Toiminimi & employment tax scenario

[beetal barber]

Ok a quick one. I've sent in my y3 registration, prepayment reg', vat reg' estimated earnings etc ... start date 1st Sept. Ok now I've been offered full time employment and I'm going to take the job and still run the business although on a far smaller scale (below 8500k) Now my concern is have I now complicated the tax issue ? Or is it just a matter of contacting Vero to combine both incomes and then use an accountant to iron things out if needed ?

Thanks in advance to anyone with some pointers

[Pursuivant]

Your "full-time" job will be your main one, and if you have a TMI that then gets the "secondary rate" - your accountant will iron out the details. At the end of the day you have your health care and such ironed out and the TMI is just a side hobby as you'll be paying 40% tax or so for the joy Now then as you have a permanent job and a TMI the only thing you'll get buggered with is the unemployment *if* you get over the threshold you have to pay YEL yourself. Otherwise if you join say http://www.ytk.fi and spend 10 months contributing, you will be entitled to some dole for the 500 days as the council dole isn't jack. Then again if you claim the dole you might need to pack up the TMI, but thats the problems of then. Just so you know and don't get a rude surprise as "nobody told me" even if you never intend to use it and all those hoighty-toity principles like I did

[beetal barber]

40 % I've just spat lonkero over my laptop

Ok thanks Persuivant , much appreciated. I will now spend some time stressing over this little dilemma

[Pursuivant]

Well, you get a tax card for "main job" and "side job", so you get two percentages like the tax calculator shows. You probably get it sorted with some cute accounting, but after taxes and paying the accountant... and you wonder why the locals don't run businesses?

[Rosamunda]

I'm not sure Pursuivant is quite right about that. As far as I remember the net result of the "business" is added to the other income of the entrepreneur. OK so it might be necessary to pay "prepaid" in advance, but your effective tax rate is calculated on your gross total income, it makes no difference where it comes from. So, after the end of the year when you have finalised your profit for the accounting period, you may qualify for a refund.

By the way, part of your "business" income is taxed at the capital income rate (which is about to come down to 20%). The explanation is in http://www.masuuni.info/images/masuuni_ ... 110524.pdf (p.32)

Since Pursuivant left the country the tax office has implemented the new tax account system which, in theory, makes the whole "toiminimi" taxation thing much easier and means you don't have to advance so much cash. Eg: for VAT you could opt for an annual tax return which (assuming you do less than 8500e turnover) would mean you have no VAT to pay.

[onkko]

I'm not sure Pursuivant is quite right about that. As far as I remember the net result of the "business" is added to the other income of the entrepreneur.

Check difference between business and hired, op said he is full time worker starting business so your example wont fit.

[Rosamunda]

I'm not sure Pursuivant is quite right about that. As far as I remember the net result of the "business" is added to the other income of the entrepreneur.

Check difference between business and hired.

Don't understand.

Many many people who have a toiminimi also have a salary coming in from their "proper" job. In fact, I would say "salary + Tmi" is the norm rather than an exception. The net profit of the business is added to your "proper job" salary to determine your effective tax rate.
What I don't know is whether or not Vero requires as much as 40% prepayment these days since the tax account system is supposed to solve that problem. IOW, I don't think the net profit from the Tmi is necessarily treated in the same way as a second job with the higher tax rate.

[Adrian42]

I'm not sure Pursuivant is quite right about that. As far as I remember the net result of the "business" is added to the other income of the entrepreneur. OK so it might be necessary to pay "prepaid" in advance, but your effective tax rate is calculated on your gross total income, it makes no difference where it comes from.

The effective tax rate is a bit misleading here, the additional tax rate is more relevant:
When you have an effective tax rate of 30% and an additional tax rate of 40%, then from additional € 1000 earned only € 600 will be for you after taxes.

(That example applies strictly only to income from an employment. As you've also already mentioned taxation and social security payments for a Tmi are slightly more complicated.)

The explanation is in http://www.masuuni.info/images/masuuni_ ... 110524.pdf

A more recent version is at http://www.yrityshelsinki.fi/en/tools-a ... t-up-guide

[Rosamunda]

Thanks for the link. I wondered where they had put the updates

[betelgeuse]

Toiminimi income is not withheld using the normal tax card so the secondary rate does not apply. The income is taxed by wire transfers that you get slips for every year. The amount is based in your tax percentage and profit from the last concluded taxation (so for this year the info would be from 2011). You do not need to contact Vero unless you want to change the slips. The first year slips are based on your estimate on the forms so this is likely since it is higher than expected. In general running a toiminimi on the side is not that complex. I have always found the tax authority phone numbers helpful so you can always just give them a call to get the answer directly.

[Adrian42]

Toiminimi income is not withheld using the normal tax card so the secondary rate does not apply.

Wrong, the vast majority of the income of a Tmi is based on the normal tax rate.

How much gets withheld is irrelevant for the amount of taxes you have to pay in the end, less withheld only means a bigger tax bill for the remaining tax amount.

[betelgeuse]

Toiminimi income is not withheld using the normal tax card so the secondary rate does not apply.

Wrong, the vast majority of the income of a Tmi is based on the normal tax rate.

How much gets withheld is irrelevant for the amount of taxes you have to pay in the end, less withheld only means a bigger tax bill for the remaining tax amount.

These two statements do not contradict themselves. There was speculation earlier in the thread that you would have pay more than is due in advance and then get a refund later. In my comment secondary rate refers to "sivutuloverokortti". I am guessing you took it to refer to capital income tax. If you have a static income then vero is accurate at withholding only the amount that is due with no action from your part. Otherwise you can always just them to send you new slips.