Tax and own business

Do you have a sole proprietorship you must pay tax on your profits in the company.

The tax you have to pay on your profit in the company, say 300,000 Dkr., will be the same tax you should have paid if you have earned 300,000 in a regular salaried position.

Tax if you own a limited company

Have you created an entrepreneurial limited company or a limited liability company it will operate as a separate legal entity. You as the owner of the shares in the company are likely to hire yourself as the manager in the company and you will be paid wages like any other employee.

Your company must withhold the tax you as an employee must pay. The company must then later pay your taxes to SKAT (The Danish Tax Authority).

Does the company have profit it must pay 24% tax on profits (2015).

Report expected profits to SKAT

As an employee you have a regular income and the company you work for report your wages to SKAT. When you start a sole proprietorship business SKAT does not how much you earn.

You therefor have to go to SKATs website and enter the figures for your anticipated income in the coming year. SKAT will then calculate your taxes and send you payment slip.

When the year is over and you know for sure how much you earned, you will then get money back if you paid too much tax or asked to pay more money to SKAT if you have performed so well that you earned more than you expected.

Pay tax after a year

If you have a lot of self-discipline and control over your accounts or have a good accountant to take care of the accounts and your finances, you can wait to pay the full tax a year after you have earned it.
This means that the money you would have paid in taxes during the year, you can keep in your own bank account. This will give you more liquidity in the company.

The big risk paying tax this way is that you might have spent the money you should have paid in taxes. And to owe SKAT money is a serious affair.

Small company with little profits

Do you have a small company beside your full-time job and you can anticipate a profit of perhaps 5 to 10.000 Dkr. you do not need to change anything on the SKAT website. You can wait to tell SKAT about the profit from the year when you make tax return at the start of the new year.

Just make sure that you have saved some money so you can pay the extra tax.

Report the actual profit to SKAT

When the year for your business is over, you know from your records how big your profit is. This surplus you must report on your online extended-tax return, which you can access on SKAT´s website in the beginning of the new year.
From this information SKAT will then calculate the tax you have to pay. Expect to pay 35-40 % of the profit in tax.

The auditor can help

If you have a turnover, costs and profits of a certain size, an accountant can help you pay as little tax as possible.

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