Flat rate entrepreneur - how to become an entrepreneur?
If you are thinking about starting an independent business, one of the simplest and most affordable ways in Serbia is to become a flat rate tax entrepreneur. This business model is good because it allows you to work as a small business owner without the need to keep complex bookkeeping records.
Flat rate taxation is particularly attractive as it leads to fixed monthly costs, reduced administration and a flexible work model. Of course, before starting the journey of entrepreneurship, it is important to understand the entire process, from the moment of registration to the way of doing business and settling tax obligations.
In this guide, we will explain how to become a flat rate entrepreneur, what are the key advantages but also obligations, and what should be paid special attention to in order not to make unnecessary mistakes.
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Contact us and start your businessWhat is a flat rate entrepreneur?
A flat-rate entrepreneur is a business-capable natural person who performs an activity with the aim of generating income, which is taxed flat-rate, and which is registered as such in accordance with the law on registration.
If the entrepreneur decides to be a flat rate entrepreneur, he is not obliged to keep business books, but is only obliged to pay taxes on a monthly basis. On the other hand, entrepreneurs who keep business books, in addition to the obligation to pay taxes, also have the obligation to keep business books.
Flat-rate entrepreneurs operate much more simply, the amounts of taxes and contributions are fixed and the administrative part of the work is significantly simpler.
Who can be a flat rate entrepreneur?
Any business-capable natural person can be a flat rate entrepreneur, with the fact that it should be noted that for certain activities and activity codes, a permit from the competent authority must be obtained before registration. Likewise, certain liberal professions whose activity is determined by special regulations are registered on the basis of those regulations.
It is very important to note that an entrepreneur can perform work in the form of a flat rate tax only if the income he achieves in a calendar year does not exceed the amount of RSD 6,000,000.00. This means that if the entrepreneur crosses this threshold, he will have to start keeping business books, that is, enter the VAT system if the legal requirements are met.
How to open an entrepreneurial store - step by step
Preparation and selection of profesional activities
After the entrepreneur has designed his business plan, before the registration itself, he should choose the appropriate activity code. It is necessary to determine the code of the activity that corresponds to the greatest extent to the activity that the entrepreneur will be engaged in. As previously mentioned, some activities require prior obtaining of permits by the competent authorities.
Registration of entrepreneurs in APR
Serbian Business Registration Agency is an institution before which requests for opening an entrepreneurial business are submitted. These applications can be submitted in person or by post, as long as the SBRA forms are completed correctly. If you encounter a problem when filling out applications and collecting documentation, it is best to consult with lawyers and attorneys, as well as with the relevant legal regulations.
Tax application and determination of flat tax
How does an entrepreneur make the choice to be flat taxed? This is done in such a way that the entrepreneur, when submitting the registration application itself to the SBRA, requests to be taxed in a flat-rate manner.
Another important question that is often asked is how the amount of tax will be determined, but the answer to that question depends on the basis for calculating the tax, on the average salary of the municipality/city where the entrepreneur is registered, the average salary in the Republic of Serbia, the registered activity, as well as other prescribed criteria.
This further leads us to the conclusion that the amount of tax does not depend on the realized income of the entrepreneur, with the previously mentioned income limitations on an annual level.
Opening a business bank account
An entrepreneur is a business entity that carries out activities in the Republic of Serbia, and as such has the obligation to open a bank account. The choice of bank depends entirely on personal choice.
VAT status of entrepreneur
When must the flat rate entrepreneur be included in the VAT system? In the event that an entrepreneur achieves a total income of more than 8,000,000.00 dinars within a period of 12 months, he loses the right to be taxed at a flat rate and enters the VAT system, which complicates the way of running an entrepreneurial business, especially in the administrative and tax sense.
Entrepreneur or LLC?
Finally, it should be taken into account that when making the decision to start a business, there is often a doubt as to whether to open an entrepreneurial shop or a company in the form of an LLC (limited liability company).
This question is quite complex because both ways of doing business bring certain advantages, but also disadvantages, and you can read more about it in our blog about how to start a company in Serbiawhich can remove certain doubts. Finally, if you still have doubts, you can always contact a corporate law lawyer, who will advise you on what is best for you and your business.
