The preliminary tax assessment: the one thing the self-employed always forget
If you pay B-tax, the preliminary assessment decides what you pay each month. If you don't set it, the Tax Agency does it for you, and guesses wrong.
As an employee, your employer withholds the tax before the money lands. As a self-employed sole trader, nothing happens unless you set it up yourself.
What B-tax is
The profit of your sole trader business is taxed as personal income. The tax is paid as B-tax in ten instalments (January–May and July–November) based on the profit you have stated in your preliminary assessment (forskudsopgørelse). If you state nothing, the Tax Agency assumes you earn the same as last year, or zero.
Why it goes wrong
Year one: a preliminary assessment of zero, no instalments, and in March the following year a tax bill of DKK 80,000 with interest. It is no surprise to anyone who has seen it before. It is a surprise to everyone experiencing it for the first time.
How to do it right
- Log in at skat.dk and open the preliminary assessment.
- Enter your expected profit (turnover minus expenses, not the turnover) in the field for "profit from business".
- Correct it when reality changes. A good quarter, a bad one, correct it. It takes five minutes and saves you a tax bill, or from lending the Tax Agency money for free.
Set the money aside anyway
Even with a correct assessment: transfer a fixed share of every customer payment to a tax account. 30–40 % is a common rule of thumb when VAT and tax are added together. Whatever is too much comes back. Whatever is too little does not.
What LegaSum does
LegaSum knows your actual profit month by month and shows what it corresponds to in tax. If it differs from your preliminary assessment, you get one question: "Your profit is heading for DKK 320,000, the assessment says 200,000; should the preliminary assessment be corrected?" You answer; we handle the technical part or show you exactly what to enter.