Entrepreneurial impact on the entire economy from idea to execution

An entrepreneur between survival and luxury

In Serbia, the word “entrepreneurship” is overused to the point of being overused. Often, a word that has a default meaning and is used so often is interpreted in completely the wrong context, as is often the case. It is implied that you have money when you say that you are an entrepreneur in Serbia, although at certain stages it has the opposite meaning. 

Entrepreneurship begins with your idea, and it’s the only guide you have, which requires that you develop a wide range of skills. The entire process is managed by you, every decision is yours, and every mistake requires you to be more creative in order to survive. When you are willing to take the risk of a business venture that carries with it a very high degree of uncertainty, you become an entrepreneur. To achieve this, you will need a number of skills, including an understanding of the target market, financial management skills, leadership skills, negotiation skills, and marketing skills. In fact, behind the word “entrepreneur” there are nights spent sleeping in front of the laptop, practicing speaking in front of the mirror, and magic moves to find sponsors and promote products…

In Entrepreneurship is also influenced by the business environment, in addition to an individual’s ability. In order for a country to have entrepreneurial capital, society must be able to encourage its development to a great extent. Through reducing bureaucracy and providing favorable financing from banks and other financial institutions, the state can encourage and support new entrepreneurial initiatives.

Entrepreneurship as a recipe for economic growth

Numerous studies conducted in America and Western Europe have confirmed the hypothesis of a significant connection between entrepreneurial activity and economic performance improvement. The level of employment, per capita income, and competitiveness of a local economy are significantly impacted by entrepreneurship.

It Knowledge exchange is one of the main instruments for transforming knowledge, skill, and creativity into a knowledge economy, and every country needs to adapt its business environment in order to encourage it. Entrepreneurship and entrepreneurial culture are essential for the successful use of accumulated knowledge on the market.

As The survival of entrepreneurs on the market depends on recognizing the needs of the market, and this is why modern approaches to a certain activity are most valuable to them. Entrepreneurs meet the needs of the environment in this way. They pay special attention to the quality of the services and goods they place on the market, thereby contributing to an increase in the quality offer and, thus, to healthy competition since they are not oriented towards systematic production. While entrepreneurs are often focused on diversity and uniqueness in their businesses, this generally affects economic growth.

Entrepreneurs in the United States, for example, produce 16 times more patents per employee than large companies. Many of these patents are filed by small technology startups with fewer than five employees.

Two thirds of new jobs in America are created by entrepreneurs. According to recent reports, they are responsible for 44% of America’s economic activity and 43.5% of its gross domestic product. 

In Despite the fact that entrepreneurs in Serbia do not have such a strong influence, the Agency for Economic Registers reports that citizen interest in entrepreneurship is increasing year by year. Serbia has 300,805 entrepreneurs, according to the latest official estimates. Compared to 2021, 636 more entrepreneurial actions were registered during the first half of 2022, indicating a continuing increase in interest.

As evidence of the interest in entrepreneurship in Serbia, the total income of entrepreneurs in 2021 reached 1,088 billion dinars, compared to 225 billion dinars in 2016. SBRA reported in 2021 that entrepreneurs in Serbia earned 44 billion dinars in positive net income, which was 30.6% higher than in 2020.

Entrepreneurship also offers an opportunity for Serbia to transform its rural economy into a knowledge economy, in which entrepreneurs play a key and vital role. A common misconception in Serbia is that innovation and knowledge economy are exclusively related to IT services, and they fail to understand that innovation, knowledge and technical-technological innovations, creativity and entrepreneurship are essential to the development of all activities.

The state in the role of support and encouragement

In order to encourage entrepreneurship, and therefore the development of the national economy, the state must invest in human resources first. Research has shown that 36% of young Serbians would prefer to own their own business over working for an employer.

In Along with investing in human capital, state institutions should liberalize and deregulate the economy of the entrepreneur, so that he or she will not be burdened with bureaucracy and administration. Entrepreneurs in Serbia face everyday challenges like reading tax regulations, getting conflicting information, and lacking information. In order to operate without violating the law, entrepreneurs must spend a significant amount of time finding ways to do so. A significant portion of their entrepreneurial energy must be spent on mastering administration.  So, the state deprives itself of individuals who are dedicated to improving the quality of the services they provide, and who have a positive impact on the entire community.

Innovating in education, security, and reducing bureaucracy

According to the amendments to the Law in 2019, all entrepreneurs must pass the Test of Independence in order to continue operating under this form for a specific principal. As part of the independence test, nine criteria are used to evaluate the relationship between the entrepreneur and the client during the performance of the activity. In order to determine whether the entrepreneur is independent in performing the activity, he must meet five criteria.

After the adoption of the law, the “Instructions for the application of the Test of Independence” were adopted in order to clarify the interpretation of the Criteria. Although the Instruction is very comprehensive, it refers to a great number of activities, so there are often doubts about its interpretation. There is no doubt that entrepreneurs would find it easier to understand each activity if there was a concrete statement or a practical example, but considering the scope of activities, this is simply not feasible.

A The independent interpretation of a 60-page tax regulation requires a lot of time and money, as well as uncertainty regarding its accuracy. Due to the decline of the independence test, the entire income generated by the client with whom you are doing the test is taxed at 45.5%.

Failure to pass the independence test has different consequences for domestic and foreign clients. A domestic client will bear the consequences of a failed test if you provide the service. However, if you fail the test in relation to a foreign client, the entrepreneur will have to bear the consequences.

In The Digital Community, which gathered in support of the adoption of the independence test, assisted Clever in creating a Digital version of the independence test, which affects the stability of entrepreneurial businesses through an innovative solution that is simple and easy to implement. Additionally, the Digital Independence Test represents an opportunity to educate entrepreneurs, as well as legal entities that do business with them, on how to interpret the criteria of the independence test and, based on that, get a reliable assessment of their relationship, and avoid paying fines.

The digital test of the entrepreneur’s independence through simple questions and carefully chosen answers prompts the examinee to give precise answers about the relationship with the client, resulting in a comprehensive report in accordance with the prescribed instructions. Thus, the digital test of independence guarantees the entrepreneur’s independence and enables him to conduct business safely.

Based on the presented solution, other countries in the region can also regulate their tax regulations based on the digital test of independence. Currently, Croatia is drafting a tax regulation similar to our independence test, and we believe that our solution will be a good basis for innovations that are in line with theirs.

In accordance with previous chapters, the Digital Test of Independence prevents the shutting down of entrepreneurial agencies, which indirectly contributes to the trend of increasing employment, encouraging innovation, and increasing income per capita through the shift in entrepreneurial activity. By doing so, we have allowed entrepreneurs to contribute to the creation of a system that will allow them to increase work productivity and therefore contribute to society as a whole instead of wasting their entrepreneurial energy on overcoming administrative obstacles.

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