Permitted activities for single tax group 1

What are the activities of IE 1 group?

Registered IE of the 1st group are entrepreneurs engaged in production activities, as well as certain types of trade and services. In accordance with the legislation of Ukraine, the list of activities that can be carried out by IE of the 1st group includes the following activities:

1. Growing plants and animals;
2. Fishing and fish farming;
3. Mining;
4. Food and beverage production;
5. Manufacture of textile products;
6. Manufacture of wearing apparel;
7. Manufacture of leather products;
8. Manufacture of wooden products;
9. Manufacture of paper and cardboard products;
10. Publishing;
11. Printing activity;
12. Production of coke and oil products;
13. Chemical production;
14. Manufacture of rubber and plastic products;
15. Manufacture of other non-metallic mineral products;
16. Metalworking;
17. Manufacture of finished metal products;
18. Production of electrical equipment;
19. Manufacture of computers, electronic and optical products;
20. Manufacture of medical products and equipment;
21. Production of motor vehicles;
22. Furniture manufacture;
23. Production of games and toys;
24. Wholesale and retail trade;
25. Repair of motor vehicles;
26. Repair of household products;
27. Housing services;
28. Hotel services;
29. Catering services in public places;
30. Health Services;
31. Social services.

The list of activities may change, so it is important to check the relevance of the information when registering IE 1 group.

The single tax rate for IE of the 1st group?

The single tax rate for IE of the 1st group depends on the chosen taxation system:

• 5% – for those types of activities where the main type of activity is the sale of goods (works, services), except for retail trade;
• 3% – for those who work on the general taxation system and carry out the production of agricultural products and sell them;
• 2% – for those who work on the general taxation system and carry out retail trade;
• 3% or 5% – for other activities, except for retail trade, depending on the total amount of income.

The value of the single tax rate for sole proprietorship on the simplified tax system may change every year, depending on changes in tax legislation.

Benefits of IE 1 group?

IE 1 group have the following advantages:

1. Simplified taxation system: IE on the simplified tax system are not required to keep complex accounting and submit reports to the tax authorities in a variety of forms and indicators. They can keep records of income and expenses on their own and submit simplified reporting.
2. Reduced tax rates: IE of group 1 have lower tax rates compared to IE of other groups, which allows them to save on taxes.
3. Increasing income limits: IE of group 1 have higher limits on turnover and income compared to IE of other groups. This means that they can have more turnover and income without switching to other taxation systems.
4. Flexibility in choosing the type of activity: Group 1 sole proprietors can engage in a wide range of activities, including retail trade and agricultural production, without the need to switch to another taxation system.
5. Convenience in business management: The simplified taxation system allows sole proprietors of the 1st group to focus on business management, instead of dealing with paperwork and complex reporting.
6. Fast start of activity: Registration of sole proprietorship of the 1st group on the simplified tax system occurs quickly and does not require many documents, which simplifies the process of starting activities.

Disadvantages of IE 1 group?

Despite the advantages, IE 1 group also has some disadvantages:

1. Restrictions in the choice of types of activity: IE of the 1st group can only engage in certain types of activities, the list of which is established by law. If the business idea does not match the list, then the FOP will have to switch to another taxation system.
2. Restrictions on the use of the taxation system: IE of the 1st group cannot use the taxation system if they have employees. If the sole proprietorship has employees, then they must switch to another taxation system.
3. Lack of flexibility: Group 1 sole proprietors cannot change their taxpayer status until the end of the tax period. This means that if a sole proprietor decides to change the type of activity or expand his business, then he will have to wait until the beginning of the next tax period to switch to another taxation system.
4. The need to keep records of income and expenses: Although sole proprietors of the 1st group have a simplified taxation system, they still need to keep records of income and expenses for the correct calculation of taxes. This can be a complex and costly process if the FOP is not experienced in accounting.
5. Limited opportunities for business development: IE 1 group has limited potential for business growth due to low limits on turnover and income. If the business begins to develop and exceeds the established limits, the FOP will have to switch to another taxation system or register an LLC.