Toiminimi. Income tax calculation scenario

hackoff · Post by **hackoff** » Sun Dec 02, 2012 4:22 pm

Hi

My case scenario.

I am heading next week to open up my Toiminimi as proposed by my client. fill the Y3 form + 75euros + YEL insurance (+ maybe open a separate company bank account) and I am all set.

I will start billing my client for a couple of months contract (Dec 2012, and Jan 2013) with the possibility of extension.

- Dec 2012 my income will be less than 8500 euros --> No VAT (in Y3 i will mark Jan 2013 as the start of VAT liability, correct knowing that i might have a longer contract with my/other client?)
- Lets say I charge bill my customer till the end of 2012, 7000 euros.

Business income to be distributed = 7000 - for exp 500 of expenses = 6500 euros

Capital income = 20% or 10 of Net assets --> First year nothing here so 0 right? and No tax on the capital income

Earned income = Business income - capital income = 6500 euros

My take home= progressive task (Seperate verokortti?) of Earned income

- Is the above correct? I know i need to attend the free session. But those will happen after I have started my toiminimi and I would Like to figure out the odds.

- What about the net assets? from one document i see that it is: net assets = assets of the business – liabilities of the business. so basically Net asset is the business income of the first accounting period. Meaning that in Jan 2013 my net assets will be 6500 euros as I am the only founder of the company.

- In the following document http://www.masuuni.info/images/masuuni_ ... 110524.pdf it says

Alternatively, the entrepreneur can decide that capital income will only be 10 % of net assets or that all of the business’s income is earned income.

What is the "correct" number to chose regarding the business income: 10%,20% or 100% of earned income?

- If the business income (Income from clients) goes up to lets say 95k a year is an OY advisable in this case?

- Can I open the toiminimi online. I think i saw a website that propose such but could not find it anymore

Thanks a lot

**Sponsor:**

Rosamunda · Post by **Rosamunda** » Sun Dec 02, 2012 10:39 pm

I have an Oy, not a toiminimi but I might be able to answer some of the questions.

I think you can register your toiminimi here: http://www.prh.fi/en/kaupparekisteri/yr ... rader.html
But if you want to claim starttiraha then I think you have to claim that BEFORE you register (not sure).

Your first accounting period can be longer than 12 months if you wish. For example, if you start your business in December you can still submit your final accounts next December for the 13 months (check this when you go on the course). At least for an Oy this is possible.

Your progressive tax rate will apply to your total income from all sources during the year. Not just the business in December. You and your business are one and the same thing.

Net assets and revenue are two different things. Assets refer to your balance sheet (cash, inventory, receivables etc) and net assets means you can deduct your liabilities (loans, payables). In other words, if you bill 7000e that's revenue but it is also an asset on your balance sheet (either in the form of cash in the bank or receivables if the customer hasn't paid).

You will be billed for pre-tax - but someone else can explain that.

When to become a toiminimi is really up to you. There is no magic number but you need to think about risk and liability. With an Oy your personal assets are safe if your business goes bust.

cors187 · Post by **cors187** » Sun Dec 02, 2012 11:57 pm

-

Dec 2012 my income will be less than 8500 euros --> No VAT (in Y3 i will mark Jan 2013 as the start of VAT liability, correct knowing that i might have a longer contract with my/other client?)
- Lets say I charge bill my customer till the end of 2012, 7000 euros.

i did a business course and most of the confusion and subsequent discussion was about VAT.What a waste of oxygen!!!
When the experts try to simplify the VAT meanings , then they will say goods and services in the same sentence..Thats when you may have heard of other countries will a similar tax called G.S.T, Goods and services tax, its simpler and gives meaning even when the letters are mentioned.
If you have to buy something for your business you are paying VAT, for example ,printer,printer paper, so you have entered the vat cycle.
If in your financial year you go over this VAT capped salary figure, then you have to re print and send your clients the new invoices including VAT and do some re adjustment book keeping with the mandatory paperwork.
The common consensus no matter how much you earn is to register for VAT , collect the VAT for the gov.fi , reducing the VAT you pass on by the VAT you already paid by buying things for you company.
Who can possibly live in this country as an entrepreneur under the VAT cap! The end result i believe and someone correct me if i am wrong , but as an entrepreneur you cannot add VAT to your invoices if you are not VAT registered, and if you are VAT registered then it was never your money in the first place, your just passing it along , but if you are VAT registered then you can re collect the VAT you already paid with your company purchases.

hackoff · Post by **hackoff** » Mon Dec 03, 2012 12:05 am

cors187 wrote: The common consensus no matter how much you earn is to register for VAT , collect the VAT for the gov.fi , reducing the VAT you pass on by the VAT you already paid by buying things for you company.

cors187 · Post by **cors187** » Mon Dec 03, 2012 12:08 am

What is the "correct" number to chose regarding the business income: 10%,20% or 100% of earned income?

Interesting system that asks you to project your future income.
I think a business here should estimate "on or under" the predicted future turnover , "on or over" the costs of running the future business and "on or under" the future profit returned to you.

hackoff · Post by **hackoff** » Mon Dec 03, 2012 12:13 am

cors187 wrote:
What is the "correct" number to chose regarding the business income: 10%,20% or 100% of earned income?

Interesting system that asks you to project your future income.
I think a business here should estimate "on or under" the predicted future turnover , "on or over" the costs of running the future business and "on or under" the future profit returned to you.

or just progressive tax after taking out the expenses sounds more "easy" for startupers. But reality sucks

cors187 · Post by **cors187** » Mon Dec 03, 2012 12:36 am

Everyone is on progressive tax, the OY tax is not progressive but its not your money until you claim it as salary or dividends and then its calculated as progressive the same as a TMI.

animist · Post by **animist** » Mon Dec 03, 2012 2:56 am

hackoff wrote: Capital income = 20% or 10 of Net assets --> First year nothing here so 0 right? and No tax on the capital income

I presume in case of toiminimi you may neglect capital income (especially if don't have rental income etc.) and declare all your income as earned income. If your progressive income tax is more than 28%, then you may save some copper declaring part of your income as capital one, however I'm surprised that toiminimi itself has assets of the business, in general it's your own money and it seems weird to pay taxes accounted from your own savings.

hackoff · Post by **hackoff** » Mon Dec 03, 2012 1:57 pm

Just submitted the papers by the help of an accountant.
I first went to maistraati but they said that they eventually send those papers to be processed in Arkadiankatu 6 HEl. So I just went there by myself as it would hae taken less time due to the fact that they send those using normal mail post.
New infos she gave me out:

- If turnover is more than 30k then she advices startupers to consider OY instead.
- If the car does not belong to the company (In this case OY) then one cant claim gas but instead he can calculate his journeys with KM. ( I think the tax office has some info).
- VAT will change to 24%
- Think about daily allowance
- If Y-tunnus is ABCDEF-123 then the internation YTunnus is something like FIABCDEF123 (Add FI and remove "-")

I will keep you updated.

Rosamunda · Post by **Rosamunda** » Mon Dec 03, 2012 2:18 pm

hackoff wrote:
- If turnover is more than 30k then she advices startupers to consider OY instead.

Did she say why?

- If the car does not belong to the company (In this case OY) then one cant claim gas but instead he can calculate his journeys with KM. ( I think the tax office has some info).

http://tax.fi/en-US/Precise_information ... nes(19315)
It is 45 cents but that is about to change too. Downwards.

- VAT will change to 24%

Yes, and 14% for food etc

- If Y-tunnus is ABCDEF-123 then the internation YTunnus is something like FIABCDEF123 (Add FI and remove "-")

http://www.vero.fi/en-US/Precise_inform ... ers(15577)

Rosamunda · Post by **Rosamunda** » Mon Dec 03, 2012 2:23 pm

cors187 wrote:Everyone is on progressive tax, the OY tax is not progressive but its not your money until you claim it as salary or dividends and then its calculated as progressive the same as a TMI.

Not true for dividends. Dividends are taxed using the capital income tax rate: flat 28%

https://www.nordisketax.net/main.asp?ur ... l=eng&m=02

cors187 · Post by **cors187** » Mon Dec 03, 2012 7:35 pm

Rosamunda wrote:
cors187 wrote:Everyone is on progressive tax, the OY tax is not progressive but its not your money until you claim it as salary or dividends and then its calculated as progressive the same as a TMI.
Not true for dividends. Dividends are taxed using the capital income tax rate: flat 28%

https://www.nordisketax.net/main.asp?ur ... l=eng&m=02

noted

Upphew · Post by **Upphew** » Mon Dec 03, 2012 7:45 pm

Dividends

Of the dividends of listed companies, 30% is exempt from tax and 70% is taxed with a 28% capital income tax. Thus the tax levied on dividends is 19.6%. The bank collects a 19% withholding tax on domestic dividends and credits it to the tax authority. The bank reports the dividends and withholding tax paid to the tax authority.

http://www.nordea.fi/Personal+customers ... 20062.html

The so-called “tax-exempt” dividend

One of the key issues behind the drive for tax reform was the fact that non-listed companies can distribute up to €90,000 in tax-exempt dividends to each individual owner.

http://www.libera.fi/en/blog/taxation-i ... 2-finland/

hackoff · Post by **hackoff** » Mon Dec 03, 2012 8:19 pm

It was a good idea having this accountant.

hackoff · Post by **hackoff** » Mon Dec 03, 2012 8:28 pm

- If the car does not belong to the company (In this case OY) then one cant claim gas but instead he can calculate his journeys with KM. ( I think the tax office has some info).

http://tax.fi/en-US/Precise_information ... nes(19315)
It is 45 cents but that is about to change too. Downwards.

mm, Said that i will be heavily taxed and profit wise is better to have the OY once the turnover reaches 30k.

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