Small business and taxes.
1. The essence and criteria for determining small businesses. The advantages and disadvantages of small business.
Many international authorities assert that the future of many economies for small businesses [1, p. 237.
Federal Law “On state support of small entrepreneurship in the Russian Federation” No. 88-FZ of 14 June 1995 defines small businesses as “commercial organizations, whose authorized capital the share of participation of the Russian Federation, subjects of the Russian Federation, public and religious organizations (associations), charitable and other funds does not exceed 25 percent, the share attributable to one or several legal entities that are not small businesses shall not exceed 25 percent and where the average number of employees during the reporting period does not exceed the following maximum levels (small businesses.
in industry – 100 people.
– in construction – 100 people.
– on transport – 100 persons.
– in agriculture – 60 people.
– in scientifically-technical sphere – 60 people.
in wholesale trade – 50 people.
– in retail trade and consumer services – 30 persons.
– in other industries and in the implementation of other activities – 50.
Under the subjects of small Predprinimatelskaya well as individuals engaged in entrepreneurial activities without forming a legal entity” [8.
In foreign countries criteria for defining a small business are different.
1) the UK small business must meet two of the three following criteria.
– turnover not more than 2.3 million ECU.
assets of not more than 1.5 million ECUs.
– the average number of employed up to 50 people (there are also more specific sectoral indicators turnover (in the transportation the number of cars) [1, p. 237.
Germany – the official definition of a small business is missing.
Usually small and medium enterprises.
– no more than 500 employees.
– not exceeding 50 million ECU annual turnover.
The European Community (EC.
– the number of employed up to 50 people.
– annual turnover of less than 4 million ECU.
– the balance sheet total of less than 2 million ECU.
– the number of employees less than 300 people.
– capital is not more than 9.5 million ECU.
– the company is not a subsidiary and is not included in the group. (For small businesses – a private firm with a number of employment no more than 20 persons) [1, p. 237.
Small business entities as subjects of market economy have both advantages and disadvantages.
Analyzing foreign and domestic experience of development of small business, we can point to its following advantages: more rapid adaptation to local conditions; greater independence of actions of subjects of small business; flexibility and efficiency in making and execution of decisions; the relatively low costs, especially management costs; a great opportunity for the individual to realize their ideas, exercise their abilities; lower capital requirements and the ability to quickly implement changes in products and production processes in response to the requirements of local markets; relatively high turnover of own capital [4, p. 96.
Thus, in the report of the International labour office notes that small and medium enterprises have significant competitive advantages, often require less capital investment per employee compared to large enterprises, are widely used local material and labor resources. The owners of small enterprises are more inclined to savings and investment, they always have a high level of personal motivation in achieving success that has a positive effect in General on the activities of the enterprise. Small businesses know better the level of demand at the local (local) markets, goods are often produced on specific request of consumers, give a livelihood to more people than large enterprises, thus facilitate the training of professionals and dissemination of practical knowledge. Small and medium enterprises compared to large, in some countries occupy a dominant position, both in number and specific weight in the production of goods, performance of works, rendering of services.
At the same time, small businesses and certain inherent disadvantages, among which should highlight the most significant: a higher level of risk, so a high degree of instability of the situation on the market; dependence on large companies; poor management; weak competence of the managers; increased sensitivity to changes in economic conditions; difficulties in attracting additional funds and obtaining loans; the uncertainty and caution of the business partners at the conclusion of agreements (contracts)[1, p. 238]. Of course, the shortcomings and failures in the activities of small entities are defined as internal and external factors, conditions of functioning of small businesses.
Experience shows that most failures are small firms is due to managerial inexperience or professional incompetence of owners of small and medium enterprises.
In regularly conducted surveys among the small businessmen, States the main reasons for the failures of their activities is often called.
– unbalanced experience (e.g. experienced engineer, but an inexperienced trader.
– lack of experience in Commerce, Finance, supply, production, management in the forms of sole ownership and partnerships, the ability to make and maintain business contacts, shared managerial experience.
Other causes of bankruptcies of small firms are.
– bad health or bad habits.
disaster, fire, theft.
According to the data given by firm “Dun & Bradst-RIT”, the commercial reasons for the collapse of the small businesses in 49% of cases are insignificant volumes of sales, the 23 — competition, 16 — too high running costs [3, p. 92.
In addition, manufacturing and retail firms indicate challenges in the areas of receivables in the accounts. The failure of retail firms are also linked to their failed position and problems of inventory management.
Practice activities American small firms suggests that the presence of a single entrepreneurial experience and acumen is not enough. In the modern small business is extremely necessary expertise. Typically a new business begins or merchant, almost knows nothing about the production or engineer who knows nothing about Commerce. Often the owner of a small company has too little experience in the management of specific business structures.
Chances of firm success increase as it Matures. Firm, long existing under one owner, bring a higher and more stable income than firms that often change owners. American statistics show that women — owners of small firms more successful in business than men. In the course of the research it is noted that succeed are those small entrepreneurs who work hard, but at the same time, don’t follow in their activities the scope of common sense.
The failures of small businesses affected by low qualification of entrepreneurs. Entrepreneurs already have experience of doing business in small firms are typically more successful. If the management of the company involved more than one person, and the entrepreneurial team consists of two, three or four individuals, chances of survival is higher because of collective decision-making is more professional. On the survivability of small firms affected and the amount of funding in the first phase. The greater the initial capital invested in the firm, the more opportunities for its preservation in times of crisis.
The constant search disappears public needs and continuous adaptation to form the basis of strategies for small business.
Small business can be considered as the school with personal relations, a testing ground for methods and principles of entrepreneurship of the future.
Thus, small business has a certain specificity and its effective functioning requires support, primarily from the state.
2. CALCULATION AND PAYMENT OF SMALL ENTERPRISES OF THE VALUE ADDED TAX.
At the present stage of economic development many small businesses face many problems in the field of taxation, in particular one of these most pressing issues for small businesses is the problem of calculation and payment of VAT.
Many small businesses and individual entrepreneurs during the last seven years worked in accordance with the Federal law of 29.12.95, № 222-FZ “About the simplified system of taxation, accounting and reporting for small businesses.
In 2002 the Federal law dated 24.07.02, No. 104-FZ Law No. 222-FZ has been repealed, and the Tax code of the Russian Federation is supplemented by Chapter 26.2 “Simplified system of taxation” which came into force on 1 January 2003.
The provisions of Chapter 26.2 of the tax code, no doubt, contain a number of attractive for taxpayers norms, but does not remove many of the problems, particularly the problem of calculation and payment of VAT.
The obligation of the taxpayer to pay VAT arises at the moment of transfer of ownership of goods, works, services. If we talk about the two methods of calculating VAT according to the rules of article 167 NK the Russian Federation, they belong to the time of determination of the tax base, that is when you have to pay tax on already-incurred obligations. In this case, VAT does not matter, used by the organization for the year income tax cash method or the accrual method. Shipped goods (works, services), organization for accounting rules has reflected this operation in the financial statements, identifying in records, their income, expenses and VAT payable to the budget, prescribed shipping documents.