Real Profit in Small Business: It is worth it?

Before analyzing whether real profit is valid for a small business, It is necessary to differentiate between real profit and presumed profit.

Presumed profit is normally adopted by companies that have annual revenue of up to R$ 48 million. In that case, Income Tax and CSLL (Social Contribution on Net Profit) are charged based on a percentage pre-established by the Revenue.

Briefly, the presumed profit tends to be the best option in cases where the profit is equal to or greater than the percentages predetermined by the Revenue (os 8%, 12% or 32%, depending on the type of company). In cases where the profit margin is lower, the best thing is to use the real profit, because this way you avoid paying taxes on a profit that did not exist.

Real Profit is what the general rule for calculating the Income Tax and CSLL of a legal entity is called.. No real profit, available to all companies and mandatory for those who earn more than R$ 48 million, taxes are calculated based on the profit determined.

REAL PROFIT AND SMALL BUSINESSES

Actual Profit is considered by many to be fairer than Presumed Profit, This is because the first is based on results that actually occurred through the accounting balance, with adjustments indicated by legislation, with additions and deletions to the calculation base.

However, Real Profit is also considered more bureaucratic, This is because it leads to the non-cumulative system of PIS and COFINS, i.e., it has higher rates and credit for contributions. However, in addition to focusing on a basis closer to the effective generation of business profit, Real Profit has advantages due to the greater probabilities of using tax planning.

Basically, When opting for Real Profit the most obvious advantages are:

The ability to balance past tax losses, or even those from the same exercise;
Reduce or interrupt the collection of IRPJ and CSLL, from the use of monthly balance sheets;
Acceptance of PIS and COFINS credits;
Greater odds of tax planning.

Nonetheless, there are also disadvantages arising from Real Profit, which are:

Maximum accounting rigor through tax rules, such as, tax adjustments, which theoretically have greater bureaucracy. However, not fundamentally, seen that all companies, including those taxed by Presumed Profit or Simples Nacional, need accounting, in accordance with the requirements of current commercial legislation.
PIS and COFINS rates are higher in real profit, in a special way, guys for service companies, which presents low credits of company contributions.

Due to the ease, and for pure convenience, There are countless companies that prefer Presumed Profit. However, It is worth highlighting that, at least annually, It is necessary to analyze the accounting balance sheets, total taxation under this regime (including IRPJ, CSLL, PIS and COFINS) x the taxation simulated by Real Profit, already considering the use of tax planning techniques.

Like this, It is up to each entrepreneur to analyze the pros and cons of real profit, and in this way, determine whether this is the truly viable model for your company, mainly because taxes and fees are relatively high.

Your accountant or accounting firm should be able to give you a good answer. Ensuring that your company is regular with the revenue and paying the least amount of taxes possible.

Get in touch and let's talk to see if there is a possibility of improving your tax planning.

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