Let’s summarize the advantages and disadvantages of joining the Yellow Umbrella Deduction. If you are in business, you may have heard of the yellow umbrella deduction. Some of you may not have come across it, but it will be helpful to check the contents because it has various advantages. Please check the details and apply if you think you need it.
Conditions for joining the Yellow Umbrella Deduction
Conditions for joining the Yellow Umbrella Deduction
yellow umbrella
The Yellow Umbrella Deduction is a deduction system created by small business owners and small businesses to prepare for closure or retirement. Employees have severance pay, but self-employed people do not have severance pay. Because there are various benefits, business owners can use it.
If you pay 400,000 won a month and meet the deduction limit, business owners who fall under the highest tax rate can receive about 2 million won as a necessary expense and receive tax savings while saving. If your annual profit is more than 20 million won, it is recommended to join. 노란우산공제 가입조건
Conditions for joining the Yellow Umbrella Deduction 좋은뉴스
The Yellow Umbrella Deduction is open to any individual entrepreneur or corporate representative who is included in the scope of small businesses and small businesses, regardless of industry. You can join immediately after starting a business or starting a business, but representatives of non-profit corporations and those who oppose the restrictions on membership cannot join.
If you are operating multiple businesses, you must select one and sign up.
– Less than 50 (10) full-time workers in the case of manufacturing/construction/mining/transportation industries
– Less than 10 people (5 people) for other industries
subscription amount
Like health insurance, the yellow umbrella deduction must be paid monthly. The monthly payment amount is between 50,000 won and 1 million won, and the original installment amount can be freely paid in increments of 10,000 won. There are monthly payment and quarterly payment, so you can choose the payment method, and only automatic debit is possible from the designated deposit account in the member’s name.
Advantages of yellow umbrella deduction
compound interest
The Yellow Umbrella deductible is accumulated by applying annual compound interest to the full amount of the paid installments without deducting any additional business expenses, so it helps businesses to recover after business closure. It is a deduction introduced for small business owners and livelihood stability such as business closures or various accidents, and interest is accumulated through compound interest on an annual basis, so it is advantageous for long-term subscribers.
Foreclosure prohibited
You can get protection by putting a savings amount into the Yellow Umbrella Deduction. The government protects the amount of money put into the Yellow Umbrella Deduction through a seizure prevention account because it protects them even in the worst situation that the self-employed can experience. Due to the corona virus, there is a situation where the payment amount is rather high, because it can be protected even in the case of being seized after the business goes out of business or goes bankrupt.
Welfare plus benefits
If you join the Yellow Umbrella Mutual Aid, you will receive welfare benefits such as support for Gyeongwon, small business education, and health care. Welfare Plus helps entrepreneurs and small business owners to reduce the management burden and help their lives. It supports welfare that cannot be enjoyed properly due to financial difficulties or lack of information.
Get free accident insurance
Accidental insurance is also available free of charge. You can receive insurance benefits from the Korea Federation of Small and Medium Enterprises (SMEs) up to 150 times the maximum monthly installment amount for two years before death or disability due to injury.
tax savings
The amount paid to the yellow umbrella can be deducted up to the limit of the amount paid to the yellow umbrella deduction in the previous year based on the year of filing income tax. It provides income deduction benefits of up to KRW 5 million per year for paid installments and helps businesses with high tax burden.
If the amount of business income exceeds KRW 100 million, it is possible to deduct up to KRW 2 million, if it exceeds KRW 40 million and less than KRW 100 million, it is up to KRW 3 million, and if it is less than KRW 40 million, it is possible to deduct up to KRW 5 million.
Disadvantages of yellow umbrella deduction
Yellow umbrella deduction has various advantages, but it also has some disadvantages. The main disadvantage is that, in the case of a bank or insurance company product, the cancellation refund amount is reduced if the product is canceled prematurely, but since the yellow umbrella deduction is a reason for voluntary cancellation, other income tax (15%) is imposed and the refund amount is reduced.
If the payment is terminated due to business closure or old age, pension + annual compound interest will be added and income deductions are not deducted. If it is necessary to arbitrarily cancel due to circumstances, it can be reduced up to the minimum amount of 50,000 won. If there are multiple businesses, only one business must be selected and arbitrarily change is not allowed.
How to apply for yellow umbrella deduction
How to apply: 13 branches of Woori Bank or Kookmin Bank, post offices, MG Saemaul Geumgo, Korea Federation of Small and Medium Businesses (including regional headquarters and mutual aid business centers), Small Business Market Promotion Agency, call center (☎1666-9988), Yellow Umbrella Mutual Aid website You can apply at (https://www.8899.or.kr/).
required documents
– subscription
– A copy of business registration certificate
– Report on the status of withholding tax
– Documents confirming sales (financial statements, proof of VAT tax base, etc.)
– A certified copy of corporate registration (in case of corporation)
The Yellow Umbrella Deduction helps businesses to use at least as a living stabilization fund for the elderly in difficult circumstances. In addition, if the installment payment period is more than 12 months, it is good to remember that it is possible to get a low-interest loan with no collateral or no guarantee, up to 90% of the installment payment. Through this article, I learned about the Yellow Umbrella Deduction, and I hope it will be helpful to you all.