What Taxes Do Wildberries Suppliers Pay and How to Manage Accounting | P

Selling on Wildberries can be a game-changer for your business, but let’s be honest – dealing with Wildberries supplier taxation isn’t exactly the fun part. From figuring out the right tax regime to keeping your e-commerce accounting in order, it can quickly get overwhelming. And the last thing you want is unexpected fines or financial headaches.

But here’s the good news: understanding your tax obligations doesn’t have to be complicated. With the right knowledge and a bit of planning, you can stay compliant, save money, and focus on growing your business.

In this article, we’ll break down everything Wildberries suppliers need to know about taxes and accounting. You’ll learn how to choose the best tax regime, avoid common mistakes, and optimize your finances. 

Getting Started: Should You Register as an LLC or an Individual Entrepreneur?

When deciding to become a supplier on Wildberries, the choice between registering as a Limited Liability Company (LLC) or an Individual Entrepreneur (IE) becomes particularly important. Both options are viable, but your decision should align with your business goals, scale, and tax preferences.

Overview of Legal Forms

• LLC: A legal entity that offers liability protection for its owners and allows multiple stakeholders to be involved. It’s suitable for businesses planning to scale or operate in high-risk industries.
• Individual Entrepreneur (IE): A simpler legal form tailored for solo entrepreneurs or small-scale sellers. It involves fewer administrative requirements and is ideal for low-risk ventures.

When to Choose Each for Wildberries

1. LLC:
   • Recommended for businesses planning substantial growth or selling high-value products that may involve liability risks.
   • Ideal if you plan to involve partners, attract investors, or manage large-scale operations requiring formal structures.
   • Suitable for suppliers who want flexibility in tax regimes and access to corporate benefits.
2. Individual Entrepreneur:
   • Best for solo sellers or small businesses just starting out on Wildberries.
   • Perfect for suppliers looking for streamlined registration and simplified tax reporting.
   • As noted by Wildberries, more than 80% of their suppliers are registered as Individual Entrepreneurs without VAT, making this option highly popular among marketplace sellers.

Pros & Cons Comparison

Specific Considerations for Wildberries Suppliers

• Ease of Registration: Wildberries allows suppliers to register under any legal form—LLC, IE, or even self-employed—with minimal documentation requirements. For IE registration, you need a Tax ID, address, and account details; LLCs require TIN and payment details.
• Tax Implications: Suppliers registered as individual entrepreneurs often benefit from simplified taxation systems without VAT, which reduces their administrative burden.
• Stock Management: Suppliers can mix inventory strategies—selling from their own stock initially while testing demand or using Wildberries’ warehouses for larger batches.

Legal and Tax Implications

Choosing the right legal form directly impacts your tax regime on Wildberries:

• LLCs offer flexibility in choosing tax systems but may involve higher complexity in reporting.
• IEs benefit from streamlined taxation like professional income tax but may face limitations in scalability.

Choosing the Right Tax Regime for Suppliers

Before selecting a tax regime, it’s essential to understand how Armenia’s overall taxation system works. For a deeper dive into Armenia’s tax landscape—including corporate taxes, turnover tax, VAT, and incentives—check out our full guide: Understanding the Taxation System in Armenia: A Comprehensive Guide for Businesses.

Which Tax Regime to Choose Based on Income

Armenia offers two primary tax regimes for businesses: the Turnover Tax Regime (a simplified option for small and medium-sized enterprises) and the VAT + Corporate Income Tax Regime (suited for larger businesses). Here’s how to decide:

• Turnover Tax Regime:
  • Ideal for SPs and small-to-medium LLCs with annual revenue below 115 million AMD (~$280,000).
  • Tax rates range from 1.5% to 10%, depending on activity type.
  • Minimal reporting requirements make it attractive for Wildberries suppliers starting out or operating on a smaller scale.
• VAT + Corporate Income Tax Regime:
  • Designed for larger LLCs or businesses exceeding the turnover threshold.
  • Involves a 20% VAT (0% for exports) and an 18% corporate income tax on net profits.
  • Requires detailed bookkeeping and VAT invoicing, making it more complex but beneficial for businesses with significant deductible expenses or export operations.

Factors to Consider:

• Revenue: If your annual sales are under the turnover limit, the simplified regime is likely more cost-effective.
• Expenses: Businesses with high deductible expenses may benefit from the general tax regime.
• Growth Plans: If you’re scaling rapidly or planning exports, the VAT + Corporate Income Tax Regime may offer long-term advantages.

What Is the Turnover Tax Regime and Its Benefits?

The Turnover Tax Regime is Armenia’s simplified taxation system tailored for small and medium-sized businesses. Here’s how it works:

• Taxation Options:
  • Fixed monthly taxes (e.g., profit tax: 5,000 AMD/month; social tax: 5,000 AMD/month; military tax: 1,500–10,000 AMD/month).
  • Percentage-based turnover tax (from 1.5% to 10%, depending on your business activity).
• Advantages:
  • Predictable and low administrative burden.
  • Simplified accounting with minimal reporting obligations.
  • Highly suitable for Wildberries suppliers who want straightforward taxation without complex bookkeeping.

This regime is particularly beneficial for new sellers or those operating solo ventures.

Taxation Options for Individual Entrepreneurs

Individual Entrepreneurs (IEs) enjoy flexible taxation options in Armenia. Here’s what you need to know:

• Self-Employment Taxes vs. Turnover Tax:
  • Self-employment taxes involve fixed monthly payments (profit tax, social tax, military tax), making them predictable and easy to manage.
  • Turnover tax allows IEs to pay based on their revenue, offering flexibility as their business grows.
• Reporting Obligations:
  • Simplified reporting requirements compared to LLCs.
  • No VAT obligations unless turnover exceeds the threshold.
• Incentives:
  • Lower rates and exemptions make this option ideal for small-scale operations like selling goods on Wildberries.

Which Tax Regime Is More Beneficial for SMEs?

Small and medium-sized enterprises (SMEs) should carefully evaluate their income, expenses, and growth plans when selecting a tax regime:

• The Turnover Tax Regime is best suited for SMEs with predictable revenue under the threshold. It minimizes administrative complexity and reduces financial strain through fixed or percentage-based taxes.
• The VAT + Corporate Income Tax Regime becomes advantageous as businesses scale or incur significant deductible expenses. Exporters especially benefit from the 0% VAT rate.

Tax Optimization Tips:

• Start with the Turnover Tax Regime if your business is new or small-scale.
• Transition to the general regime as your revenue grows or if your expenses justify deductions.
• Regularly assess your financial performance to ensure you’re maximizing savings while staying compliant.

The Accounting Process for Wildberries Suppliers

To stay organized and compliant, Wildberries suppliers need to maintain essential documents, including:

• Invoices and receipts for all transactions.
• Contracts with suppliers, logistics partners, or customers.
• Financial reports like profit and loss statements, balance sheets, and cash flow statements.

Tips for Organization:

• Use digital storage for easy access and backup. Tools like Google Drive or Dropbox can help.
• If you prefer paper-based records, ensure they’re filed systematically in labeled folders.
• Digital records are easier to search, share, and update, making them ideal for e-commerce businesses.

How to Properly Record Income and Expenses

Accurate financial tracking is crucial for tax compliance and understanding your business’s health. Here’s how to do it right:

• Categorize income and expenses (e.g., sales revenue, shipping costs, marketing expenses) to simplify tax reporting.
• Use accounting software or spreadsheets to log every transaction.
• Regularly review your records to spot errors or discrepancies early.

Best Practices:

• Update your records daily or weekly to avoid backlog.
• Keep separate accounts for personal and business finances to maintain clarity.

How to Manage Accounting Using Online Platforms

Online accounting tools can save time and reduce errors. Popular options for Wildberries suppliers include:

• QuickBooks or Zoho Books for comprehensive financial management.
• Excel or Google Sheets for simpler, manual tracking.

Key Features to Look For:

• Integration with Wildberries sales data.
• Automated invoicing and expense tracking.
• Tax calculation and reporting capabilities.

Required Reports and Submission Deadlines

Depending on your tax regime, you’ll need to submit specific reports:

• Turnover Tax Regime: Simplified reports, often quarterly or annually.
• VAT + Corporate Income Tax Regime: Detailed reports, including VAT declarations and annual financial statements.

Deadlines:

• Turnover tax reports are typically due quarterly.
• VAT returns are often monthly or quarterly.
• Annual financial statements are due within a few months of the fiscal year-end.

Tips for Staying Compliant:

• Mark deadlines on your calendar and set reminders.
• Use accounting software to automate report generation and submissions.
• Regularly consult with a tax advisor to ensure accuracy and compliance.

Common Mistakes to Avoid as a Wildberries Supplier

Tax Mistakes That Can Lead to Penalties

Tax compliance is crucial for Wildberries suppliers, yet many fall into common traps, such as:

• Failing to register under the correct tax regime: Choosing an unsuitable regime can lead to higher taxes or penalties.
• Missing tax reporting deadlines: Late submissions can result in fines and legal risks.
• Incorrect financial tracking: Misreporting income or expenses can trigger audits or penalties.

How to Avoid These Mistakes:

• Consult a tax advisor to select the right tax regime for your business structure and revenue level.
• Set reminders for tax deadlines and use accounting software to automate reporting.
• Regularly review your financial records to ensure accuracy and compliance.

Documentation Errors in Accounting

Missing or incorrect documents can create serious financial and legal issues. Common errors include:

• Incomplete invoicing: Missing key details like tax numbers or transaction dates.
• Poor contract management: Failing to keep signed agreements with suppliers or logistics partners.
• Disorganized storage of financial records: Losing receipts or invoices needed for tax reporting.

Best Practices:

• Use digital tools like cloud storage or accounting software to organize and back up your records.
• Double-check invoices for accuracy before issuing them.
• Maintain a checklist for essential documents, including contracts, receipts, and sales reports.

How to Avoid Unnecessary Tax Burden

Many suppliers unknowingly pay more taxes than necessary due to poor planning. Common oversights include:

• Not utilizing deductions or exemptions: Missing out on allowable expense deductions can inflate your tax bill.
• Overestimating taxable income: Failing to properly categorize expenses can lead to higher taxes.
• Skipping professional consultation: DIY tax planning often overlooks optimization strategies.

Solutions:

• Work with a tax consultant to identify legal ways to reduce your tax liability.
• Keep detailed records of deductible expenses, such as shipping costs and advertising fees.
• Regularly evaluate your business’s financial performance and adjust your tax strategy accordingly.

How to Optimize Accounting and Taxes

Using Automated Accounting Software

Automating your bookkeeping can save time, reduce errors, and simplify tax reporting. For Wildberries suppliers, this is especially useful given the high volume of transactions. Here’s how it helps:

• Benefits: Automation streamlines tasks like invoicing, expense tracking, and financial reporting, freeing up time to focus on growing your business.
• Recommended Tools: Platforms like QuickBooks, Zoho Books, or Seller Assistant integrate seamlessly with Wildberries, offering features like real-time sales tracking and automated tax calculations.
• Simplified Tax Reporting: These tools generate accurate financial reports and ensure compliance with tax deadlines, minimizing the risk of penalties.

How to Benefit from Tax Incentives

Governments often offer tax incentives to support small businesses. Here’s how Wildberries suppliers can take advantage:

• Available Incentives: Look for deductions on expenses like shipping, marketing, and inventory costs. Some regions also offer reduced tax rates or exemptions for small businesses.
• Qualifying for Deductions: Keep detailed records of all business expenses to claim deductions. For example, if you export goods, you might qualify for a 0% VAT rate.
• E-commerce-Specific Benefits: Research industry-specific incentives, such as grants or tax relief programs for online sellers.

Working with Professional Accountants

Hiring a professional accountant can be a game-changer for Wildberries suppliers. Here’s why:

• Expertise: Accountants understand complex tax laws and can help you optimize your tax strategy.
• Choosing the Right Accountant: Look for experience in e-commerce and familiarity with platforms like Wildberries. Check reviews and ask for references.
• Outsourcing Benefits: Outsourced accounting services save time and ensure accuracy, allowing you to focus on sales and operations.

Profin Consulting – Your Trusted Accounting Partner

Profin Consulting also specializes in e-commerce taxation and offers tailored services for Wildberries suppliers. Here’s what we provide:

• Services: Tax consultation, full-cycle accounting, compliance management, and financial planning.
• Getting Started: Contact Profin Consulting via our website or phone to schedule a consultation. Our team will assess your needs and provide customized solutions to optimize your accounting and taxes.

Conclusion

Tax planning might not be the most thrilling part of your Wildberries journey, but it’s definitely one of the most important. With a solid tax strategy and proper e-commerce accounting, you’ll not only stay compliant but also keep more of your hard-earned money.

Remember to choose the tax regime that fits your business best, stay organized with your financial records, and be proactive about managing your obligations. Taking these steps will help you avoid unnecessary fines and gain better control over your finances.

And if it ever feels like too much, Profin Consulting is here to make things easier. From personalized tax advice to complete accounting support, we’re committed to helping your business run smoothly and efficiently.