Features of cash payments for individual entrepreneurs and individuals

Entrepreneurs have the right to accept cash from individuals for the sale of goods or services. However, there are some restrictions on the amounts of such transactions carried out during one day.
How do cash restrictions work, and which law regulates them?

Laws Regulating Cash Restrictions

According to Law No. 1591, all cash payments exceeding the allowed amounts must be made through a bank account. That is, a sole proprietor must deposit the money into their business account. The law does not limit the number of businesses and individuals with whom transactions are made during the day.
The rules and requirements for cash transactions in national currency are specified in the NBU Regulation No. 148. The resolution establishes that cash restrictions also apply to:

1. Cash transactions for goods or services that were received using a payment card.
2. Transactions between sole proprietors and individuals through ECR or software equivalents.

However, there is a nuance: the established restrictions do not apply to transactions with state and budgetary target funds, as well as to the payment of charitable donations.

Cash Transaction Limits in 2024

There are limits on all cash transactions depending on the size of such transactions and their participants.
Since February 24, 2022, the established limits have not changed. They can apply to the following types of transactions:

• 10,000 UAH for transactions between companies, sole proprietors; an individual and a sole proprietor;
• 50,000 UAH for transactions between individuals, between a company and an individual, a sole proprietor and an independent professional.

Independent professionals are individuals who carry out independent professional activities. This category includes notaries, lawyers, etc. The only condition is that this person should not be registered as a sole proprietor.

What Are the Exceptions?

To avoid confusion with the established norms and comply with the law, it is important to know which transactions are exceptions. Among them:

• Cash payments between companies and sole proprietors with state or budgetary target funds. An example would be tax payments;
• Charitable contributions and donations on a voluntary basis;
• Using funds issued for business trips;
• Salaries.

The above-mentioned restriction amounts apply to all financial transactions for various payment receipts received during one day. What does this mean?

Interestingly, this rule works both ways between the same transaction participants. For example, if a sole proprietor paid 39,000 UAH to a legal entity, that company can no longer pay this amount to the entrepreneur.

Entrepreneurs often face this problem when an individual first pays for goods and then requests a refund. If the buyer paid 40,000 UAH for a product that did not suit them and wants a refund, the seller cannot return this amount on the same day. Otherwise, their actions would be considered a violation, as the refund amount would exceed the established limit. This is because the total amount of transactions doubles to 80,000 UAH, with the possible limit being 50,000 UAH.
Thus, the restriction applies only to the total of all cash transactions made during one day.

And it is always important to remember that cash received at the cash register must be registered in full on the day it is received. Otherwise, the tax authorities may impose a fine for violation of cash accounting.

How Do Cash Restrictions Work?

1. The established rules apply only to financial transactions between two specific participants. Thus, a sole proprietor can settle in cash during one day with several other sole proprietors. And the amount of each such transaction is 10,000 UAH.
2. When paying with bank cards through a terminal, there are no cash restrictions. But if the buyer transfers the amount to the seller's account, this transaction falls under the current law and must be recorded through ECR or software ECR.
3. Payments under a civil law contract are not considered wages. In this case, cash restrictions apply to them.
4. If a person is sent on a business trip, only the funds issued exclusively for the following needs are not subject to restrictions: payment for food, accommodation, travel, etc.

How to Bypass Cash Transaction Limits?

If you need to pay an amount that exceeds the established limits, you can do the following:

1. Make a payment through a bank terminal or bank cashier.
2. Pay a certain amount each day, the size of which does not exceed the established limit.
3. Pay one part in cash and the other by non-cash payment.

Liability for Violating Cash Restrictions

The State Tax Service monitors compliance with the established order of cash transactions for goods or services. If a tax audit reveals a violation, the following fines will be imposed:

• For the first violation — from 1,700 UAH to 3,400 UAH.
• For each subsequent violation — from 8,500 UAH to 17,000 UAH (according to Article 163 of the Code of Administrative Offenses).

The fine is imposed on both parties to the transaction, both the seller and the buyer. However, this mainly concerns entrepreneurs, as the tax authorities cannot apply these sanctions to an individual or independent professionals. Nevertheless, it is essential to comply with legislative requirements to conduct business transparently and efficiently.