What type of taxation should I choose for a small workshop?

I'm not really a tax expert, but from people around me I know that for a small workshop, USN (simplified tax system) usually works well - less paperwork and easier to calculate 😊 Whether you choose 6% of income or 15% of profit depends on what your expenses are like, but most people go with USN. You should probably still get advice from an accountant or your local tax office though - they'll tell you what's best for your specific situation, I don't want to say something wrong.

UTS (Simplified Tax System) is really usually the best option for a workshop, but it's important to understand that the choice between 6% of income and 15% of profit (income minus expenses) depends on your specific situation. If you have big material costs for raw materials, tools, spare parts - 15% is more profitable, because you only pay tax on your actual profit. But if it's mostly services from your own labor with minimal expenses, then 6% is simpler and cheaper.

Here's what people often forget about: with UTS you lose the right to VAT deduction. If your suppliers work with VAT and send you invoices, you won't be able to get that tax back. This can be critical if you're buying from big companies. So it makes sense to estimate before registration how much you're actually buying from legal entities that charge VAT.

Another thing - revenue amount. UTS is available if your income is up to 188 million per year (in 2026), so for a workshop that's not a problem. But keep in mind that you need to pay contributions for yourself and your employees, keep minimal accounting records (a book of income records). It's still easier than the general system, but it requires you to be organized.

The problem is that you're asking about taxes but don't actually know your workshop's real turnover. It's like coming to my clinic and saying "prescribe me a pill" without knowing the diagnosis. USN might be perfect for you, or it might be a losing proposition - it all depends on the numbers.

Here's what I'd do in your place: take your data from the last few months of work (or a forecast if you're just starting out) and calculate three scenarios - USN at 6%, USN at 15%, and the patent system if it applies to you. Yeah, sounds tedious, but 15 minutes of calculations will save you tons of money later. Account not only for taxes but also for your contributions as an individual entrepreneur - they're different depending on the system. And here's something almost nobody talks about: if you have a workshop, you'll almost certainly have consumables, materials, equipment. With USN 6% you can't deduct those, with USN 15% you can. So if expenses are even a third of your turnover, 15% might be more profitable than it looks.

My next piece of advice - don't make this choice online. Spend an hour or two on a consultation with an accountant or tax advisor in your city. I know it sounds like an expense, but tax audits are way more expensive.

Over 21 years at school, I hear pretty often from parent entrepreneurs these stories about how they rushed into choosing a tax system and then regretted it! The main thing is don't do it randomly - first honestly calculate what your actual annual income is and what expenses your workshop has, and then choose between simplified tax system 6% or 15%.

What they already wrote about the simplified system is correct, but don't forget about one more thing - if you later want to work with big companies (like those construction firms), they often require invoices with VAT, and then you'll have to switch to the general tax system, and that's a completely different story with tons of reporting! I would recommend to my acquaintances to first consult with an accountant who will look at your specific situation - you'll spend a few thousand on a consultation, but you'll save much more later!

My neighbor had a clothing alteration and repair workshop, and she struggled with the choice for a long time until she talked to an accountant. It turned out that for her volume of work (not that many orders per month, but decent material expenses) the 15% simplified tax system on profit worked better, because she could deduct the cost of fabrics, thread, electricity. If she'd chosen the 6% system on all income, she'd be paying tax even on money that goes toward materials.

So the main thing is to honestly calculate what your average monthly turnover is and how much goes to expenses. If expenses are high (and in a workshop that's usually the case), then 15% might end up being more profitable. Plus keep in mind that a lot of clients really do prefer working with a sole proprietor on simplified tax - way fewer questions and paperwork than dealing with private individuals.