As in many other areas, the proper and comprehensive planning of what you do in business is the key to a successful activity.
Accurate information about what activity you want to do
Usually, the persons engaged in small businesses operate in areas where they have experience and skills. For example, if an individual with extensive knowledge and experience in the field of agriculture sets up entrepreneurial activities in this specific area, it gives him a number of advantages over the inexperienced competitors.
Resources required for the activity you want to engage in (financial resources, labor force, office, warehouse and land parcel, etc.)
Depending on the nature of business, you need to have precise information about the equipment, facilities and other tools required, the financial resources needed to acquire them and the specialized workforce.
At this stage, the entrepreneur analyzes the data on the number of potential buyers of the product (work, service) to be offered, competitors who offer the same product (work, service) and makes decisions based on the information obtained (for example, the correct location, unique selling points of the offered product and its attractiveness to customers etc.).
One of the main factors to consider when starting a business is the price of the offered product (work, service). A number of factors should be taken into account in the pricing: total production costs, entrepreneurial profitability rate, average market price of the same product etc. Moreover, the seller of the product may agree with the buyers in advance on the sale of the product (State Agency on Procurement that purchases food products from its manufacturers and sellers, distributors, wholesalers, shops, etc.).
Two main financial resources are used to fund costs: equity and outside funds. The equity is the financial means that an entrepreneur owns and uses to invest in entrepreneurship. The outside funds are financial resources obtained from other sources (ex. bank loan). If the production cost is AZN 7,115 according to the cost estimate, AZN 3,115 of the required amount will be paid out of the equity, and the entrepreneur will decide to apply to the National Entrepreneurship Support Fund (hereinafter NESF) to finance the remaining AZN 4,000. Upon analysis of the business plan by the NESF, positive feedback is given to the entrepreneur's financing and a loan agreement is signed for 8 years at an annual interest rate of 8% (further information about the NESF is available on the Fund's official page).
Prior to starting a business after comprehensive business planning, the entrepreneur shall first be registered with the tax authority as a taxpayer, take measures to obtain if funding is required to finance its activities, and calculate, declare and pay income taxes to the state budget for business activity.
An individual may engage in business activities as an individual entrepreneur or as a legal entity.
Private Entrepreneurship is an entrepreneurial activity individually carried out by individuals without the establishment of a legal entity, based on their particular property, undertaking risks and responsibility for the purpose of earning income.
A legal entity is a lawfully registered, specially created entity with an independent balance-sheet that owns property, is liable for the obligations with this property, acquire and exercise property and personal non-property rights on their own behalf, assume obligations, have the right to sue or be sued in court.
An"Application for tax registration of an individual",shall be submitted to tax authority along with a copy of the ID card for the citizens of the Republic of Azerbaijan by individuals who are registering as taxpayers. Foreigners and stateless persons have to submit a card of foreigners and stateless persons issued by the State Migration Service. The legal entities shall submit an "Application for State Registration of Commercial Entity" along with other documents required for state registration. In addition to other information, the application form shall indicate the type of activity(s) they wish to deal with, the taxation system. The tax authority shall be notified within 40 days of any changes in that information in the subsequent period.
Sahibkar fəaliyyət göstərəcəyi təsərrüfat subyektini (obyektini), məsələn: mağazanı, kafeni, istehsal sexini, fermanı, anbarı və s. yerləşdiyi ərazi üzrə vergi orqanına, o cümlədən əhatə dairəsinə aid olan vergi ödəyicilərinə xidmət mərkəzlərinə müraciət etməklə uçota qoymalı, nağdsız hesablaşmaların aparılması, o cümlədən kreditlərin götürülməsi məqsədilə istədiyi bankda hesab açmalı, nağd pul hesablaşmaları aparıldığı təqdirdə isə təsərrüfat obyektində nəzarət-kassa aparatını quraşdırmalıdır.
Discharge of Obligations
An entrepreneur shall calculate and pay taxes (simplified tax or income (profit) tax), VAT, income tax paid at the source for hired labour, taxes at the source, etc.) to the state budget and submit the relevant declarations to the tax authority in accordance with the taxation system and taxable activities he/she chooses when being registered as a taxpayer.
In addition to the social benefits provided to improve the welfare of the population in the country there are also some incentives aimed at increasing capital investment and employment of the population and developing the non-oil sector.
The agriculture is also one of the areas with the large number of entrepreneurs. It is not a coincidence that since 2001 a system of preferential tax treatment has been applied to meet the domestic demand of the population and ensure access for agriculture products to foreign markets. Currently, producers of agriculture products are exempt from income and profit taxes (excluding income from processing of these products), VAT, simplified tax and property tax on property used in the course of this activity.
Further information regarding tax registration as an individual, the establishment of a commercial legal entity, registration of business entity, bank account opening, Cash Register and POS-terminal registration, tax compliance etc. can be found in the "Tax Guide"section
During the registeration at the tax authority, the entrepreneur shall be registered at the State Social Protection Fund (SSPF) under the Ministry of Labor and Social Protection of the Population according to the information sent by the Ministry of Taxes (shall calculate, declare and pay to the budget the social insurance deductions for the area where it operates and for wages accrued to its employees).
A written employment agreement shall be entered into for each employee hired by the entrepreneur in accordance with the labor legislation. Notifications shall be included in the electronic information system in order to be legally valid.
An entrepreneur shall maintain accounting records so that he/she can evaluate his/her activities properly and obtain accurate information about their financial position.
It is obligatory to keep accounting records in accordance with the relevant accounting standards and accounting rules established by the Law of the Republic of Azerbaijan “On Accounting”.
An entrepreneur has to analyze, make decisions on the results of his/her business activities, set specific goals before starting a new business process and develop a plan for achieving these goals. For example, an entrepreneur must make decisions about recruiting new employees based on financial results, reducing costs and making efficient use of available resources to achieve a 20% increase in total turnover by the end of next business.
Since entrepreneurship is a complex activity, it is not possible to illustrate all the processes in this document. Nevertheless, the examples are about the general issues that the public have to pay attention to and the challenges they face in their entrepreneurial activities.
In order to gain entrepreneurial skills and experience, we recommend that you familiarize yourself with the economics literature and attend meetings and trainings conducted by government agencies.
To increase business activity of entrepreneurs in the country, to provide them with the necessary theoretical knowledge, to train habits and skills, it is expected to conduct awareness-building meetings, trainings and provide consulting services to legal and natural persons engaged in entrepreneurial activities in Baku and regions, as well as businessmen wishing to start a business. These events will be organized with the participation of other authorities including the Baku Business Training Center under the Ministry of Economy and its regional offices, the Ministry of Finance and the Ministry of Labor and Social Protection of the Population. The events will cover such topics as starting a business, calculating and paying taxes and social insurance contributions, tax accounting and accounting records. For further information on events to be held in the regions and other issues, please contact the Taxpayers Service Center and the Call Center (195-1) (195-1) of the Ministry of Taxes.