What are the conditions for joining the Yellow Umbrella Deduction?
The Yellow Umbrella Mutual Aid is a government support system for business owners. Unlike general workers, entrepreneurs do not have severance pay. The government implemented the Yellow Umbrella Deduction in September 2007 as a system to protect business operators safely due to concerns about the situation after business closures of businesses without severance pay. The Yellow Umbrella Deduction provides support for business owners to provide severance pay or large sums of money so that they do not suffer from hardships due to reasons such as business closure or old age.
In other words, the Yellow Umbrella Deduction is a system to prepare for severance pay for business operators. Through this, the Korea Federation of Small and Medium Businesses, a government-affiliated organization, is managing and operating in order to ensure that businesses can continue to live a stable life even if they go out of business and are provided with opportunities for business revival.
● What are the conditions for joining the Yellow Umbrella Deduction?
The condition for joining the Yellow Umbrella Deduction is the business operator. As it is a system implemented for business owners, only business operators can join. You can join the Yellow Umbrella Deduction if you have a business registration certificate, such as individual entrepreneurs, corporate representatives, simplified taxpayers, and joint businesses that fall into the category of small businesses and small businesses, regardless of business type, age, etc. Therefore, even those who have just started a business are eligible to join.
In addition, unregistered business owners (freelancers) who generate business income and are subject to global income tax return also meet the conditions for joining the Yellow Umbrella Deduction. They can join even without a business registration certificate, and can receive benefits from the system by subscribing to the Yellow Umbrella Deduction.
The Yellow Umbrella Mutual Aid is operated in accordance with Article 115 of the Small and Medium Business Cooperative Act. 노란우산공제 가입조건
● What is the Yellow Umbrella Deduction Tax Benefit? 좋은뉴스
Tax benefits account for the largest part of the reason businesses join the Yellow Umbrella Deduction. Businesses who subscribed to the Yellow Umbrella Deduction can receive an income deduction when filing their annual income tax return. Income deduction through the yellow umbrella deduction is applied at the time of global income tax or year-end settlement.
Income deduction is a system that subtracts a certain amount from the tax base (gross income) to which the tax rate is levied when filing an income tax return. If you receive an income deduction, you can reduce the tax base and thus reduce the amount of tax. Businesses who are enrolled in the Yellow Umbrella Deduction can receive an income deduction of up to KRW 5 million.
However, the applicable limit of the yellow umbrella deduction income deduction differs according to the tax base of the business operator.
division
tax base
Maximum deduction limit
Individuals and corporations
40 million won or less
5 million won
individual
More than 40 million won and less than 100 million won
3 million won
corporation
More than 40 million won and less than 70 million won
3 million won
individual
over 100 million won
2 million won
Here, the tax base is business income for individual entrepreneurs (including freelancers) and ‘early income (salary)’ for corporate representatives. Businesses subject to global income tax return receive a yellow umbrella deduction for income tax return. In the case of corporate representatives, since they are subject to year-end tax settlement, they receive personal income deduction for year-end tax settlement.
Yellow Umbrella Deduction whose membership condition is a business operator
▶Business Support System Yellow Umbrella Deduction (Click)
● Yellow Umbrella Deduction How to get income deduction?
In order to receive income deduction through the Yellow Umbrella Deduction, the amount of the Yellow Umbrella Deduction for one year of the business operator is important. This is because the amount paid by the business operator to the Yellow Umbrella Deduction for one year is used as an income deduction. Therefore, in order for a business operator to receive the maximum amount of income deduction, the amount must be paid to the Yellow Umbrella Deduction.
If the business is less than 40 million won, the amount paid to the yellow umbrella deduction for one year must be at least 5 million won to be able to receive the income deduction up to 5 million won when filing income tax the following year. Even if you exceed the limit, you can deduct up to 5 million won. If the amount paid to the Yellow Umbrella Deduction for one year is less than the limit, only the amount paid can be deducted.
● What is the monthly payment for the Yellow Umbrella Deduction?
The Yellow Umbrella Deduction, a savings system for business owners, requires monthly savings. The amount that a business operator can pay monthly is from a minimum of 50,000 won to a maximum of 1 million won. You can select and set the payment in units of 10,000 won, so you can set it according to the business situation. This payment can be adjusted at any time by the business operator, such as increasing or decreasing the amount.
The payment method is also part of the business operator’s choice. The payment method you can choose is ‘monthly payment’ or ‘quarterly payment’. If you choose to pay monthly, you will need to pay the above amount every month. If you choose the quarterly payment, it is a quarterly payment method, so you only need to pay 3 months’ worth every quarter at once.
● What are the benefits of joining the Yellow Umbrella Deduction?
New subscribers to the Yellow Umbrella Deduction can apply for and receive the Hope Incentive, which is a subscription subsidy. The Hope Encouragement Fund is supported by local governments that have signed an agreement with the Korea Federation of Small and Medium Enterprises. This is a project implemented to encourage business operators to join the Yellow Umbrella Deduction.
The support plan for the Hope Encouragement Fund is as follows.
municipality
Support target (annual sales)
Support Amount (Month)
Maximum support amount
Seoul
200 million won or less
20,000 won
240,000 won
Busan
300 million won or less
20,000 won
240,000 won
Dae-gu
300 million won or less
20,000 won
240,000 won
Incheon
300 million won or less
20,000 won
240,000 won
gwangju
200 million won or less
10,000 won
120,000 won
Daejeon
300 million won or less
10,000 won
120,000 won
Ulsan
300 million won or less
10,000 won
120,000 won
Sejong
300 million won or less
20,000 won
240,000 won
game
300 million won or less
10,000 won
120,000 won
Chungnam
300 million won or less
10,000 won
120,000 won
Jeonnam
300 million won or less
20,000 won
240,000 won
Gyeongbuk
300 million won or less
20,000 won
240,000 won
Gyeongnam
300 million won or less
20,000 won
240,000 won
Jeju
300 million won or less
20,000 won
240,000 won
Gangwon
200 million won or less
50,000 won
600,000 won
Chungbuk
300 million won or less
10,000 won
120,000 won
Jeonbuk
300 million won or less
10,000 won
120,000 won
Only new subscribers of the Yellow Umbrella Deduction whose business site is located in the implementation area can apply for the desired subsidy. Since the subsidy is supported according to the budget of the local government, the amount of support, the target of support, and the support period vary by region.
As it is supported by the budget, it is advantageous to apply at the same time as joining the Yellow Umbrella Deduction because the application for the Hope Incentive is closed when the budget is exhausted.
In addition, businesses who have subscribed to the Yellow Umbrella Deduction can receive benefits for their payments. First of all, the entire amount paid for the Yellow Umbrella Deduction is prohibited from seizure, transfer, and provision of collateral according to the law. Therefore, even if the business is unavoidably closed, the deductible amount can be kept. Since the Yellow Umbrella Deduction is an installment savings system, interest is added. Interest is compounded annually and the current rate is 2.5%.
In case of delay in monetization, the Small and Medium Business Mutual Aid Fund
The Small and Medium Business Mutual Aid Fund is a non-profit public system that is supported to create a flow of money in business establishments. The government introduced the Small and Medium Business Mutual Aid Fund so that businesses can raise their own funds without relying on banks. This system, which has been in effect since January 1984, is operated as a savings account, and companies that subscribe to the fund collect emergency funds through this system. In case of financial difficulties due to delay in financing at the business site, a loan from the Small and Medium Business Mutual Fund can be used. The Small and Medium Business Mutual Fund Loan is financed by government contributions, so that companies participating in the fund can receive 3-7 times (no guarantee) of the total outstanding balance when applying for a loan. At this time, if you are a member of the Yellow Umbrella Deduction, you can receive a preferential discount on loan interest.