How to complete a PIT return for sole traders

 The basics of PIT settlement for business owners

PIT accounting for business owners is a key element of financial management in any business. In Poland, self-employed individuals can choose from several forms of taxation, each with its own specific requirements and benefits. The choice of the appropriate form depends on many factors, such as the level of income, tax-deductible expenses and the entrepreneur’s tax preferences.

 For many business owners, the most commonly chosen form is the PIT-36 tax return, which applies to income taxed according to the tax scale (12% and 32%). This is the form preferred by those who derive income from business activities conducted under general rules. It is worth noting that the PIT-36 form is also used by business owners who derive income from various sources, such as private lettings or contracts for services, provided that such income is taxed according to the tax scale.

 The choice of taxation method has a direct impact on the amount of income tax payable on business activities. It is therefore important for entrepreneurs to fully understand the differences between the available options and to choose the one that best suits their needs. For new entrepreneurs, it is particularly important to understand that not every business activity can be taxed under every scheme. For example, certain types of business activity are excluded from the flat-rate tax scheme.

 Another important aspect is the option to file a joint tax return with a spouse or as a single parent. Entrepreneurs who choose to be taxed under the general rules can take advantage of these options, which often lead to tax benefits. However, those who file under the flat-rate scheme are excluded from these options, unless they meet specific conditions, such as submitting a zero PIT-28 return.

 The PIT-36 form for businesses and its use

 The PIT-36 form is one of the most important tools in the arsenal of an entrepreneur who settles their tax affairs under the general rules. It applies to income taxed according to the tax scale and is used by individuals who calculate and pay their income tax advances themselves. This is particularly important for business owners who do not have a payroll agent responsible for collecting tax advances.

 The PIT-36 form is used not only by those running a business but also by those who derive income from other sources, such as letting or leasing. It is important for business owners to understand that not all income can be declared on this form. For example, income taxed under the flat-rate scheme requires the submission of PIT-28.

 The PIT-36 form is also required when including the income of minor children or offsetting losses from previous years. Entrepreneurs must bear in mind that offsetting losses can be useful in reducing the tax base and thereby lowering the tax due.

 It is also worth noting that the PIT-36 form allows for joint filing with a spouse, which may be advantageous where one spouse’s income is taxed according to the tax scale whilst the other utilises other forms of taxation. However, this is only possible if both spouses meet certain conditions, such as maintaining joint ownership of property throughout the tax year.

The PIT-36 form is an integral part of income tax returns for many entrepreneurs. Completing it correctly and understanding all the relevant regulations is crucial for avoiding tax errors and optimising tax liabilities.

 Tax reliefs for entrepreneurs

 Tax reliefs for entrepreneurs are an important factor that can significantly affect the amount of income tax due. Entrepreneurs have access to various reliefs that can help reduce their tax liabilities. The most popular of these are the child tax relief, the rehabilitation tax relief and the internet tax relief.

 The child tax relief is one of the most advantageous reliefs for business owners operating under the general tax regime. It allows a specific amount to be deducted from tax for each child, which can significantly reduce the amount of tax due. It is important for business owners to ensure they meet all the conditions for claiming this allowance, including having the relevant documents confirming their entitlement to the deduction.

 The rehabilitation allowance is another form of support for business owners who incur expenses for rehabilitation purposes. It may be applied to expenses related to treatment and rehabilitation, as well as to the purchase of medical equipment. However, business owners must bear in mind that this relief is only available to people with a certified disability or to those who have a disabled person as a dependant.

 The internet tax relief is another popular relief available to entrepreneurs. It allows expenses incurred for internet usage to be deducted from taxable income, which is particularly beneficial for businesses operating online. However, business owners must bear in mind that this relief is subject to limits and can only be claimed for a specified period.

 It is also worth mentioning the option to deduct health and social security contributions from income. For entrepreneurs subject to a flat-rate tax, it is possible to treat health insurance contributions as tax-deductible business expenses, which may be more advantageous than deducting them.

Tax reliefs are an important tool for business owners, which can help reduce their tax liabilities. However, it is crucial that business owners fully understand which reliefs are available to them and what conditions they must meet to benefit from them.

 Accounting for business activities

 Accounting for business operations is an integral part of running a business. Good accounting management not only ensures taxes are settled correctly but also enables effective management of the business’s finances. Entrepreneurs can choose from various accounting methods, including simplified accounting and full accounting.

 Simplified accounting, also known as the Income and Expenditure Ledger (KPiR), is most commonly chosen by small business owners. It is a relatively straightforward method to maintain and allows for the tracking of business income and expenses. However, business owners must bear in mind that, despite its simplicity, the KPiR requires accuracy and regularity in record-keeping.

 Full-scale accounting is a more complex form of bookkeeping, which is required for larger companies and businesses that exceed certain revenue thresholds. Full-scale accounting allows for a more detailed tracking of the company’s finances, but also requires greater knowledge and experience in accounting. For this reason, entrepreneurs often decide to employ an accountant or use the services of an accountancy firm.

 An important aspect of business accounting is also keeping records for VAT purposes, if the business owner is a registered VAT payer. These records allow for the tracking of transactions subject to VAT and are essential for the correct settlement of this tax.

 Entrepreneurs must also bear in mind their obligation to prepare and submit tax returns and financial reports to the relevant authorities. Keeping accounts regularly and submitting the required documents on time is crucial for avoiding problems with the tax authorities.

Accounting for a business is an integral part of managing the company’s finances. Regardless of the chosen accounting method, business owners must ensure that their records are kept accurately and regularly, which enables the correct settlement of taxes and effective financial management.

 Calculating income tax advances

 Calculating income tax instalments is one of the fundamental obligations of entrepreneurs running a business. These instalments are paid to the tax office during the tax year and form part of the annual tax return. The amount of the advance payments depends on the chosen form of taxation and the amount of income earned.

 For business owners who settle their tax under the general rules, income tax instalments are calculated on the basis of the income earned during a given tax period. Entrepreneurs must take into account all revenue and tax-deductible costs, and then calculate the taxable income. It is worth remembering that advance payments can be reduced by any tax relief to which they are entitled.

 Entrepreneurs who pay tax at a flat rate calculate their advance payments in a similar way, with the difference that they apply a fixed tax rate of 19 per cent. In the case of the flat-rate tax on recorded revenue, advance tax payments are calculated on the basis of revenue, without taking tax-deductible expenses into account, which means that the tax rate is applied directly to the revenue.

 Business owners can choose between monthly and quarterly systems for paying income tax instalments. This choice should depend on the nature of the business and the business owner’s preferences. Monthly advance payments allow for better control of cash flow, whilst quarterly payments may be more convenient for business owners with stable revenue.

 Another important aspect of calculating advance payments is the option to use a simplified advance payment scheme, which allows for the payment of fixed amounts throughout the tax year. This is a particularly advantageous option for business owners who prefer financial stability and predictability in their tax costs.

Calculating income tax advance payments forms part of entrepreneurs’ tax compliance. Regardless of the chosen form of taxation, entrepreneurs must accurately calculate their tax liabilities and pay advance payments on time, thereby avoiding problems with the tax authorities.

 Choosing the right form of taxation

 Choosing the right form of taxation is one of the most important decisions any business owner must make. This decision affects the amount of income tax payable on business activities and the method of settling accounts with the tax office. Entrepreneurs can choose from several forms of taxation, the most popular of which are the tax scale, the flat-rate tax and the lump-sum tax on recorded income.

 The tax scale is the basic form of taxation used by the majority of entrepreneurs. It is a progressive system, meaning that tax rates increase as income rises. The tax scale allows for the use of numerous tax reliefs and joint tax returns with a spouse, which makes it attractive to many entrepreneurs.

 The flat-rate tax is an alternative to the tax scale and is characterised by a fixed tax rate of 19 per cent. This form of taxation is preferred by high-income entrepreneurs, as it allows them to avoid higher tax rates. However, the flat-rate tax does not allow for the use of most tax reliefs or joint tax returns with a spouse.

 The flat-rate tax on recorded income is a form of taxation based on income, without taking into account the costs of obtaining it. This form of taxation is advantageous for entrepreneurs with low operating costs, as it allows them to reduce their tax base. However, the flat-rate scheme does not allow for the use of tax reliefs or joint tax returns with a spouse.

 Entrepreneurs must carefully consider their choice of taxation scheme, taking into account the specific nature of their business and their individual needs. It is also worth consulting a tax adviser, who can help in selecting the most favourable taxation scheme.

Choosing the right form of taxation is crucial for optimising an entrepreneur’s tax burden. Before making a decision, it is worth carefully analysing the available options and selecting the one that best suits the company’s needs and capabilities.

 Summary

 Filing PIT returns for business owners is a complex process that requires accuracy and an understanding of the applicable regulations. Business owners must be aware of the available tax regimes and the associated obligations and opportunities. Choosing the appropriate form of taxation, correctly calculating income tax instalments, making use of tax reliefs and maintaining accurate accounts are key elements of effective financial management within a business.

 For many business owners, using the services of a professional accountant or tax adviser can be of invaluable help. These specialists can assist in understanding complex tax regulations, as well as in optimising the tax burden. It is also worth making use of modern tools, such as tax return software, which can simplify the entire process and minimise the risk of errors.

 The future of tax returns in Poland is moving towards ever-greater digitalisation and automation. Services such as Twój e-PIT are becoming increasingly popular and offer business owners convenient and fast solutions for filing their tax returns. It is worth keeping an eye on the development of these tools and using them to simplify the tax filing process.

 In summary, PIT filing for business owners requires not only knowledge of the regulations but also the ability to plan and manage finances. Entrepreneurs should strive to continually improve their knowledge of tax matters and make use of the available tools and services that can help them manage their tax liabilities effectively.

 We encourage you to explore this topic further and make use of the available resources, which can help you better understand and manage taxes in your business. Remember that proper tax management is the key to your company’s financial success.

Frequently asked questions

Who is required to submit a PIT-36 form?

Form PIT-36 must be submitted by sole traders taxed according to the tax scale, those carrying forward losses from previous years, those declaring the income of minor children, and those who have earned income requiring them to calculate their own tax advances.

What is the difference between the PIT-36 and PIT-37 forms?

PIT-36 is intended for people who must calculate their own tax advances on business income or other income, whilst PIT-37 applies to people for whom tax advances are calculated by a payer, e.g. an employer.

Can I file a joint return with my spouse using PIT-36?

Yes, you can file a joint tax return with your spouse using the PIT-36 form, provided that you both meet the conditions for joint filing and do not use forms of taxation that preclude this, such as the flat-rate tax or the lump-sum tax.

What tax reliefs can I claim on the PIT-36 form?

On the PIT-36 form, you can claim various tax reliefs, such as child tax relief, rehabilitation tax relief or social security contributions, provided that the specific conditions for each are met.

Do I have to submit a PIT-36 form if I have suspended my business activity?

Yes, even if your business was suspended for the whole year, you must submit a ‘zero’ PIT-36 return, showing that you had no income from business activity.

Can I submit a PIT-36 online?

Yes, you can submit your PIT-36 online via the e-Deklaracje system or using tax return software, which is the most convenient way to file your return quickly and accurately.

By when must I submit my PIT-36 for 2024?

The PIT-36 for 2024 must be submitted by 30 April 2025. This is the final deadline for submitting the return and settling any tax liabilities.