Starting a business

This is a place for people who are operating a business in Peru, or who are planning on starting one.

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Remigius
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Starting a business

Postby Remigius » Wed Sep 22, 2010 3:13 pm

Hello all. My wife and I are freelancers and business is going well, so we're about to start a company. In our case, since we are spouses, it'll be an EIRL. It also means we'll not be able to get tax exoneration of the 4th category and have to start paying full taxes on all our income. Now, I suppose that if we need to buy equipment and office supplies for our company, that we can ask for an invoice and use this to get a tax cut. My question is how far you can go with these declarations (lunch, food, etc) and if in the end we'll be able to get back some of our monthly tax payments?

Who can give me a push in the right direction? I'd really appreciate your time.


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Re: Starting a business

Postby PTTurboe » Wed Sep 22, 2010 5:25 pm

Seems like everything but food and drink. Especially gas and car expenses.
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Re: Starting a business

Postby PTTurboe » Wed Sep 22, 2010 5:26 pm

What kind of freelancing?
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Re: Starting a business

Postby Remigius » Wed Sep 22, 2010 5:35 pm

PTTurboe wrote:What kind of freelancing?

Web design/translation/interpretation
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Re: Starting a business

Postby PTTurboe » Wed Sep 22, 2010 5:47 pm

What kind of web software?
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Re: Starting a business

Postby Remigius » Wed Sep 22, 2010 6:07 pm

PTTurboe wrote:What kind of web software?

PHP/JavaScript-AJAX/XHTML
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Re: Starting a business

Postby PTTurboe » Wed Sep 22, 2010 6:45 pm

I can't PM you...
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fanning
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Re: Starting a business

Postby fanning » Fri Sep 24, 2010 11:47 pm

You cannot just put lunch or food as business expenses.
You are allowed up to 0.5% of your sales to use for 'representation costs' and another 0.5% for 'employee expenses'. The representation costs must however be justified with some sort of proof with whom you had your business lunch, and the employee expenses are meant that you take your personnel for example to a restaurant to improve 'moral'. But the max is only 0.5% of your sales, so only if you sell really a lot it is worthwhile.
( This is only valid if you are in Regimen General, if you are in RUS or Regimen Especial, you pay tax over your sales, and not over your profit )

I don't know the details of an EIRL, but I don't really understand why you would loose the renta 4ta taxcut, as you also in that case would be on the payroll of your own company, and pay renta 5ta ( which has the same taxbreaks as renta 4ta ).
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Re: Starting a business

Postby Remigius » Sat Sep 25, 2010 10:19 am

fanning wrote:You cannot just put lunch or food as business expenses.
You are allowed up to 0.5% of your sales to use for 'representation costs' and another 0.5% for 'employee expenses'. The representation costs must however be justified with some sort of proof with whom you had your business lunch, and the employee expenses are meant that you take your personnel for example to a restaurant to improve 'moral'. But the max is only 0.5% of your sales, so only if you sell really a lot it is worthwhile.
( This is only valid if you are in Regimen General, if you are in RUS or Regimen Especial, you pay tax over your sales, and not over your profit )

I don't know the details of an EIRL, but I don't really understand why you would loose the renta 4ta taxcut, as you also in that case would be on the payroll of your own company, and pay renta 5ta ( which has the same taxbreaks as renta 4ta ).


Hi Fanning. Nice to see a compatriot ;) According to SUNAT we'd become 3rd category RER. My wife would be "titular" and I'd become General Manager. Apparently spouses can only start an EIRL. The moment we start issuing invoices for the type of work we do, we're not allowed any more to issue boletas in the 4th category for the same kind of work.

So with RER we'd be in a Regimen Especial, so I'd only pay tax over my sales and declare expenses that are roughly 1 % of our sales. With expenses I can imagine: office supplies, petrol (for going to clients), business lunches, etc. Everything that's related to my business, but I should declare wisely. But, how about, for example, business cards? I should be able to declare that as business expenses?

Thanks for you reply! Much appreciated!
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fanning
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Re: Starting a business

Postby fanning » Sat Sep 25, 2010 10:37 am

No, Remigius !

There exist two totally different tax regimes, one is RUS & RER ( I think 2% - 2.5% ), in which you pay a tax over your sales, and the other is 'regimen general' in which you pay taxes over your profit ( 30% over your profit )

If you are in the RER, it simply means that you cannot ( and don't have any need to ) deduce your taxes with expenses, as you pay taxes over your sales. An example.

Suppose your sales are S/. 100000, and your expenses are S/.85000, making you profit S/.15000

If you are in RER, you pay 2.5% over your sales, making the tax 2.5% over S/.100000 = S/.2500
If you are in Regimen General, you pay 30% over your profit, so 30% over S/.15000 = S/.4500

However if you make a loss or a small profit, then the Regimen general could make you pay less taxes:
( Or you have simply a lot of expenses )

Suppose your sales are S/. 100000, and your expenses are S/.105000, making your loss S/.5000

If you are in RER, you pay 2.5% over your sales, making the tax 2.5% over S/.100000 = S/.2500
If you are in Regimen General, you pay 30% over your profit, so 30% over S/.0 = S/.0

Also some industries, and I think software is in one of those, cannot be in the RER or RUS, but must be in Regimen general.
Furthermore, you can also start a SAC with some relative, in which the relative has 1 stock, and you and your wife have 9999 stocks. A SAC gives more protection in case the company doesn't work out, as with a SAC the socios are only responsible for the social capital, and with a EIRL or persona natural you are fully responsible.

There are many more details, I would suggest you get some professional info.
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Re: Starting a business

Postby Remigius » Sat Sep 25, 2010 11:06 am

fanning wrote:There are many more details, I would suggest you get some professional info.


Hi Fanning,

Many thanks for the explanation. Of course we'll go and get some more information. I think COFIDE is a good place for that. I was more interested in whether or not I could get some of the expenses back, such as travel expenses and office supplies. Just to give me an idea of what's possible and what's not.

Again, thanks for you time!

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