Toiminimi for less that 8k per year

[mpjacko]

I've read all the useful information on this forum on toiminimi but I have a couple of questions in regards to earning less that 8k.

Background: I have my main job using my tax card but every so often, maybe 1/2 times a month I get an article to proof read. I don't earn much a year (less than 8k) but it's an extra bit of spending money.

I like the idea of setting up a toiminimi as in my situation no VAT would be required so an extra 24% in my pocket. Because I don't really know how much I would make in a year, is it possible to charge vat on the invoice, pay vero and then claim it back at the end of the year if my total income through the tominimi is less than 8k?

or pay vero once a year when I know how much has been earned, and if this is less than 8k then nothing would be sent to them?

I like the idea of eezy.fi but if my income is less than 8k, then I won't get the tax back through that process (as i assume then vat payment is a whole from everyone who uses the service)

Any advice for low income earners?

[cors187]

I like the idea of setting up a toiminimi as in my situation no VAT would be required so an extra 24% in my pocket

Heres the thing.
You cant add 24% VAT to a customer invoice and then keep it if your not VAT registered.

http://www.vero.fi/en-US/Precise_inform ... 2815591%29
So you invoices must state 0% VAT.

If your buying stuff for your part-time business regardless of turnover(under8500), then registering for VAT allows you can claim on your Purchases VAT.
Example :printer ink, paper, desk,this crap starts to add up.
>Its like getting to jump in the deep end of the pool with your floaties on.

[mpjacko]

Put it this way and you may understand

Say I charge someone 15€ per page to proof-read I have a number of options to receive this money eg Tax card, freelance card or invoice. The first two can be a pain as some people / companies / departments would rather have an invoice. I can't add vat to this figure as it's a fee I have agreed with the customer (so VAT must come out of it. I understand that if I make more that 8.5k a year then VAT is applied, but I am only doing this to earn a little bit of cash after my main job (so income would be less than 8.5K.

Yes, I could use eezy but why should I lose 24% on my earnings thru paying VAT when I know I don't have to pay this (or take it from my set fee) since eezy doesn't differentiate between how much you earn during the year.

So basically, as a toiminimi, can I send an invoice with 0% tax, collect all the money during the year and then if I go over the 8.5k value, pay vero the outstanding VAT? or collect vat at 24% on the invoice, pay vero each month, and then find i am under the 8.5K and claim the VAT back. From your previous answer, the second part can't be done so dose toiminimi allow you if you estimate to be under 8.5k, collect money and then report at the end of the year?

My other part of the question was that if I say i did the proof-reading at home, which I do then I can claim expenses (like someone renting a room for their workshop), but since I won't make any VAT can I claim any expenses?

Does this make sense

[cors187]

to receive this money eg Tax card, freelance card or invoice.

i didnt read all , but there is only one form of business= business number
business number on invoice.+ VAT%
I dont know what this freelance thing is , is ita business number?

[cors187]

Yes, I could use eezy but why should I lose 24% on my earnings thru paying VAT when I know I don't have to pay this (or take it from my set fee) since eezy doesn't differentiate between how much you earn during the year.

with eezy you dont pay VAT, eezy is responsible for the VAT, which by contract between you and them they make you pay for it.
You need to charge your customer VAT so the final customer pays for it and not you.

[Rosamunda]

#1 Are you working B2B or B2C? If you have negotiated 15€ per page with a BUSINESS customer then your client would understand this to mean BEFORE VAT. If your customer is a business then they have no problems with you ADDING VAT to the invoice because they will ultimately claim it back. That's how VAT works. If, however, your customers are NOT businesses, then they would probably understand 15€ per page to mean the total price including any taxes etc.

#2 If you are doing this on an ad-hoc basis and your revenues are under 8500€ per year, you do NOT have to register your business, you do not have to register for VAT. As a physical person you can invoice someone for something and all you have to do is declare the extra income to Vero when you file your personal tax return. However, this extra revenue will not entitle you to any additional pension etc as it is outside the social security regime.

#3 If you wish to register as a toiminimi, that is your choice. You can also choose whether you register immediately for VAT or not. However, you will have to make social security (pension) contributions: that is not optional but you can choose how much you pay. So if you already have a salaried job I suppose you could just opt for the minimum annual contribution.

#4 If you choose NOT to register for VAT then you have to indicate that you are tax-exempt on your invoice (this is not the same as 0% VAT). Eg you could indicate: "The seller is tax-exempt - annual business turnover is less than 8500e". However, if your client is a private person (not a business) that is not necessary, you can use simplified invoicing: https://www.vero.fi/en-US/Precise_infor ... ces(15591)

#5 If you choose to register for VAT and you want to invoice VAT to your customers, you can do so. (This is a good idea if you are invoicing businesses because it also gives you the opportunity to make VAT deductions on your own business expenses). If your business is small, you can ask Vero for an annual VAT filing which means you only have to send them the paperwork once per year (this is also a good idea for small companies).

#6 If your toiminimi's annual revenue is less than 8500e you are entitled to a full VAT refund (if you chose to register for VAT). If your business has billed over 8500e but less than 22500e there is a lower-limit VAT relief scheme whereby you can claim most of it back:
I suggest you read this guide (VAT is on page 38) http://www.uusyrityskeskus.fi/sites/uus ... 13_web.pdf it has all the answers and some easy-to-follow examples. If there's something you don't understand then come back and post here.

I would definitely avoid Eezy if this is a small-scale activity. If you are only invoicing a few K€ per annum to private individuals, then I would keep it simple and just write a receipt of the payment and then declare this to Vero when you file your personal tax return.

One thing to remember... businesses DO NOT PAY VAT. They just collect it from their customers and pass it on to the state.

[cors187]

My other part of the question was that if I say i did the proof-reading at home, which I do then I can claim expenses (like someone renting a room for their workshop), but since I won't make any VAT can I claim any expenses?

To claim expenses you need to be VAT registered.
Remember you dont make VAT, you make agreements with the goverment(VAT registered) to collect their tax from your service.
If you will turnover under 8500 then you are allowed to make no agreement(non VAT registered) , which means your service is 0% VAT.

[Rosamunda]

My other part of the question was that if I say i did the proof-reading at home, which I do then I can claim expenses (like someone renting a room for their workshop), but since I won't make any VAT can I claim any expenses?

To claim expenses you need to be VAT registered.
Remember you dont make VAT, you make agreements with the goverment(VAT registered) to collect their tax from your service.
If you will turnover under 8500 then you are allowed to make no agreement(non VAT registered) , which means your service is 0% VAT.

Claiming home office space is nothing to do with VAT. But Cors187 is right in that you would have to be a registered toiminimi in order to deduct the expense from your revenues. it would reduce your PERSONAL TAXATION liability (ie NOT VAT).

Like I said above, don't confuse TAX EXEMPTION and 0% VAT. They are two very different things.

[cors187]

I meant VAT expenses.
If you buy printer ink , you will pay VAT on the 20 euro cartridge. VAT is 3.87 euro.
To have some claim on that 3.87 euro you already put into the VAT system you need to be VAT registered.

VAT registered
You sell your service for 100euro to a customer
you earn 80.65 +VAT 19.35 = 100euro

VAT cycle
You have collected 19.35 in the governments VAT
You have paid already 3.87 into the Governments VAT
You owe 15.48 which was always the vero's money.

[Rosamunda]

OK, yes. That is true. Unless it's export sales.

[mpjacko]

Thanks for all the advice.

Just to clarify, I am proof-reading for a university department who can also get the proof-reading done from their university's language department. The language department charges 15euro per page and there is no tax as it's between department. I understood it that the department doesn't sell any thing so would have to pay the vat (i.e have nothing to offset the tax). If that is the case and the customer pays tax then my rate would be 15euro + 3.6 = 18.6e per page compared to 15e from the language department. So if i was to do this, then it would be cheaper for them to use the language department. This is where I have my problem. I want to make as much as possible but be competitive in price at the same time.

[mpjacko]

to receive this money eg Tax card, freelance card or invoice.

i didnt read all , but there is only one form of business= business number
business number on invoice.+ VAT%
I dont know what this freelance thing is , is ita business number?

Freelance is when you are paid by a company using a freelance tax card (which involues you paying for your pension etc) but without a contract

[cors187]

Freelance is when you are paid by a company using a freelance tax card (which involues you paying for your pension etc) but without a contract

So your an employee with the profit margins directed back at you because the employer is a non profit type of organism, and your responsible for making the employer contributions out of your own profits.
Your an employee for a Co-op or something.

[mpjacko]

Freelance is when you are paid by a company using a freelance tax card (which involues you paying for your pension etc) but without a contract

So your an employee with the profit margins directed back at you because the employer is a non profit type of organism, and your responsible for making the employer contributions out of your own profits.
Your an employee for a Co-op or something.

Not sure what you mean

Basically, a professor asks me if i can proof-read a paper for one of his students. I do the work and tell him how many pages it was. Based on the agreed price of 15 e per page, I can either ask him to pay me thru my tax card (this would mean the department paying my pension etc from their own money), invoice him with tax added (again his department pays extra), thu the method as advised by Rosamunda, or thru a freelance tax card where your pension contribution etc are subtracted from your fee (i.e I pay my own pension thru the work i do and so the department doesn't pay anything extra but pays the pension on my behalf using my money). The freelance tax card is a bit like what eezy offers but without the added vat. Does this make sense now?

[cors187]

Thanks for all the advice.

Just to clarify, I am proof-reading for a university department who can also get the proof-reading done from their university's language department. The language department charges 15euro per page and there is no tax as it's between department. I understood it that the department doesn't sell any thing so would have to pay the vat (i.e have nothing to offset the tax). If that is the case and the customer pays tax then my rate would be 15euro + 3.6 = 18.6e per page compared to 15e from the language department. So if i was to do this, then it would be cheaper for them to use the language department. This is where I have my problem. I want to make as much as possible but be competitive in price at the same time.

I think the co-op taxcard or freelance whatever(description is deceptive) is probably geared up to be the best over all coin into pocket solution.
Or start a TMi and work until you earn 8500 euro/year, i think its about the same except you get to have more choices with the TMi.

Or if your good enough and the pages keep coming then register for VAT with the new TMi and look at this equation, 12euro+2.88 VAT = €14.88.
Build up you company with years of history so you can use that history to be infront of your competitor, just like every other good business does.