Simplified Tax System
Posted: Mon Jan 06, 2025 3:30 am
A franchisor who works on the simplified tax system will pay tax on the payment as income. But for the franchisee, the situation is different:
If it works on the "income" system. In such a situation, the contribution is not taken into account in the taxable base.
If it operates on the "income minus expenses" system. The amount can be taken into account in expenses, but under one condition. If what the rights to which were transferred under the franchise agreement falls into the closed list from subparagraph 2.1 of paragraph 1 of Article 346.16 of the Tax Code of the Russian Federation.
The closed list includes: exclusive rights to use inventions, utility models, industrial designs, computer programs, databases, integrated circuit topologies, production secrets (or know-how).
Lump sum payment in accounting
Here we will talk about management accounting, not bangladesh phone number lead accounting. After all, it is management accounting that allows you to see the real picture of the business and make decisions that will make it more profitable. Let's consider the features of management accounting using an example.
Example . There is a 5-year franchise agreement and a lump sum payment of 600 thousand. If I am the franchisor, I will not immediately include the entire amount in the revenue. Instead, I will distribute it over 60 months, that is, over the entire term. This means that I provide the service in parts. The same is true for royalties: I include them in the revenue monthly, since they are received regularly.
If I am a franchisee, the fee reduces my net profit because I pay it up front. Royalty also reduces profit, but as a regular expense that I include in my profit and loss statement each month.
See the table for more detailed information on how to record information across three reports :
cash flow (CF);
income statement (IPS);
balance.
Example of management accounting
The main conclusion : always keep management reports and record exact figures, including the lump sum payment. Only then will you understand whether your business is really making money on the franchise and where there are growth points.
If it works on the "income" system. In such a situation, the contribution is not taken into account in the taxable base.
If it operates on the "income minus expenses" system. The amount can be taken into account in expenses, but under one condition. If what the rights to which were transferred under the franchise agreement falls into the closed list from subparagraph 2.1 of paragraph 1 of Article 346.16 of the Tax Code of the Russian Federation.
The closed list includes: exclusive rights to use inventions, utility models, industrial designs, computer programs, databases, integrated circuit topologies, production secrets (or know-how).
Lump sum payment in accounting
Here we will talk about management accounting, not bangladesh phone number lead accounting. After all, it is management accounting that allows you to see the real picture of the business and make decisions that will make it more profitable. Let's consider the features of management accounting using an example.
Example . There is a 5-year franchise agreement and a lump sum payment of 600 thousand. If I am the franchisor, I will not immediately include the entire amount in the revenue. Instead, I will distribute it over 60 months, that is, over the entire term. This means that I provide the service in parts. The same is true for royalties: I include them in the revenue monthly, since they are received regularly.
If I am a franchisee, the fee reduces my net profit because I pay it up front. Royalty also reduces profit, but as a regular expense that I include in my profit and loss statement each month.
See the table for more detailed information on how to record information across three reports :
cash flow (CF);
income statement (IPS);
balance.
Example of management accounting
The main conclusion : always keep management reports and record exact figures, including the lump sum payment. Only then will you understand whether your business is really making money on the franchise and where there are growth points.