Ask a tax advisor on the topic of Trade tax

Business registration, now questionnaire from the tax office.

February 12, 2010 | 15,00 EUR | answered by Matthias Wander

Hello,

I need some help with the questionnaire I received from the tax office after registering my business (I had asked about it here before).

The business registration is for a side job, etc. I have websites and want to earn money from advertising, etc.

My questions:

1. In the section "Information on the determination of advance payments," they ask for the expected income from the business. Do I indicate here what I earn or what is left over after expenses? I currently earn about 20€ per month, but have more expenses at the moment. Do I indicate 240€ for the year (20€ x 12 months) or do I subtract estimated expenses from that?

2. This leads me to something more fundamental. Should I generally indicate higher or lower amounts on the form than expected?

3. Section "Information on profit determination"
I can choose between "income-expenditure account, asset balance sheet, opening balance sheet, available, to be submitted later, profit determination using average rates.
What should I choose? I assume income-expenditure account. Then another question, how does this work?

4. Section "Information on registration and payment of turnover tax"
Here I should indicate the total turnover for the year (estimated). How is turnover defined again (with deductions or only income, etc.) and again the question of higher or lower than expected.

5. "Small business regulation"
What should I check here...

a) I opt for the small business regulation (§19 para. 1 Turnover Tax Act-UStG). I do not separately show VAT on invoices and cannot claim input tax deduction.

Or

b) I waive the application of the small business regulation. Taxation is carried out according to the general provisions of the Turnover Tax Act for at least five calendar years (§19 para. 2 UStG). Turnover tax returns must be submitted monthly in electronic form.

6. "Tax exemption"
Check yes or no? Fully or partially tax-free sales according to §4 UStG.

7. "Tax rate"
Sales are made that are wholly or partially subject to the reduced tax rate according to §12 para. 2 UStG: the options are "Yes," "No," "Type of sale/activity."

8. "Accrual/cash basis of fees"
I calculate VAT based on... Agreed fees (accrual basis)

or the second option...

Received fees, I hereby apply for cash basis accounting.

9. This is all new to me, as I am still very young. Do I have to file a tax return, and does the form come automatically with it? Or do I have to request it and make sure to submit it on time?

10. I just remembered something, I currently have a 400€ job that I want to quit soon because the circumstances are too difficult for me (boss, etc.). Should or must I still indicate it, or can I just leave it

Matthias Wander

Dear inquirer,

Thank you for your inquiry, which I would like to answer based on the information provided and in the context of your situation as part of an initial consultation.

1. Prepayments are determined based on the estimated profit, i.e. after deducting any operating expenses. If there is a loss, you should enter zero.

2. You should state in the questionnaire the profit you expect to generate. If you report a profit that is too low, you may end up with a tax payment. If the profit is too high, you will get back the excess tax paid, but you will still have to make higher prepayments despite the low income. Prepayments can be adjusted at any time.

3. For determining the profit, it is best to choose the income-surplus calculation method. With this simplified method of profit determination, you record income when received and expenses when paid.

4. Revenue is income minus sales tax. For small business owners, sales tax is not deducted from income. It is advisable to estimate revenue as realistically as possible.

5. If your turnover in the previous year was not more than €17,500 and in the current year not more than €50,000, you can take advantage of the small business regulation. This means you do not have to pay sales tax to the tax office. However, you cannot deduct input tax included in expenses. If you do not have high input tax amounts, it is recommended to choose the small business regulation; thus option a).

6. No

7. No

8. If you are a small business owner, do not check anything. Otherwise, it is actual taxation.

9. Yes, you must file a tax return. Usually, you will be asked by the tax office. With the request, you will also receive the forms. You can also prepare your tax return using the "Elster" program. You can download the program for free at www.elster.de.

10. Since the €400 job is tax-free, you do not have to report it.

11. The costs for this inquiry are deductible operating expenses. Strictly speaking, invoices paid last year should already be taken into account last year. For simplification purposes, you can record the costs in the profit determination for 2010 as "costs before business opening."

I hope this gives you an initial overview.

Best regards,

Wander
Tax Advisor