Main points
- After the funds are received, the individual entrepreneur's account becomes his own, and entrepreneurs do not keep records of expenses under the “simplified” system.
- The tax service does not object to using a business card for personal expenses – provided that taxes are paid.
Can sole proprietors pay personal expenses with a business card / Collage 24 Channel
Whether an individual entrepreneur can pay with a business card in stores, gas stations, or restaurants is a question that still causes a lot of debate. Many believe that this is contrary to the law.
How to use a business card of a sole proprietor?
However, tax consultant Mykhailo Smokovich explains that once the funds are received in the individual entrepreneur's account, they become his own. Moreover, expenses for entrepreneurs are not recorded on the “simplified” tax system.
The accountant drew attention to the fact that the tax service does not object to such transactions, providing appropriate explanations for individual entrepreneurs.
So, you can use the money after paying taxes .
But if the individual entrepreneur has no debt in the Balance of Payments to the Budget, then the taxes have been paid. The only prohibition is transfers of funds to individuals, there are indeed additional taxes and reports,
– the expert emphasized.
What is the reason for the reservations? Mostly it is about the desire to “play it safe.” Some accountants are guided by outdated practices or individual atypical situations, rather than the systemic norm, Smokovich believes.
He also analyzed individual cases:
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Myth #1 – if the payment was made to an individual entrepreneur, you will need to submit 4DF.
Explanation: the tax authority does indeed make such a recommendation, but this is not in the legislation, which was previously confirmed by the Supreme Court.
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Myth #2 – if you buy alcohol on foreign websites, the tax office may consider it an import or sale of excisable goods.
Explanation: The mere fact of purchase is not a basis for such conclusions. Violations can only be established in the case of actual sale, and not the purchase of goods for personal use.
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Myth #3 – if an individual pays with a card of an individual of Group I to another individual of Group I, this will be a violation.
Explanation: when making a payment by card, the payer is an individual – the account holder, and not an entrepreneur as a business entity. Therefore, such a transaction is not considered an interaction between two individual entrepreneurs, and it is practically impossible to define it as an entrepreneurial one on the part of the payer.
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Myth #4 – if you pay for goods with a business card and then issue a return, these funds will be included in the income of the individual entrepreneur.
Explanation: A refund for a product is not business income.
Mykhailo Smokovich
Accountant, tax consultant
It is convenient when personal expenses and business funds are separated, and there are no personal transactions on the business account… This is the only position I can agree with. If it is convenient for you, then why not. If it is convenient to pay, then you can do it too.
What is worth knowing about transferring your own funds to an individual entrepreneur's account?
However, transfers to an individual entrepreneur's account from relatives (such as a husband or wife) may raise questions during monitoring. Therefore, to avoid problems, it is advisable to leave clear and unambiguous wording in the purpose of the payment.
In addition, the money must have a legal source of origin, from which mandatory taxes have already been paid (salary, sale of property, etc.), and supporting documents will also be useful.