How to choose between being a small-scale taxpayer and a general taxpayer
- Release Date：2025-03-21 08:00:15
- Reading volume： 0
Just starting a business and feeling completely confused about tax and finance issues? Should I choose a small-scale taxpayer or a general taxpayer? A single character difference may cause your business to pay more taxes and fall into more traps! Don't worry. Exclusive Easy Finance and Taxation will explain the core differences in just 3 minutes and help you master the essential finance and taxation survival guide - save money and be compliant!
Small-scale taxpayers vs general taxpayers
The differences between small-scale taxpayers and general taxpayers lie in the following five core aspects:
Which one is more cost-effective?
Does the customer want a special invoice？
If the clients are mostly large enterprises (such as state-owned enterprises or listed companies), they may request special invoices for deduction, which is more suitable for general taxpayers.
If the client is an individual or a small business, a regular invoice is sufficient. Small-scale taxpayers have a lower tax burden.
Is the company's procurement cost high?
If the purchase volume is large and a large number of input invoices can be obtained (such as in manufacturing and trade industries), general taxpayers can make deductions, and the overall tax burden may be lower.
If the costs are mainly based on human resources and services (such as consultation and design), and there is a lack of input invoices, small-scale taxpayers are more advantageous.
Will the annual sales exceed 5 million?
It is expected to rapidly exceed 5 million in the short term, directly apply for general taxpayer status, and avoid being flustered after mandatory upgrade.
If the business scale is small and stable, priority should be given to small-scale tax payment to enjoy a low tax rate.
The three major misunderstandings that entrepreneurs must know!
Misconception 1: Is small-scale tax payment always more cost-effective?
❌ wrong! If the gross profit is low and the input tax is high, the tax burden for general taxpayers may be even lower!
Misconception 2: Small-scale taxpayers are exempt from value-added tax for 1.2 million yuan within a year?
❌ wrong! Within a quarter, the amount is no more than 300,000 yuan (VAT exemption for ordinary invoices). As long as the conditions are met, the corresponding ordinary invoices for that quarter are exempt from VAT.
Misconception 3: No tax to pay if no invoice is issued?
❌ is completely wrong! Even income without invoices needs to be declared, and the risk of tax evasion and tax fraud is huge!