Companies pay income tax

Income tax, sales tax, trade tax: Which types of tax are relevant for companies?

Taxes play a central role for companies. Income tax, corporation tax, trade tax, sales tax or wage tax are just some of the types of tax that entrepreneurs have to deal with. Each type of tax has its characteristics and different payment deadlines. But not all types of taxes are relevant for every entrepreneur. Which types of taxes play a role for you and your company depends on various factors.

Which types of taxes are relevant for companies?

There are different types of tax that play a role in the taxation of companies in Germany. The main types of tax include:

The income tax

Income tax is a tax that is payable in Germany on the Income of natural persons will be charged. The legal basis for the calculation and collection of this direct or community tax is regulated in the Income Tax Act (EStG).

The Income tax amount depends on the total income of the taxpayer. To calculate taxable income, you will need different types of income, for which different allowances apply, added together. This includes, for example, income from

  • independent work
  • not self-employed work
  • the commercial enterprise
  • Rental and leasing
  • Capital assets
  • Agriculture and Forestry

Companies can reduce their profits through deductible business expenses. These include, for example

  • Personnel costs (wages and salaries)
  • Benefits in kind
  • interest
  • Down payments
  • Provisions and deferred taxes
  • Deductible input tax
  • VAT paid
  • Depreciation
  • material costs
  • Rental costs
  • Insurance
  • Car costs
  • Advertising expenses

This reduces a company's taxable income and can lower the income tax due. The Loss carryforward also significantly reduces the tax burden of income tax.

Income tax is subject to tax progression, which means that the tax rate rises as income rises. The Maximum rate is currently 42 percent for income tax. Up to a tax Basic tax allowance income of 9,000 euros is not taxed.

How high the income tax will ultimately be for you can be calculated on the basis of your individual information with the help of income tax calculators on the Internet.

Difference in wage tax and income tax

Income tax is levied on income from self-employment, capital assets or pensions. The wage tax is not an independent tax, but a special form of income tax that employees pay on their wages.

As a self-employed person, you are obliged to report your income to the responsible tax office yourself. The deadline for your income tax return is July 31 of the following year. Submit your income tax return using a Tax advisor a, the deadline for submission is extended to End of February of the year after next. The taxpayer makes quarterly advance payments on the income tax, which he is expected to owe the tax office over the period of the assessment of the income tax. Advance payments are due on March 10, June 10, September 10 and December 10, respectively. With the income tax assessment you will receive the exact amount of income tax to be assessed. If you paid too much income tax, you will receive a refund. If the prepayments are insufficient, one awaits you Back tax payment

The corporate income tax

TheCorporation tax (KSt) is levied on the income of legal entities such as corporations, cooperatives or associations. The taxation of their income is regulated in the Corporate Income Tax Act (KStG). Corporate income tax is currently 15 percent for all corporations. Normally, the profit of the calendar year or financial year is used as the basis. The taxable profit is made by the Business asset comparison calculated.

The sales tax

The value added tax is levied on all sales generated by the company in Germany. The Value Added Tax Act (UStG) differentiates between the standard tax rate of 19 percent and the reduced tax rate of 7 percent.

Small business regulation

Under certain circumstances, companies can take advantage of the small business regulation and thus be exempt from paying sales tax. According to §19 UStG, you must meet two requirements for the tax office to classify you as a small business: Your turnover in the previous calendar year must be less than 22,000 euros and may not exceed 50,000 euros in the current calendar year.

The business tax

The Business tax in Germany are subject to all companies with the exception of the freelancer. The trade tax is calculated on the basis of the trade income. This arises from the after Income Tax Act (EStG) or Corporate Income Tax Act (KStG) determined profit. The taxation of trade income is regulated in the trade tax law (GwStG).

The wage tax

The income tax is a special form of income tax and is relevant for companies that employ employees. The company itself does not pay any wage tax, but is legally obliged according to § 19 EStG to withhold wage tax from the wages and salaries of its employees and pay it directly to the tax office.

Correct bookkeeping and accounting

At the beginning you are faced with the task of keeping your books correctly and keeping them up to date. They form the basis for your company's accounting. It applies to all revenue To document down to the cent and to collect all invoices and receipts. The same goes for everyone Corporate spending. Here, however, a distinction is made according to the type and size of the company, as some entrepreneurs have an easier time with accounting than others.

Small business owners and freelancer benefit, for example, from the simple bookkeeping and a simplified accounting method - the income-surplus-account (EÜR). In addition, they do not need to have a cash book. In this case, entrepreneurs should be able to do their bookkeeping on their own. When filing your income tax return, it is advisable to hire a tax advisor. Companies that go to double-entry bookkeeping and Preparation of a balance sheet It is recommended that you hire a professional accountant or hire an accounting firm.

If there is order in the accounting, it is Basis for tax payments such as income tax, trade tax or sales tax.

Is it worth hiring an accountant or tax advisor to do the income tax return?

Whether it's worth it for you to have a Tax advisor or accountant Entrusting your income tax return depends on how complex your tax affairs are and how much time you are willing to invest in this work. Corporations will have a higher effort here than solo self-employed persons, freelancers or freelancers. The solution may lie in answering the following questions:

  • How much time do I spend doing bookkeeping and preparing income tax returns?
  • Is there any profitable job I could do instead of bookkeeping and preparing income tax returns?
  • What is my hourly wage?
  • How much does the accountant / tax advisor cost?

If the costs that arise when you take care of your income tax return yourself exceed the profit that you can earn in the same time with other work, it is no longer worth doing these tasks yourself. In addition, you can deduct the costs for the accountant and / or tax advisor from the profit of your company as part of your income tax return.

Nevertheless, as an entrepreneur, you should know which ones Tax types What is relevant for you is which documents you have to submit and which deadlines have to be observed. In the best case scenario, this saves your accountant or tax advisor time in preparing your income tax return and, at the same time, you save costs.