"Empty" declaration and individual bank cards: myths about the simplified system that cost entrepreneurs money

Individual entrepreneurs remain one of the most popular forms of doing business in Ukraine. The simplified taxation system allows working with minimal tax burden and simplified accounting, but it does not exempt from the obligation to comply with legislative requirements. It is precisely due to neglecting basic rules that entrepreneurs most often receive fines, lose the right to use the simplified system, or become participants in tax disputes.

According to tax consultants, most sanctions are imposed not because of complex tax evasion schemes, but due to ordinary carelessness: missed tax payment deadlines, errors in reporting, lack of documents, or violations of labor legislation. "Judicial and Legal Newspaper" has examined the most common mistakes made by entrepreneurs and how to avoid financial losses.

Mistake #1. Untimely payment of taxes and unified social contribution (USC)

One of the most common reasons for fines remains untimely payment of mandatory fees. For entrepreneurs, these primarily include: single tax, military levy, unified social contribution, and tax obligations arising when switching to another taxation system. The procedure for paying the single tax and deadlines for its payment are defined by Article 295 of the Tax Code of Ukraine. Single tax payers must comply with the established deadlines regardless of whether they remember the payment date or have received reminders from the tax authorities.

Entrepreneurs often mistakenly believe that if there is no income, contributions do not need to be paid. However, the legislation does not always link the tax obligation to the actual receipt of profit.

What threatens the entrepreneur. Even a slight delay can lead to: accrual of penalties, application of fines, emergence of tax debt, problems with closing the entrepreneur status, or obtaining certificates of no debt.

How to avoid problems. Lawyers advise regularly checking information through:

• Electronic taxpayer cabinet
• State Tax Service of Ukraine.

Mistake #2. Losing control over the income limit

The simplified taxation system is regulated by Chapter 1 of Section XIV of the Tax Code of Ukraine. The law sets requirements for single tax payers and restrictions on the volume of income for each group.

In practice, entrepreneurs often lose control over their turnover, especially if they: work with multiple bank accounts, receive payments from foreign customers, use various payment services, or operate simultaneously in several directions. When the limit is exceeded and discovered only after the reporting period ends, the consequences can be quite significant.

Consequences of exceeding the limit. The entrepreneur risks: moving to another group of single tax payers, paying an increased tax rate, losing the right to the simplified taxation system. For many small businesses, this means a sharp increase in tax burden and additional costs for accounting support.

Practical advice. Specialists recommend analyzing income volume monthly and keeping separate financial records, even if the law does not require full accounting.

Mistake #3. Working under unregistered economic activity codes (NACE)

Another common problem is the discrepancy between the entrepreneur’s actual activity and the registered types of activity. Often, an entrepreneur starts selling new products, providing additional services, working with new client segments but forgets to update registration data. At the same time, the Tax Code contains a list of activities that do not allow the use of the simplified taxation system at all. Requirements for single tax payers are defined by Article 291 of the Tax Code of Ukraine.

Why this is dangerous. The tax authorities may conclude that the entrepreneur unjustifiably used the simplified system. As a result, possible consequences include: cancellation of single tax payer status; additional tax assessments; fines and penalties. What to do. Lawyers recommend checking the relevance of NACEs and the conformity of actual activities with the state register at least once a year.

Mistake #4. Unregistered employees and hidden labor relations

Many entrepreneurs work with freelancers, sales managers, administrators, or assistants without proper documentation. However, Article 24 of the Labor Code of Ukraine explicitly prohibits allowing an employee to work without a labor contract. Relations are assessed not only by the contract title but also by their actual content. If a person works on a schedule, performs constant functions, and is subordinate to the employer, controlling authorities may recognize such relations as labor relations.

What threatens the entrepreneur. In case of inspection, possible consequences include: significant financial sanctions, additional tax assessments, labor inspections, and court disputes.

In case No. 240/7766/23, the Supreme Court considered a dispute regarding liability for allowing an employee to work without proper labor relations registration. The court thoroughly analyzed criteria distinguishing labor relations from civil-law contracts.

Mistake #5. Lack of primary documents and proper accounting

Some entrepreneurs still believe that the simplified taxation system means no need to maintain document flow. In fact, this is one of the most dangerous mistakes. Article 296 of the Tax Code of Ukraine establishes rules for accounting and reporting by single tax payers. During inspections, the entrepreneur must be ready to confirm: the origin of funds, legality of business transactions, fact of service provision, receipt of payment. Particular importance is attached to: contracts, acts of completed work, bank statements, invoices, and waybills.

Separate risk – cash registers (RRO) and software cash registers (PRRO). In recent years, more and more fines are related to violations of the rules for using cash registers. The procedure for using RRO is defined by the Law of Ukraine "On the use of cash registers in trade, public catering, and services".

Failure to conduct a cash operation through RRO or untimely fiscalization can be grounds for significant fines.

Most fines for entrepreneurs arise not from complex tax schemes or intentional law violations. Most often, problems are caused by ordinary carelessness, lack of systematic control, and unwillingness to monitor legislative changes.

Mistake #6. Failure to submit a declaration due to lack of income

Many entrepreneurs mistakenly believe that if they did not receive income during a quarter or year, they do not need to submit a declaration. In fact, lack of profit does not exempt from the obligation to report to tax authorities. Failure to submit or late submission of a declaration entails fines. For the first violation, the fine may be 340 UAH, and for repeated violations within a year – 1020 UAH.

What to pay attention to. This mistake is especially common among entrepreneurs who:

• temporarily suspended activities;
• work seasonally;
• are preparing to close the business;
• did not receive payments during the reporting period.

Mistake #7. Receiving income on a personal bank card

Another risk actively discussed among entrepreneurs recently is the use of personal accounts to receive income from entrepreneurial activities. If an entrepreneur systematically receives payments for goods or services on a personal card, the tax authorities may question the proper declaration of such income.

What this threatens. Possible consequences include:

• additional tax assessments;
• financial sanctions;
• the need to prove the entrepreneurial origin of funds;
• additional questions during tax audits.

Mistake #8. Incorrect closure of the entrepreneur status

Many entrepreneurs believe that closing the entrepreneur status is completed after submitting an application to the state registrar or via the "Diia" portal. In fact, after ceasing activities, tax obligations remain: submitting liquidation reports, checking for absence of debts, resolving USC issues, and storing documents for the established periods.

Due to missing these procedures, entrepreneurs often learn about fines after they consider the business closed.

The most expensive mistake for entrepreneurs in 2026

According to experts, the largest financial sanctions today are related to violations of the rules for using cash registers and software cash registers. For certain violations, the fine can be 100% of the value of goods or services sold in violation, and for repeated violations – 150%.

Judicial practice shows: it is sometimes possible to appeal fines, but it is much cheaper to prevent violations than to defend your position in court later. That is why regular control of your reporting, proper document preparation, and timely consultation with an accountant or lawyer remain the best investment in business security.

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