How to draw up the initial documentation of the business on a simplified tax system?

Correctly executed source documents is the headache of each business entity at the start of work. Today we will talk in more detail about what source documents are and how to properly organize work with them.

Read also: Simplified Taxation System For The LLC

The business source documents in 2020: Has anything changed?

Source documents are the documents that that evidences the occurrence of one or more business transactions. Any actions of the business entities related to doing business must be documented.

Many people are misled by the provisions of the Law on Cash Registers, which says that individual entrepreneurs using the single tax does not have to keep records of goods and prove their origin. You may conclude that you can forget about the source documents and not to worry.

However, in practice, the regulatory authorities refer to the provisions of the Tax Code, which states that all business entities must keep source documents regardless of the taxation system they use.  In addition, Single Tax Payers of 1-3 groups, VAT payers, must keep an income book, which is filled in on the basis of source documents.

Read also: Rules For Maintaining The Enterprise’s Book Of Records

How To Properly Draw Up Source Documents Of The Business?

There are general requirements for maintaining source documents in Ukraine, which we will briefly summarize here.

The documents must be executed in the state language - Ukrainian. There are clear explanations from the Ministry of Finance about the correct execution in the state language - so there can be no options here.

The main indicators of the correct execution of documents, its mandatory and additional details:

  • Document name;
  • Number, date;
  • Name of the seller, indication of its code, address;
  • Content of the business transaction;
  • Unit of measurement, quantity, sum;
  • Official’s signature.

At the moment, the mandatory availability of a seal has been cancelled. This does not mean that you can’t seal documents at all, if you want to get a seal - it can be easily done.

Please note! The above requirements apply to both paper types of documents and electronic documents, which are now more and more in use.

Read also: Accounting Support Of The Business Entering The Market

How to find out what source documents are needed for your business activity?

When registering as a business entity, it is often difficult to understand where to start the bookkeeping, what documents are needed and how to conduct transactions.

We will give examples of situations that arise when attempting to organize source documents. If you want to get a deeper understanding of the issue, please call us, we are always happy to help.

Cashless settlements.

Typical situation: You’ve found a buyer, the first his request is to get an invoice for payment. What should the invoice specify? And you’re immediately embarrassed. 

What to do: The business transaction shall be “correctly named” and comply with the type of activity. It is not uncommon to see documents stating the provision of services. And what services are these? Do not forget that if the individual entrepreneur using a single tax carries out activities that are not specified during the registration, it threatens the following: 

  • In case of a transaction for an unregistered type of economic activity, an entrepreneur shall pay 15% of such transactions of the current month and loses the status of a single taxpayer from the next month, switching to the general taxation system.

And this means that you will have to pay additional tax according to the general taxation system: income tax at 18%, military fee at 1.5% and single social security tax at 22%.

Let's say, if the type of economic activity is the sale of auto parts, but you carried out a deal on the sale of carpentry goods - you automatically move to the common system. 

Cash settlements.

The most common questions are as follows: 

  • How do I draw up a receipt for payment? 
  • In what form and with what details? 
  • How to install a cash register and program it taking into account all requirements of the law?

You can find some answers concerning the installation of the cash registers and its programming here.

Within the framework of cooperation between our staff accountants and Clients who need help with source documents, we organize the work for the correct filling in the documents, timely maintenance, complete recording in  the accounting, the availability of originals. This allows the Client to save personal time and be confident that all accounting documents are in accordance with the law.

If you need to understand how to keep records without getting penalties, or if you want to delegate this work to an experienced accountant, don’t hesitate to contact us. We are here to help you.

Publication date: 29/05/2020

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