withhold the tax amount from the individual entrepreneur at a rate of 13%.

This is practiced when the entrepreneur’s certificate of activity contains information about the provision of transport services or other types of activities not related to rental. It is necessary to notify the tax office of the levy and provide it with a personal income tax return. If the described actions are not carried out, then fines will be applied to the company.

Based on statistical information and decisions of judicial authorities, we come to the conclusion that there are exceptions that allow an individual entrepreneur to conduct commercial activities that are not presented in the document on state registration manipulations, for example, when the certificate does not reflect what services the businessman provides. The absence of such information does not at all provide grounds for declaring a document invalid. This gives rise to the right of choice for the company when required by tax authorities to make tax payments. You don’t have to pay tax, but then you’ll have to go to court.

At the legislative level, it is determined that an entrepreneur is allowed to change information and enter new information into the register. The Tax Code contains no instructions regarding the safety of copies of the individual entrepreneur’s registration form on the part of enterprises. However, to prevent troubles for a limited liability company, it is safer to ensure that the businessman makes changes to the register relating to his activities.

Before an individual entrepreneur begins cooperation with an LLC, business entities must weigh all the positive and negative aspects. When making a final decision, it is necessary to focus on the final result that is planned to be obtained in the interaction process. It is recommended to pay special attention to the degree of profitability of the proposed transaction.

Copying site materials is possible without prior approval if you install an active indexed link to our site.

How to work as an individual entrepreneur with VAT

Most often, individual entrepreneurs choose to work with various variations of the simplified taxation system (STS, UTII, Unified Agricultural Tax). However, most large companies work with VAT and it is beneficial for them to deal with the same taxpayers, since they will be able to take into account the amount of tax received when calculating liabilities. Therefore, even if an individual entrepreneur offers products at reduced prices without VAT, it is not always more profitable for the enterprise to buy from him. But for individual entrepreneurs, working with payers of this tax can mean concluding large and profitable contracts. How to proceed? Obviously, if an entrepreneur wants to work with large enterprises, he will have to master VAT.

Individual entrepreneur with VAT on the general taxation system

When registering with the Federal Tax Service, an entrepreneur who has not submitted an application for one of the simplified systems automatically becomes a tax payer on a general basis. One of these taxes is VAT. At the same time, he can apply for an exemption from paying it subject to a number of conditions specified in the Tax Code of the Russian Federation.

How to work as an individual entrepreneur with VAT on OSN?

The seller issues an invoice to the entrepreneur, where VAT is separately allocated; the individual entrepreneur, in turn, when selling products, issues the same invoices to his clients. At the end of the reporting quarter, based on the entries from the sales book and the purchase book, he displays the difference between input and output taxes, obtaining the amount that must be paid to the budget.

pros

Among the advantages of working for OSN for an entrepreneur, one can only name the opportunity to deal with large companies, which, as a rule, is associated with long-term contracts for large sums.

Minuses

But there are several disadvantages compared to lightweight systems:

the need to keep records using two methods (personal income tax payable is calculated using the cash method, and VAT on shipments);
the need to maintain more complex and voluminous accounting and store all primary documents for at least 5 years;
the need to file tax returns once a quarter;

Most often, VAT is chosen by individual entrepreneurs engaged in trade, while the entrepreneur’s turnover is usually significant with a large number of primary documents.

Important! When switching to OSN with VAT, an entrepreneur should hire an accountant, since the accounting and tax accounting system here is quite complex and voluminous. And if errors or inaccuracies are made that lead to underpayment of tax, he will have to compensate the damage to the state at the expense of all his property.

In addition to directly paying personal income tax in the amount of 13% and VAT 18%, the entrepreneur, as under the simplified tax system, will have to pay taxes and contributions from the wages of his employees, as well as contributions to social insurance funds for himself.

VAT for individual entrepreneurs under the simplified tax system

According to the Tax Code, businessmen who have chosen a simplified tax system are not VAT payers. However, for individual cases an exception is made. For example, individual entrepreneurs working under commission agreements, even if they have chosen the simplified tax system, can issue VAT invoices to their clients. In this case, the entrepreneur will have to prepare and submit a VAT return within the appropriate time frame (based on the results of the calendar quarter) and pay the tax. There is no need to keep books of sales and purchases.

Important! It is entirely legal for individual entrepreneurs with the simplified tax system who are intermediaries, agents or commission agents to issue VAT invoices.

Mistakes with consequences

It is curious that in practice there are quite often cases when individual entrepreneurs using the simplified tax system issue VAT invoices to counterparties in pursuit of higher income. Most often this happens due to a lack of knowledge about the features of VAT. If the individual entrepreneur has already allocated VAT in the expense documents and accepted payment for the products, then many experts recommend filing the appropriate declaration at the end of the reporting quarter and transferring the tax to the state. However, it is worth considering that this will be a violation of the law, which provides for the responsibility of all parties to the transaction.
If an entrepreneur transfers the tax and submits a declaration, he will save himself from paying fines and other payments that may be assessed upon discovery of a violation. However, its counterparty may nevertheless lose the right to reduce the tax base with a corresponding additional assessment and the need to pay an administrative fine. Inspectors of the Federal Tax Service, when identifying this violation, will most likely insist on exactly this scenario.
Such situations are dealt with in court, which may take the side of both representatives of the Federal Tax Service and the taxpayer based on specific circumstances. From all this, the conclusion suggests itself that enterprises working with VAT should not accept invoices from individual entrepreneurs on the simplified tax system, issued with the allocation of VAT, except for the cases described above.

Explain, what will be the violation if an individual entrepreneur issued an invoice using the simplified tax system with VAT on goods, received payment, then submitted the corresponding declaration to the Federal Tax Service and transferred the tax to the state? I don't understand!

In most cases, entrepreneurs prefer not to work with value added tax (). This preference in the business environment is associated with the desire to optimize the tax burden and develop in the chosen area of activity.

The business tactics are completely justified. At the same time, the legislator introduces some restrictions, which mostly relate to the financial performance of the enterprise. As soon as an organization reaches sufficient turnover, it simply becomes unprofitable for it to refuse to charge value added tax.

Organizations that are not VAT payers meet two conditions:

The legal field in which organizations that are not VAT payers are located ceases to apply for operations related to foreign economic activity or the sale of excisable goods.

There is a direct relationship between the obligation to pay VAT and the type of economic activity chosen by the organization. This is something to keep in mind when applying for a new business. Entrepreneurs often try to indicate more economic activity codes. This must be done thoughtfully so as not to fall under a different tax regime.

Based on the results of the revision of reports on financial indicators, organizations that maintain accounting in accordance with the OSN procedure may decide to withdraw from the legal field of taxation of VAT transactions.

To do this, the management of the enterprise initiates the following actions: a notification is drawn up to be sent to the tax office, copies of the balance sheet, an extract from the invoice register (sales book), and an extract from the book of expenses and income are attached to the application. A package of documents for using the right not to apply VAT should be sent to the inspectorate no later than 20 days after the end of the month in which the decision to switch to a preferential regime was made. In practice, an organization may not expect a counter-notification from the tax department, since the decision-making is of a notification nature.

VAT optimizes taxation, but there are still disadvantages

The main disadvantage that VAT has is the workload on the enterprise. On the one hand, an entrepreneur perceives an accountant as an operator of information systems, on the other, an organization that is obliged to pay federal tax is obliged to keep records in full. What does it mean:

The company must check its counterparties and strictly monitor the timely submission of primary documents and the correctness of their execution. Along with the tax burden, the enterprise must comply with the requirements of reporting and financial discipline (timely payment of taxes and).
For organizations that use a simplified algorithm such as “income without expenses”, the right to use input VAT to reduce the tax base is retained. If enterprises pay a tax of 6% on income, they do not have this right, even if they accepted an invoice that includes VAT.

An enterprise that operates under a general taxation regime is always exposed to risks. In most cases, penalties can be avoided thanks to the work of competent accountants. But we should not forget that federal budget revenues are especially diligent. In the context of frequently changing legislation, it is necessary to be especially vigilant.

VAT accounting concerns such transactions as the sale of goods and property rights, the provision of services, installation work, or the donation of manufactured products for the needs of the company.

Are there any advantages to working with VAT?

The legislator is constantly taking measures to reduce the number of shadow entrepreneurs. Thus, it will not be possible for organizations that are not involved in VAT management to receive large orders. This is the preference of companies that have achieved high turnover - it is quite logical that they need to compensate for input VAT with incoming amounts.

As the practice of business entities shows, participation in large projects for organizations and entrepreneurs that do not work with VAT is practically prohibited. The current public procurement system consistently provides orders to all segments of contractors and performers.

Opinions on the last issue in the professional community are divided. If we consider , which comes from the “simplified”, it turns out that according to pricing standards, it does not add the amount of VAT to the price. In practice, when accepting VAT, an enterprise will have to wait for the state to return this 18% to them. During this time, funds could participate in the company's turnover.

Write your question in the form below