All you need to know about starting a business in Kazakhstan (First Chapter)

You can start a business from scratch. Where and how to start? Where can I get money to start? First, it is to be understood what you should do to start making earnings – provide services or goods? Today, not only ready-made products are in great demand, but also personal knowledge, skills, talents and experience. First, it is needed to start with your strengths, the things you have known the best of all, for example, a teacher can open an educational center, and an accountant can help with accounting and audit of companies. Second, you will need to study a certain market, understand the market needs, study the proposals of competitors and offer your new service (for example, if there is no coffee shop within walking distance, you can offer barista services by investing in a coffee machine). If you have already decided on a niche, you need to develop a business plan (provide all the necessary points, calculate the costs to implement the idea). In the beginning you can work from home without renting an office space. For example, you can turn your hobby into a business (baking, embroidery, etc.).

Types of entrepreneurships

Before starting your own business, you need to decide which form of business to choose. To do this, you need to understand what business you are going to do – trade, education, accounting, etc. One of the forms of entrepreneurial activity is Individual Entrepreneur (IE). It is easy to become an individual entrepreneur in Kazakhstan, you do not need to go anywhere for this, it is enough to send a notification to the state revenue authorities about the start of activities as an individual entrepreneur. It is possible to submit a notification through gov.kz portal. In addition, at present, it is possible to submit a notification through mobile application of the second-tier banks, while an IE registration service is carried out through state information system e-license.kz. Individual entrepreneurship is carried out in the form of personal or joint entrepreneurship. It should be noted that in addition to the citizens of the Republic of Kazakhstan and ethnic Kazakhs (“kandas”), citizens of the EAEU countries (RF, Tajikistan, Kyrgyzstan, Belarus, Armenia) who permanently reside in the Republic of Kazakhstan have the right to carry out individual entrepreneurship. You can find out more about individual entrepreneur registration here.

If you decide to conduct your business with a partner, an acquaintance, a friend with whom you jointly invest your money, knowledge and you start your own business, then for a joint business it is better to open a Limited Liability Partnership (LLP). This is the case when your business articles of incorporation will be required. Without this document, you will not be able to maintain a bank account and receive public services. This means that you will not run the business. But, in the case you decide to register LLP it is not required to have articles of incorporation in place. 

An LLP can be engaged in any services, it can also be engaged in both the services, processing and production. There are only certain activity types that require the receipt of additional licenses. For example, if you decide to be engaged in the construction of buildings or sale of alcoholic beverages, in this case, you need to obtain a license in addition to your LLP to carry out the business activity. To open a limited liability partnership, you also need an authorized capital. It is found upon contributions of each of the LLP founders and thus their share in the company equity is determined. There is a restriction to pay from the equity capital towards the purchase of raw materials, rent, public utilities and other expenses. This is an untouchable amount. Even in the time of crisis, the equity capital must be held on the LLP account. It serves as a security deposit and is withdrawn in the case of company liquidation. The money can go to pay off the debts and other liabilities once the LLP is recognized as a bankrupt. More information about the establishing and closing of LLP can be found here.

Taxation regimes for small businesses

A taxation regime stated during registration of business is determined by business activity regime. There are several taxation regimes in our country, after choosing one of them, a small business entity is registered. Let us list the main two: a generally established taxation regime and special tax regimes.

Generally established regime. A small business entity that applies generally established taxation regime, each year (until March 31 of the next year) shall submit an individual income tax report. A net income is stated in the tax report (“income” minus “expenses”) received during reporting period, which is a subject of individual income taxation at the rate of 10%. That is, in the generally established regime, we take our turnover – we take away all the official costs and expenses that were incurred for the business – this is the purchase of goods, salaries, rent of premises, telephone communication, everything that can be documented, all this can be your cost items and you pay tax 10%, but from the net income! We pay the tax once a year. It is also necessary to keep accounting records in 1C system.

In Kazakhstan, in order to support small businesses, the Tax Code provides for a special tax regime for small businesses.

This mode is sub-divided into the following types:

• on the basis of a patent;
• based on a simplified declaration;
• using a fixed deduction.

To apply a special tax regime for small businesses, certain restrictions have been established on the number, turnover and types of activity.

Types of special tax regime.

A special tax regime based on a patent is intended only for such a type of entrepreneurship as an individual entrepreneur, which does not use hired workers and carries out the types of activities provided for by the list (18 types). The peculiarity of the patent is that the IIT is calculated at the rate of 1% of the estimated income, that is, the entrepreneur pays taxes in advance.

The next type of taxation is a special tax regime based on a simplified declaration. It is applied by taxpayers who meet the following conditions: number of employees for the period – up to 30 people; the income for the tax period does not exceed 24 038 MCI. The individual income tax rate is 3% of income (excluding expenses), this regime differs in that the tax is paid on the entire turnover without taking into account any costs incurred. The tax report is provided once every six months. The regime is used mainly by the taxpayers doing trade, catering, and other types of services.

 And the third type of special tax regime is a special tax regime using a fixed deduction. There is an additional fixed deduction of 30% of the total annual income, without supporting documents, as well as a 200% reduction of the payroll. For this regime, higher (in comparison with the simplified declaration) criteria for the size of the maximum income 144 184 MCI and the maximum number (50 people) have been established.

The regime is mainly applied by the taxpayers who carry out wholesale and retail activities, provide other types of services, and also work in the construction sector.

Whichever tax regime you choose, you must have a cash register. In case of payments in cash and bank cards for the purchased goods, works, services, it is mandatory to use a cash register. In simple words, if in your activity you plan to receive payment in cash, as well as by bank cards, for the goods sold, services rendered, work performed, then you need to purchase and register a cash register with the tax authority.

The cash register must be purchased BEFORE making payments, i.e. at the time of receipt of payment from buyers, you must already have a cash register registered with the tax authority. The cash registers are of two types. An ordinary cash register for cash, and a mobile cash register in the form of an application on the phone.