Innovation for the self-employed – financial management and accounting at the click of a button

As early as next year, a small entrepreneur’s account will start operating in Lithuania, which will facilitate financial and accounting management for self-employed persons. It is hoped that this will encourage more people to become self-employed. The account will have many advantages. It is designed taking into account the needs of self-employed persons – finances will be managed at the click of a button.

The innovation is planned to be implemented in several stages. A trial phase is expected from the beginning of the year, which will give customers the opportunity to test the account and evaluate the advantages. Later, it will be expanded with additional useful features based on customer feedback. The measure was initiated by the Ministry of Economy and Innovation together with the Ministry of Finance – the aim is to reduce the administrative burden on small and medium-sized businesses.

“This is an advanced, modern approach to financial management and accounting – all processes are automated. Self-employed persons will be able to devote all their strength and attention to the ongoing activities, instead of time-consuming tax calculations and filling out declarations. By reducing the administrative burden, we encourage the entrepreneurship of residents and create more opportunities for small entrepreneurs,” says Aušrinė Armonaitė, Minister of Economy and Innovation.

The Ministry of Finance also emphasizes the benefits of a small entrepreneur’s account. “We believe that the instrument prepared by the Ministry of Finance will become a daily routine for the self-employed – just like connecting to e-mail. banking. Easy, comprehensible and transparent are the most important priorities of a small entrepreneur’s account”, emphasized Finance Minister Gintarė Skaistė.

Less administrative burden for the self-employed

The initiation of this innovation was motivated by the expectations expressed by the target group. Surveys show that one self-employed person spends about 18 hours a year on financial accounting. A total of 4.3 million is allocated for keeping records and paying taxes. hours, which amounts to approximately 35.1 million euros.

More than half of the survey participants rate their accounting skills as average or below average. When interviewed, self-employed persons usually point to such difficulties as the complicated process of submitting declarations, the difficulty of calculating the taxes to be paid, and the lack of knowledge of accounting. Some of the respondents point out that accounting takes a lot of time.

Thus, automated accounting will save time, as well as reduce the likelihood of errors when calculating taxes. It will no longer be necessary to fill out and keep an accounting journal for 10 years. Everything will be easier and simpler.

Small business account – how does it work and what are its benefits?

A person will open a small entrepreneur account in a financial institution that provides such a service, and the State Tax Inspectorate (VMI) will automatically register the individual activity. So it will be possible to start executing it immediately. All receipts to the account, as well as cash deposits, will be classified as operating income and all data will be automatically transferred to the GPM (personal income tax) declaration.

It is true that tax calculation is only partially automated in the pilot phase. But after receiving positive feedback and results, self-employed individuals will be offered a complete package – fully automated real-time accounting and monthly tax calculation. VSD (state social insurance) and PSD (compulsory health insurance) taxes will be automatically calculated. It is estimated that about 85 thousand people could use this package. individuals performing individual activities.

The account of a small entrepreneur is based on the best practices of foreign countries. A similar system is applied in Estonia and is currently being implemented in Latvia. From 2024 it will be possible to test the innovation in Lithuania as well.

As shown by a survey conducted last year, the introduction of a small entrepreneur’s account is extremely positively assessed by those engaged in artistic activities, as well as those providing information technology, transport and education services.

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