Table of Contents:
1- Difference between professional and business activity.
2- What can I bill as a natural person with business activity?
3- Why should it be declared annually?
4- What can I bill as a natural person with business activity?
5- Conclusion.

The first step you have to take is knowing how to fit into the economic activity or heading, here we are going to tell you the difference if you are going to carry out a professional or business activity.

Now if you are a person who carries out commercial, industrial, motor transport, agricultural, livestock, fishing or forestry activities, regardless of the amount of income you receive, then keep reading this article, this will interest you!

1- Difference between professional and business activity.

Economic activities are understood as those that meet the following characteristics:

  • Existence of self-management of means of production and human resources or any of them.
  • Purpose of intervening in the production or distribution of goods or services.

Within income from economic activities, it is possible to differentiate between business and professional activities.

  • Professional activities are those included in Sections Two (professional activities of a general nature) and Third (professional activities of an artistic or sports nature) that are found in the Rates of the Tax on Economic Activities (IAE). And, by definition, income from professional activities is obtained from the free exercise of their profession.
  • Business activities are those included in the First Section of the IAE Rates.

Now, how is one different from the other?

The professional activity is one that requires a degree to exercise it, there are exceptions, don’t worry!, and that lacks structure or business organization.

While the business activity has a company structure, workplace, employees, among others. In the case of setting up a civil company with several partners who wish to practice as professionals, each of them must pay taxes independently.

2- What can I bill as a natural person with business activity?

What we want to explain to you first, if you do not know what you can bill as a natural person with business activity, is that you can register under 5 regimes:

  • Employees: Are those people who receive salaries and other benefits of a personal job available to an employee. You must file only once a year.
  • Fees: They obtain their income by providing their services in a professional manner, being independent from companies.
  • Business activities: These are people who carry out commercial, industrial, agricultural, trucking, fishing, livestock or forestry activities.
  • Leasing of real estate: They obtain income by renting or renting real estate.
  • Tax incorporation: They carry out business activities selling goods or providing services and it is not necessary to have a professional title to do so.

Now that you know the schemes to which people can register, it is important to know that one of the main obligations that every natural person has: Annual declarations.

3- Why should it be declared annually?

In addition to the fact that it is a fiscal obligation as taxpayers and although the boss must carry out this procedure, it is necessary that you do it on your own because in this way, you can deduct personal taxes and obtain a refund of the taxes you pay, the same as during the year can rise up to 30% of personal expenses, provided that you earn less than $400,000 per year. It is a fully recommended option, according to professionals.

It is important to mention that if you decide to carry out the procedure on your own, you must notify your direct boss. In order to deduct the personal expenses corresponding to a certain year, an expense that you must present that same year. It should be noted that individuals who only receive salary income from a single boss (employees) can comply at any time during the year.

4- What can I bill as a natural person with business activity?

They will be divided into 2 types of deductions: Monthly expense deductions and Annual expense deductions. We will talk to you about the payments that you can deduct both monthly and annually as long as you have the payment receipts in physical or digital form so that you can proceed with the deductions, but it is also important that you consult with a professional before submitting your annual statements.

  1. Deductions of monthly expenses: You can deduct expenses and even investments only if they are necessary to be able to carry out work activity, among the expenses that you must declare monthly there are:
  • Payment received for wages and salaries.
  • The fees that were made as employer to the IMSS.
  • The lease of the premises in which you carry out your work activities.
  • Stationery and stationery needed in your work activity.
  • Investments in fixed assets, for example, computer equipment, office equipment, buildings or transportation equipment.
  • Merchandise, raw materials, finished or semi-finished products, which are used to produce goods or services.
  1. Annual expense deductions: Expenses must be deducted annually, such as:
  • Medical, dental, nursing and hospital expenses, in addition, the rental or purchase of devices that are needed for rehabilitation, prosthetics, analyzes and clinical studies must be included.
  • Graduated optical lenses with a cost of up to $2,500.00 pesos.
  • Funeral expenses if necessary.
  • Payments made for health insurance premiums.
  • Donations.
  • School transportation (only if the school makes it mandatory).
  • Voluntary contributions to the retirement fund.
  • Tuition (covering studies from preschool to high school).

5- Conclusion.

Many people get confused when talking about this regime because, commonly, attention is usually focused on natural persons (employees) and legal persons (entrepreneurs), which causes a general understanding that there are only these two options. In fact, many people who carry out activities as individuals with business activity do not even know that they are or that they must register as such with the Tax Administration System.

That is why it is of the utmost importance that you read everything carefully and know how to differentiate all the schemes because if you make a mistake you can have problems with the SAT and you will have to waste a lot of time with the paperwork to change and correct everything.

With this information you are more than prepared to enter the regimen and get the most out of it. However, there is nothing wrong with asking for help; If you do not feel prepared or if these issues are simply not for you, you can always go to a trusted accountant to handle your finances and help you carry out the corresponding procedures in a safe and transparent manner.

We hope this information will be useful for you! If you liked this article, you can share it on your social networks and tag your friends, since it is also an excellent idea to keep them informed. And don’t forget to visit our official Factura.com page. Remember that we have the best blogs about business, finance, advice on many SAT topics and marketing to be able to better inform you, and as always we explain it to you with apples in the best possible way.

On the other hand, if you need to invoice electronically, we invite you to discover the platform at Factura.com! Get your 15 day trial.

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