Hi Folks, yet another question regarding toiminimi and taxes. So far, my understanding is that,
the Business Results are divided into:
- capital income (also called Investment income)
- Earned income
From what I've read regarding Capital Income, I won't have any.
Now what I'm not sure about is that: You can earn up to a maximum of 8,500 per year, tax-free. Anything beyond 8,500 requires paying VAT at 22%. self-employed person's YEL contribution of 15.6% of your estimated annual income, this is taking into account the 25% discount for the first 4 years when setting up a new business.
So, my question is: is that all the taxes I'll have to pay?? meaning can I, as the business owner, after having paid VAT+YEL, take the money I want as a salary without payng additional taxes?
Thanks for your help.
Toiminimi and taxes
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richard berman
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Re: Toiminimi and taxes
After you have have paid VAT and YEL, you still have to pay tax on the rest of the money.
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Re: Toiminimi and taxes
Thanks for your quick answer Richard. Can you be more specific? - what taxes are you referring to? Social security, Pension contribution, Ununployment Insurance contribution?
Many thanks.
Many thanks.
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Pursuivant
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Re: Toiminimi and taxes
Then you pay income tax on the money that is left from all the other taxes.
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Re: Toiminimi and taxes
I think you are confusing everything. It is much more simple to understand it all if you separate the ALV (VAT) which is directly related to your business activity from your personal taxation.
You are liable for ALV on the totality of your business as soon as your gross income (ie what you invoice to your customers) exceeds 8500€. This has NOTHING to do with your personal tax liabilities. The ALV which you must pay (on the 15th day of the second month after the trading month) is net of ALV you might have paid on purchases of goods and services you made for your business (there are some exceptions eg parking tickets). Your ALV is calculated on a monthly basis to infinity and beyond. It is quite separate from your personal tax declaration. Under certain circumstances small businesses are able to claim back ALV they have paid if their annual turnover was less than (???) 22000€. You have to wait until the end of your tax year to claim that, there is a form to fill in.
(BTW - once you go over 8500€ turnover VAT is due ON THE WHOLE AMOUNT, so if you sell goods/services (whatever it is you do) for 8600€ then you owe 22% on the whole 8600€, not just the 100€ above the threshold).
YEL is due if your annual income exceeds approx 6000€ (2007), the 25% discount is for the first 4 years, then it is 20,8% of work income.
Your (net) work income is added to any other income you have for personal taxation purposes. Then you are taxed on the total according to the usual personal taxation rates, just as if it were a salary.
You should look for a small business bookkeeping course (most municiaplities are offering these and they are usually free and in English - search on this forum as sometimes people post them on here). If you are in Helsinki you could walk into http://www.intofinland.fi where you can get help on your tax and social security questions in English (and other languages too).
You are liable for ALV on the totality of your business as soon as your gross income (ie what you invoice to your customers) exceeds 8500€. This has NOTHING to do with your personal tax liabilities. The ALV which you must pay (on the 15th day of the second month after the trading month) is net of ALV you might have paid on purchases of goods and services you made for your business (there are some exceptions eg parking tickets). Your ALV is calculated on a monthly basis to infinity and beyond. It is quite separate from your personal tax declaration. Under certain circumstances small businesses are able to claim back ALV they have paid if their annual turnover was less than (???) 22000€. You have to wait until the end of your tax year to claim that, there is a form to fill in.
(BTW - once you go over 8500€ turnover VAT is due ON THE WHOLE AMOUNT, so if you sell goods/services (whatever it is you do) for 8600€ then you owe 22% on the whole 8600€, not just the 100€ above the threshold).
YEL is due if your annual income exceeds approx 6000€ (2007), the 25% discount is for the first 4 years, then it is 20,8% of work income.
Your (net) work income is added to any other income you have for personal taxation purposes. Then you are taxed on the total according to the usual personal taxation rates, just as if it were a salary.
You should look for a small business bookkeeping course (most municiaplities are offering these and they are usually free and in English - search on this forum as sometimes people post them on here). If you are in Helsinki you could walk into http://www.intofinland.fi where you can get help on your tax and social security questions in English (and other languages too).