What is a PMV?

What is PMV?

One PMV is a personally owned small business with one owner, no employees, and no VAT liability.

It is particularly popular with freelancers, entrepreneurs and the self-employed as it allows you to run a business as a hobby, as a part-time job or as a supplement to your primary income.

A PMV is characterized by the following:

• You own the company alone
• You have no employees

• You are personally liable with your own assets
• Your turnover is below DKK 50,000 within the calendar year
• You are not liable for VAT or payroll

It is therefore possible to run a PMV, as long as the turnover does not exceed DKK 50,000 within 12 months, and you are therefore not liable for VAT.

Freelance business as PMV

A PMV is mainly aimed at freelancers who want to run a leisure or part-time business with profit in mind. Unlike some of the other forms of business, no start-up capital is required upon incorporation, making it an efficient and quick way to get started.

Even if your annual turnover in this case is below DKK 50,000 and you are therefore exempt from VAT, it is still important to comply with the Danish tax rules. 

This means that you must report the company's profits and pay tax on the amount. If you have any deficit, this can be deducted from your personal income.

Registering a PMV as a freelancer can be a good start for some without the need for start-up capital or VAT registration. However, there will still be requirements for accounting, not to mention that a PMV with a turnover limit of DKK 50,000 within 12 months quite naturally limits your business.

How to use Factofly as an alternative to PMV

Factofly is a freelance agency specifically for freelancers and solo freelancers who are looking for a shortcut to invoicing without having to bother with accounting and administration.

Factofly offers a simple and clear way to handle invoicing, VAT accounting, insurance and tax reporting.

With Factofly you can easily create and send professional invoices to your customers. The platform keeps track of all your invoices, so you never lose track of your payments.

When you use Factofly, you get the following benefits:

• No limit on turnover: With Factofly, you are not subject to the DKK 50,000 limit for turnover, as you are already registered for VAT through Factofly's CVR number.
• Simple invoicing: Factofly allows you to invoice your customers without the need to register a CVR number. It saves you both time and unnecessary administration.
• Correct tax and VAT accounting: Factofly automatically reports VAT and tax, so you are always on the safe side and avoid mistakes.
• Optimum utilization of deductions: When you use Factofly you can continue to register tax deduction, where expenses are deducted from your taxable income.
• Insurance and security: With Factofly you are covered by both statutory insurances; professional liability insurance and professional injury insurance so you can work with peace of mind, knowing you are insured.

In short, with Factofly you can get rid of the administrative hassle and instead focus on what you are passionate about.

Dive into PMV accounting: Basic principles and practice

All companies in Denmark have a bookkeeping obligation, and this also applies to PMV. It is important to keep track of the accounts, and this can basically be done in several ways:

• You can post and report it all yourself
• You can pay an accountant or bookkeeper to handle the accounts

Bookkeeping and accounting in a PMV involves, among other things, registration of sales and purchases, registration of deductions, completion of annual statement and reporting of tax. Below you will find some basic principles and practices that can help you get started.

How do you get started with a PMV account as a freelancer?

A PMV account requires you to carefully book all your income and expenses during the year. Here, most people use an accounting program for bookkeeping, such as Dinner or Billy. 

What you book here is at the same time your tax and annual accounts. The results from the accounts must later be filled in an information form for the Tax Agency, so it is important that the appendices and information are correct.

If you have had more income than expenses, you will have a profit which is taxed. If the situation is the other way around, and you have had more expenses than income, you have a deficit, which can have an impact on your personal income, as you, as PMV, are liable for your own personal wealth.

PMV and accounting - You should know that

In a personally owned small business (PMV), the profit is taxed as personal income due to your personal liability as a business owner. When you own a PMV, you are not VAT registered, but it is important that you continue to report tax.

Tips for keeping track of the accounts in a PMV

It may be a good idea to post all attachments on an ongoing basis so that your accounts are always up to date. In this way, you ensure that attachments are not forgotten or that you are suddenly behind with the accounts. 

Here you must post both sales invoices, i.e. your sales to customers, and purchase invoices, which are purchases or expenses in the company.

If you are new to bookkeeping, it can be a good investment to get the help of an accountant or bookkeeper who can help you get off to a good start and ensure that you get everything posted correctly.

Alternatively, you can also use Factofly to keep track of the accounts, so that you don't have to worry about accounts and tax. Factofly's system automatically keeps track of everything, where you always have access to your information, and will have your money paid out as salary directly to your account.

PMV Tax: Every freelancer should know this

When you run a personally owned business and are CVR registered, it is crucial to understand how the tax calculation in your PMV works. The tax is calculated in your advance statement based on your expected income, where your expected income is easily sent to the Tax Agency via your advance statement. 

In this way, you pay ongoing tax on your income, where at the end of the financial year you must report the actual income and expenses to find out whether you have to pay more tax or have money left.

Common mistakes with PMV and tax

It is important that all information about the tax is correct in order to avoid a possible tax slap. Common mistakes for tax returns can e.g. be that the expected income in the advance statement is set too low and that these are not continuously adjusted. This will result in you ending up having to pay back tax, which can be avoided by setting the amount in the advance statement slightly higher than expected or simply by continuously correcting the advance statement.

In addition, it is also important to be aware of tax deductions to ensure which expenses or purchases in the company are eligible for deduction. In this way, you are sure to register all deductions, so that you avoid paying more tax than necessary.

It is therefore important to report correctly

When you yourself are responsible for the reporting of tax in your company, it is incredibly important that you get the correct information posted and reported to the Tax Office. The report must therefore be both timely and correct, as otherwise you risk fines and fees, and interest will automatically be added to the amount owed. 

As the owner of a PMV, it is your own responsibility that the report is correct and timely, and you yourself are responsible for keeping track of reporting deadlines. 

If it seems a bit unmanageable, you can easily and quickly invoice your customers through Factofly instead. When using Factofly, your tax return is handled automatically, after which your money is paid out to your account after tax. You do not need to keep independent accounts, as you are associated with Factofly as a project employee, and are therefore technically an employee.

PMV Deduction: Optimize your income as a freelancer

Like other companies, as a PMV you also have the right to tax deduction for certain expenses in the company. 

As a rule of thumb, you can say that expenses which are necessary in connection with the work or are considered to be justifiable purchases in the company, can be deducted from tax. However, it is important to check these, as some deductions may differ.  

The most common deductions in a PMV include:

• Purchase of equipment or programs for work, e.g. computer or accounting software
• Driving allowance when driving out to customers
• Telephone and internet costs
• Rental expenses for office space
• Electricity and heating costs for office space
• Employment insurances
• Expenses for bookkeeper or accountant

These are just some of the most common deductions. There are several deductions that you can advantageously register as purchases in the company. 

With Factofly, you can of course also get help registering yours tax deduction.

Take advantage of the available deductions

The list of deductions is long, and to make sure that you take advantage of the deductions that are available, it is a good idea to regularly check whether a possible amount is deductible. 

As a rule of thumb, you can get deductions for all work-related expenses, but there are still deviations, and therefore it is always recommended to check the rules for deductions on an ongoing basis.

Examples of overlooked PMV deductions that can benefit your bottom line

Some deductions are less known than others, but can have a big impact on your tax account and your bottom line as a freelancer. Here are some examples of overlooked PMV deductions:

• Rent for office
• Software and programs
• Research material
• Tools and equipment
• Home office (if part of your home is used exclusively for business)
• Travel and transport expenses
• Marketing e.g. expenses for advertisements, logo or website
• Expenses for administration, e.g. accounting program or accountant

Best practices for handling PMV as a freelancer

When you own a PMV, it is important to regularly check up on new rules and guidelines in the area. It is your own responsibility that these are observed and that you keep up-to-date on the rules for the operation of a PMV in order to avoid fees, fines or sanctions. You can make these up The Danish Business Authority's website. 

If you are in doubt about the rules for the operation of or tax reporting for PMV, you can always contact the Danish Business Authority or the Tax Agency for questions. In addition, it can be an advantage to be a member of various network groups, where you will be able to spar and help each other with general questions.

It may also be important to consider the future of the operation of your PMV. Your freelance business can develop and grow over time, and if you have a goal of a turnover that exceeds DKK 50,000 within the calendar year, it may be necessary to change your business form. 

Here you can also consider making use of Factofly with a focus on flexibility and ongoing adaptation to your changing needs – here there will be no upper limit for your revenue. You can read more about Factofly as a freelance agency here.