News in the field of accounting FOP (Sole proprietorship) in 2023. Did quarantine cancel the cash register installation?

Everyone is waiting for an increase in the annual income limits of entrepreneurs and enterprises using the simplified taxation system. But so far this improvement is only at the stage of consideration and it is very likely to be introduced already in 2022.

However, today some changes have been already introduced to the accounting for sole proprietors. Today we will elaborate on all developments in more detail and give our analysis, taking into account the current situation.

Read also: Source Documents For A Sole Proprietorship 

Changes facing sole proprietors using the single tax regime

The main changes concern business entities operating under the 2-4 group of the single tax, which use cash payment methods, including payment cards. 

For such settlements, deadlines have been set for the introduction of cash registers. From April 2021 all business entities which use the simplified taxation system (except for 1 group of the single tax) will have to comply with this requirement. 

Please note! It’s worth remembering that even if your business is not yet obliged to use a cash register, no one has cancelled the compulsory revenue ledger. Sole proprietors using the 1, 2, 3 groups of the single tax (not VAT payers) are obliged to maintain the revenue ledger, which shall contain information about the income received for the day. This rule applies to both cash and non-cash settlements with buyers. 

It is also important to consider: even in today’s environment, you must switch to cash registers if your current year income exceeds 1 million. This applies both to trade in goods and services.

If your income is above 1 million, you must start using cash registers on the first day of the next quarter. And before that, you must rsegiter your cash register. In addition, if the goods are identified as undocumented during the inspection, you can face a fine in the amount of double price of this good.

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What to consider when installing cash registers and what are the potential risks for business entities? 

The cash register significantly complicates the accounting of business entities. In previous years when operating under the simplified taxation system, you didn’t need to keep “paper” evidence of your expenditures/income. From now on, every cash receipt associated with business activity of a sole proprietor shall be registered with the cash register. This means that the name of the goods and their codes (in case of excisable goods) shall be entered in the accounting system. It’s worth remembering that all goods shall be registered under the name by which they have been purchased. 

How to properly organize this process? 

1. When buying goods, you must demand a receipt or bill of purchase. 
2. According to these documents, the goods are registered as receipts and entered in the accounting ledger.  
3. When entering data into the cash register, data on the name of the goods and their price shall coincide with the accounting data. In this case, the price must not be lower or equal to the purchase price. 

Please note! When purchasing goods for your further activities from an individual (it doesn’t matter whether it is a sole proprietor or not) each business entity is required to submit a quarterly report on income paid to individuals using 1-DF form. Many sole proprietors “forget” about this report.  

How did the timeframe of the cash register rules introduction change due to quarantine? 

The transition process will be gradual and divided into several stages. The deadline has been moved by 3 months from the initial date. Today, the transition to cash registers shall be performed from April 19 to January 1, 2021 by sole proprietors using the 2-4 groups of the single tax, which sell complex equipment subject to warranty repair, as well as drugs or medical products.

From 1 January 2021, the use of cash registers will be mandatory for business entities carrying on the following activities:

• Sale of goods (provision of services) via the Internet;
• Sale of technically complicated household goods subject to warranty repair;
• Sale of drugs, medical products and provision of paid services in the health sector;
• Sale of jewelry and household items made of precious metals, gemstones, etc.;
• Retail sale of used goods in stores (group 47.79 KVED);
• Hotel business and similar temporary accommodation services (group 55.10 KVED);
• Sale of textiles (except for sale for cash at markets), parts and accessories for motor vehicles according to the list approved by the Cabinet of Ministers of Ukraine;
• And some others.

And already from April 1, 2021, enterprises and sole proprietors operating under the simplified taxation system will have to use cash registers in their cash settlements. 

For the quarantine period, a moratorium is imposed on inspections and fines, but quarantine will end and fines will be imposed.

For example, one of the significant violations that will be followed by a fine is the lack of correct entry of goods into the cash register. In case of inspection, you will be imposed a fine of UAH 85 or UAH 5,100 UAH for excisable goods for each incorrectly programmed product. If you multiply each product by 85, you get a pretty penny. 

And if you did not use a financial check for cash payments at all - from April 1, 2021, a fine will amount to 100% of the goods price in case of the first detection of the violation and 150% of the goods price, if the violation is detected again. 

Ignoring the accounting requirements when using the simplified tax system may lead to more fines than savings. We understand that a person who is not versed in taxation issues can’t follow all the developments of tax legislation, much less analyze them correctly. 

Installing a PPO today is not the only problem that individual entrepreneurs may face when trying to run and develop their business. There are more pressing problems, for example:

• incorrect contracts with the entire hired staff;
• untimely payment of salaries and bonuses;
• problems with the process of extending an employee at work;
• non-submission of reports, which threatens with fines that you may not even know about;
• exceeding the limit on transactions.

Important! Our firm offers not only legal, but also accounting services for your business, as an individual entrepreneur. What exactly does our team do:

• explain the current legislation in the field of accounting;
• we provide consultations regarding risks and choosing the right direction;
• we create a scheme for the accounting itself;
• we plan the most favorable profit taxation;
• we carry out all the procedures in the taxpayer's personal account (everything that can be done online);
• we pay salaries to employees;
• we submit the necessary reports to the tax service;
• we are present and accompany the sole proprietor during inspections by regulatory authorities;
• we make electronic keys;
• we get the necessary certificates from the tax office.

In a situation where an entrepreneur wants to be engaged exclusively in business, and not in its conduct, having an outsourced personal accountant is the best option. This allows you to be confident in the legal registration and conduct of your business.

Develop your business and increase your income, and we will take care of proper accounting.