Taxation under the general rules. What do you need to know?

The amount of business taxation depends not only on the value of the income earned, but also on the form of taxation chosen. The most common method among entrepreneurs is the tax scale, based on the applicable tax thresholds. 

Tax thresholds are nothing more than limits on annual income, to which certain tax rates are assigned. In 2022, the rate is 12% for income up to PLN 120,000 and 32% for income above that amount.  

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For whom is the tax rate intended? 

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The tax scale is designed both for entrepreneurs running their own business, partners in a civil partnership, general partnership, partnership and limited partnership, and individuals drawing income from other sources, such as an employment contract. The main difference is that entrepreneurs can opt out of this form of settlement. For the rest, it is the only form of income tax available.

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Declaration of activities for taxation according to the tax scale

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Tax scale as a form of company taxation can be chosen when registering business activity on the CEIDG-1 form, or by not indicating another form of taxation when registering the company with the office. Entrepreneurs who previously accounted for lump sum or flat tax may also change the form of taxation to general rules. This is possible until the 20th day following the month in which the first income was earned in the new tax year.     

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It is then necessary to submit a written statement about the change from the current form of taxation to the relevant tax office or through a change via CEIDG-1.

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Settlement

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Accounting under the general rules, income tax is calculated on income and on the basis of business expenses. Settlement can be based on a tax revenue and expense ledger or in ledgers - this depends on the organizational and legal form of the business. Taxation in this form entitles the entrepreneur to take advantage of many tax benefits and deductions.

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In addition, choosing general taxation, the entrepreneur is required to calculate and pay advance payments for income tax during the year (on a monthly or quarterly basis). Advance payments must be calculated and paid to the account of the relevant tax office by the 20th of the month following the accounting period. After the end of the tax year, the taxpayer submits an annual PIT-36 return to the relevant tax office. The deadline for this obligation is April 30 of the following tax year.

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Summary 

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Tax scale accounting thus boils down to the fact that as income thresholds increase, so does the tax rate. If business income does not exceed the first tax threshold, this is certainly a criterion in favor of taxation on a tax scale. This form of taxation is also chosen by entrepreneurs for whom the lump sum on registered income and flat tax are not attractive, or those who care about deducting business expenses from income, deducting insurance (social) contributions and tax benefits.