Which income tax to choose?


January 20 is the final date for people running a business to change the way they are taxed with income tax. In order for the choice to be correct, it should be preceded by a simple analysis of historical data, taking into account the forecast for the next year.

The choice between taxation on general principles and a flat tax creates many difficulties for entrepreneurs. The seemingly attractive 19% flat tax is not always profitable. In addition to the level of income, the family situation should also be taken into account, i.e. the expected income of the spouse and the number of children. The declaration on the choice of the flat taxation method is valid for a minimum of one year and is valid until revoked.

Brief characteristics of individual types of income taxation

General rules

They consist in paying tax according to the tax scale (18% or 32% depending on the amount of income), which is calculated on the basis of income (income - tax deductible costs). The discussed method of taxation, apart from the fact that it applies when the entrepreneur chooses it himself, is additionally automatically assigned in a situation where the taxpayer does not declare a choice at all. It is possible to use the simplified method of calculating income tax advances. They are then constant, and they are determined on the basis of income from previous years. In addition, with this form of taxation, it is possible to make deductions from income and tax as part of the applicable allowances (e.g. Internet tax, rehabilitation, pro-family - for children, abolition, church donations or for public benefit purposes) as well as joint taxation with a spouse or for the rules for single parents.

Taxpayers who have chosen to settle on general terms for a given year are required to submit a tax declaration on the PIT-36 form by April 30 and finally settle their tax liabilities for the previous year at this date.

19% flat tax

The tax base, as in the case of tax on general principles, is income (revenue - tax deductible costs). Choosing a flat tax means that regardless of the amount of income, the tax rate will be constant at 19%. However, it should be remembered that when deciding to settle income with a flat tax, it will not be possible to use most of the tax reliefs allowing for deductions made at the end of the year from income or from the value of the tax itself. The exceptions are paid social contributions, which reduce income, and paid health contributions, which reduce the tax payable. Taxation with flat tax also does not exclude the possibility of reducing income by losses from previous years, bearing in mind, of course, the generally applicable rules in this dimension. Advance payments for tax may be paid monthly, quarterly or in a simplified manner (not applicable to taxpayers starting a business and those who did not show taxable non-agricultural business income in their annual settlements for the previous two years).

The annual settlement of income obtained from a business activity conducted by a natural person, which is taxed on the basis of a flat tax, is submitted on the PIT-36L form. The deadline for submitting and paying the tax resulting from the annual tax return is 30 April of the following year.

Lump sum on recorded revenues

It is usually chosen by companies whose operations require little investment and costs. With this method of taxation, the tax is payable only on the revenues earned. It is not possible to reduce revenues by the costs incurred in order to obtain them (the tax base is income, not income), but it is possible to take advantage of tax reliefs and deductions. Taxation with flat-rate income tax is regulated by Art. 1 of the Act and applies to certain revenues (income) of natural persons who:

  1. run a non-agricultural business,
  2. generate income from rental, sublet, lease, sublease or other similar agreements, provided that these agreements are not concluded as part of their business activity,
  3. they are clergy.

The turnover limit that allows you to use the lump sum is EUR 150,000 per year. If this amount is exceeded, the taxpayer is obliged to change the form of taxation - even if the excess occurs during the tax year. Tax rates depend on the type of business and are respectively: 3%, 5.5%, 8.5%, 10%, 17% and 20%. The declaration on the choice of the method of lump-sum taxation on recorded revenues should be sent to the head of the tax office. There is no top-down pattern on which to assemble them, so you have to draw them up yourself. Taking into account the declared form of settlement, the tax may be paid to the account of the tax office every month (by the 20th day of the following month) or quarterly (by the 20th day of the month following the end of a given quarter). Lump sum as a form of tax settlements does not allow for settling accounts together with a spouse or as a single parent.

After the end of a given tax year, until January 31 of the next year, the taxpayer is required to submit an annual tax return on the PIT-28 form for taxable income earned in the previous year in the form of a registered lump sum.

Tax card

It exempts from the obligation to keep tax books, but obliges to pay the tax to the account of the office in the amount determined by the decision of the head, issue bills and invoices at the client's request, and to keep copies of these documents. The amount of income tax is determined annually by the tax office, and therefore it may be different for each year. With this form of settlement, it is not possible to apply deductions and discounts (the exception is the tax-reducing part of the paid health insurance). The choice of the method of taxation on the basis of a tax card should be reported to the head of the tax office competent for the place of residence before setting up the company. In the case of people running a business, the application must be made on the PIT-16 form by January 20. There is no obligation to submit the declaration again if the taxpayer does not intend to change the selected form of taxation.

The day of January 31 after the end of the tax year is the deadline for submitting information on the amount of health insurance premium paid and deducted from the tax card in each month of the tax year. Therefore, the PIT-16A form should be submitted to the tax office.