How to reduce the simplified tax system “Income”
An entrepreneur's income always increases the tax amount. But not all receipts are income: replenishment of an individual entrepreneur’s account with personal money, chargebacks, loans and borrowings. Such income does not need to be taken into account when calculating the simplified tax system. We talked about this in more detail in the article “STS “Income”: how to report and how much to pay.”
Reducing the simplified tax system on insurance premiums
Tax on the simplified tax system “Income” can be reduced by insurance premiums. To do this, follow three rules:
- Individual entrepreneurs without employees can reduce the tax completely, and individual entrepreneurs with employees and LLCs can reduce the tax by no more than 50% of the tax amount.
- The tax is reduced by: – insurance premiums of individual entrepreneurs for themselves: 43,211 rubles for 2022 + 1% of income more than 300,000 rubles; – contributions for employees to the tax office for pensions, medical and social insurance, as well as to the Social Insurance Fund for injuries; – sick leave for the employee for the first three days.
- Contributions must be paid in the same period for which you calculate the tax. For example, the tax for the first quarter can be reduced by insurance premiums paid from January 1 to March 31. It does not matter for what period the contributions were paid.
We recommend paying individual entrepreneur insurance premiums for yourself quarterly. This way you will evenly reduce advance payments for the simplified tax system, and by the end of the year you will not be able to overpay.
Elba will tell you how much to pay in contributions and how to reduce taxes. The service will automatically calculate the tax payable and prepare a declaration according to the simplified tax system along with a book of income and expenses.
Reducing the simplified tax system for trade tax in Moscow
Individual entrepreneurs and LLCs that are registered in Moscow can reduce the trade tax. If you trade in the capital, but are registered in another region, you will have to pay tax in full.
The simplified tax system tax is completely reduced by the trade fee. The 50% limit as a reduction in insurance premiums for individual entrepreneurs with employees and organizations does not apply, because the tax is reduced in addition to the amount of insurance premiums. The final amount of tax payable may be zero even for the organization and the individual employer.
