Among those who are not interested in this issue, there is an opinion that legal entities include any form of entrepreneurial activity. Whether it's a limited liability company or an individual entrepreneur, it's all the same. Entity. But is it really so? After all, there is a huge the legislative framework differences both in doing business and in the various opportunities and constraints that are imposed on both of these types of business activities.
Therefore, for those who plan to open a business and choose a form of activity, it is important to understand what the differences really are, and how, in fact, it is correct to talk about the status of individual entrepreneurship.
The simplest explanation for the layman (that is, someone who is simply interested in this issue, but not related to it): An individual entrepreneur is an individual with the rights to conduct business activities of a legal entity.
From the point of view of the legislative spectrum, an individual entrepreneur is called a private entrepreneur, or “an entrepreneur without a legal entity”. But still, this is an individual.
So, almost everyone can become an individual entrepreneur, but he will have to fulfill the requirements specified by law. That is, it will be an individual who builds its activities within the boundaries and requirements of the law, but does not register a legal entity.
In an even simpler language:
A certain Ivanov Ivan Andreevich lives. He decided to go into business, but did not want to create any company like Avdrug LLC. Therefore, he is registered according to the rules and becomes IP Ivanov Ivan Andreevich. From that moment on, he has the right to do business, but only within the framework legislative norms and the legal regulations that govern the work of those who have registered as an “idiot”. And still, it is not a legal entity.
Why you can't engage in commercial activities without being an individual entrepreneur
- Because without registration of business law, any activity will be recognized outside the law (we recall that it is not is about legal entities).
- When a person is registered as an individual entrepreneur, he is registered with the tax and selects the system by which tax will collect from his taxes for his commercial activities.
- SP after registration takes on themselves property responsibility for everything he owns.
- Without registration, an individual entrepreneur cannot it will turn out to hire employees to to work. A SP it can do in not breaking laws. After all, everyone hired will need a mark in work book.
Who are individuals?
But if an entrepreneur remains an individual, then it is worth figuring out what is meant by this term.
In fact and according to the letter of the law, an individual is a person who has rights and obligations within the framework of legal regulation state system.
An individual has its own characteristics
- Identified by the system by name.
- Not is obliged to undergo any registration (except for obtaining a certificate of birth and passport).
- Has the right to conducting economic transactions with physical and legal entities in trade plan, exchange environment, production processes and transport.
What do an individual and an individual entrepreneur have in common?
- The profit received by the individual entrepreneur and funds of an individual are completely in their orders regarding further actions on them.
- Nobody obliges either an individual or Individual entrepreneur to open a checking bank account or maintain Accounting.
- None obliges to have a seal.
- SP and an individual is equally liable before the law for committed violations.
- The individual has the registration address. IP has it serves as the address of registration of business activities.
Important! An individual without an individual entrepreneur cannot conduct commercial activities. And this is the fundamental difference. That is, the same Ivanov Ivan Andreevich cannot go into business if he did not go and register himself as individual entrepreneur... But even after registration, when he receives the additional right to do business, he remains in the status of an individual.
We analyzed the characteristics of individuals and looked at what are the similarities and differences between those of them who registered the right to a business. Now let's see, so that we can already imagine the whole situation, what specific traits have legal entities.
Signs of a legal entity
- The organization that will do business is registered and possesses certain property.
- Have the legal entity has its own separate name and registration address.
- Separate responsibility.
- The legal entity acts in the form of a certain team, which is structured, divided into managers and subordinate employees who operate in a certain formal area of rights and responsibilities of each member.
- The legal entity has the right to appear in legal proceedings, both by the plaintiff and the defendant.
- It is supposed to keep accounting records, submit reports to the Federal Tax Service, and also extrabudgetary funds.
- The legal entity is liable before the law for committed violations based on the chosen organizational form.
- The legal entity gets the right to obtaining licenses for a certain type of activity that is inaccessible to other forms of commercial activity.
- Seal - an obligatory tool for conducting the activities of a legal entity, as well as current account in banking organization.
Note: with regard to property liability, in the case of the organization of a legal entity, its founders invest in the common "piggy bank" their parts of the authorized capital.
Note 2: In litigation, the legal entity is the representative of the entire organization.
What is common between an individual entrepreneur and a legal entity
- The need for reporting to the tax department.
- Controlling and inspection bodies arrange inspection activities in relation to both forms of entrepreneurship.
- Have the right to hire employees in the state.
Comparison of IP with Yur. Face
In order to finally understand why an individual entrepreneur is not a legal entity, the following characteristics can be cited, point by point:
Taxes. Both of them pay.
Accounting. Both are leading.
Employees in the state. Anyone can hire.
Payment account. SP has the right. Legal entity - it is obliged.
Seal. SP - has the right. Legal entity - it is obliged.
Penalties... Mandatory in case of offenses both on the part of the individual entrepreneur and on the part of legal entities. However, in the case of the latter, they are more significant.
A responsibility. The SP is responsible for everything that he has. Legal entity - only within its share of the authorized capital.
Registration. SP is registered simply. You need a passport, application and receipt. The legal entity will need constituent documents.
The address. An individual entrepreneur is registered at the place of residence; the business does not necessarily have to be there. The legal entity has a legal address, which most often coincides with the location of the office.
Activities. Individual entrepreneurs have many restrictions on various complex views commerce. A legal entity can obtain a license for them.
Disposal of income. The SP decides for himself how to dispose of. When withdrawing cash from an account, you just need to indicate that this is the entrepreneur's income. The legal entity is obliged to indicate the purpose - for what they will then be used.
No matter how similar the two forms of entrepreneurship are, there are still more differences. Both in terms of quantity and quality, especially in the area of duties and responsibilities. On the other hand, an individual entrepreneur can exercise his right to open a current account, to create a seal and to recruit employees. Then the level of differences will sharply decrease.
Pros and cons of an individual entrepreneur versus a legal entity
All these factors (both positive and negative) can be deduced from what we identified earlier based on a comparison of two forms of commercial activity.
Among clear advantages can be distinguished:
- The ease of registration actions when opening an IP (and when closing too).
- Calm distribution of income from their activities as needed.
- The reporting is simple.
- Office - optional condition... You how IP register by your residence address, so you can work and Houses.
- There are a number of forms of doing business that are aimed at simplification of duties- UTII, USN, PSN.
Flaws:
- Responsibility you carry all your personal belongings, and not only those that apply to actions of SP.
- Different kinds activities will remain inaccessible to you.
- The largest, and most often the most profitable partners are not will work with small entrepreneurs. This is most often associated with lack of payment for VAT.
- V pension fund you you will still pay royalties, even if you work alone, or not at all you work, but the IP works.
Outcome
We figured out how ordinary individuals, individual entrepreneurs and legal entities differ. You can find many differences, as well as similarities. Exactly, as well as positive and negative features of all forms of management economic activity... And, if you again ask the question, voiced at the beginning of the article - is the sole proprietor a legal entity, then we can confidently say “No”.
An individual entrepreneur is still the same individual. But it registered its activity in accordance with the rules of registration and accounting of entrepreneurial activity. And accordingly, after that, it acquired certain rights and obligations, which in turn are regulated by separate laws and articles of codes.
According to the civil code of R.F. An individual entrepreneur is an individual who has the right to engage in commercial activities. The entrepreneur is responsible for his obligations with all his property.
What form of business does individual entrepreneurship belong to?
Many people cannot understand the organizational and legal affiliation of an individual entrepreneur: is it an individual or a legal entity? Answer to this question indicated in Art. 23 of the Civil Code of the Russian Federation, according to which any citizen has the right to practice labor activity as an individual entrepreneur without forming a legal entity.
The concept of a legal entity is interpreted differently: it is a registered organization (LLC) with founders and authorized capital. SP leads entrepreneurial activity without one.
It should be noted that an individual entrepreneur in many cases is endowed with the same powers as an LLC. For example, he can also open a current account, enter into contracts and carry out practically the same types of activities, with the exception of some of them.
What is the difference?
| Individual (individual entrepreneur) | Legal entity (LLC) |
|---|---|
| Simplified registration procedure, minimum state fee | Registration requires a lot of documents, a higher state fee |
| Responsible before the Law with his personal property | Risk only a fraction of authorized capital |
| There is no need to keep accounting records and open a current account | Permanent documentary control of movement Money, obligatory opening of a checking bank account |
| Disposes of profits at its own discretion | The manager has no right to take the received proceeds |
| Cannot engage in any kind of activity | There are no restrictions on the types of activities |
| Pays contributions to the FIU, even if there is no profit | There is an opportunity not to pay contributions to the FIU in the absence of income |
| Business cannot be sold | There are no prohibitions on the sale of a business |
| Lower penalties | High fines in case of violations of the Tax Code of the Russian Federation |
| You cannot attract investors | Possibility of attracting investors |
Thus, each of the organizational and legal forms has its pluses and minuses, and any acting individual entrepreneur can register an LLC by contacting the Federal Tax Service with documents, but taxes and fees will have to be paid for all forms of activity.
Example: citizen, being the founder of an LLC engaged in the manufacture building materials, decides to sell clothes through an online store. To do this, he has the right to open an individual entrepreneur separately, but he is obliged to pay taxes to the Federal Tax Service, contributions to the Pension Fund of the Russian Federation and OOMS for both organizations.
In this case, asking the question - IP is a legal entity. a person or an ordinary natural person. face? - it is necessary to proceed precisely from the form of business that is run by a citizen. When resolving legal disputes, filling out documents, submitting reports from an LLC, it will be a legal entity, and from an individual entrepreneur - an individual.
Consideration of controversial situations in court
In accordance with the Arbitration Procedure Code of the Russian Federation, the Arbitration Court has the right to accept applications from organizations and individual entrepreneurs in the event of the following disputes:
- Economic: for example, about debts.
- Administrative: when maintaining not registered in legally business.
- Organizational: bankruptcy of LLC.
- Tax: Failure to pay advance payments on time.
- Corporate: when causing losses caused by co-founders, founders and participants to a legal entity.
- Interethnic economic: in case of default by a company registered in the territory of the Russian Federation in relation to a foreign citizen, or vice versa.
When making a decision on the imposition of penalties, the court has the right to be guided by the data on the personal property of an individual entrepreneur. If the fine is imposed on the LLC, then the arbitration can only take into account the authorized capital of the organization.
Due to the fact that an individual entrepreneur is an individual, or an organization is a legal entity, all conflicts and disputes between them fall within the competence of the Arbitration Court and are resolved only in court.
Addition
There are still questions about the nuances of the legal status of an individual entrepreneur or you need a detailed expert consultation on another issue legal issue? The moneymaker factory recommends using the "Pravoved" online service to obtain professional advice from an experienced lawyer. (Receiving the first response within 15 minutes after its publication).
Having analyzed the norms of the current legislation, one can dwell on some differences between the procedure for carrying out entrepreneurial activity in the status of an individual entrepreneur, from the procedure for carrying out entrepreneurial activity using any of the forms of a commercial organization.
In particular, the following differences can be highlighted:
A) when registering a legal entity, the founders make contributions on their own behalf to the property of the organization. It can be money, inventory or non-current assets. The property of a legal entity from this moment is accounted for separately from the property of the founders. Suppose the organization incurs a loss. Creditors are demanding debt repayment. A legal entity can settle accounts with creditors only within the limits of its property. That is, to give away fixed assets, securities, goods, finished products, etc. At the same time, the founder can sleep peacefully: it is impossible to take the personal property of the founders for debts, since the organization is liable for debts only with its separate property (Article 48 of the Civil Code of the Russian Federation). In order for a citizen to register as an individual entrepreneur, form authorized capital no need. But at the same time, an individual registered as an individual entrepreneur is responsible for his obligations (including those assumed as an individual entrepreneur) with all his property (Article 24 of the Civil Code of the Russian Federation).
B) upon registration, an individual entrepreneur cannot, at his choice, rent an office in any of the city districts and register with the tax office at the place of his location, unlike a legal entity.
State registration of a legal entity is carried out at the location indicated by the founders in the application for state registration a permanent executive body, in the absence of such an executive body at the location of another body or person entitled to act on behalf of a legal entity without a power of attorney.
State registration of an individual entrepreneur is carried out at his place of residence (clause 3 of article 8 of Law No. 129-FZ). Place of residence - dwelling house, apartment, room, dwelling of specialized housing stock (service dwelling, dwelling in a dormitory, dwelling of the flexible stock, dwelling in the house of the system social service population and others) or other residential premises in which a citizen permanently or predominantly resides as an owner, under a lease (sublease) agreement, a specialized residential premises lease agreement or on other grounds stipulated by law Russian Federation, and in which he is registered at the place of residence (paragraph 8 of article 2 of the Law of the Russian Federation of June 25, 1993 No. 5242-1 "On the right of citizens of the Russian Federation to freedom of movement, choice of place of stay and residence within the Russian Federation").
Therefore, in order to obtain the status of an individual entrepreneur, a citizen must submit Required documents to the tax office at the place of residence. But it should be noted that, for example, the registering authority of Moscow is the Interdistrict Inspectorate of the Federal Tax Service of Russia No. 46 in Moscow. Consequently, both individual entrepreneurs and organizations, upon registration, must submit all the necessary documents there. In the event of a decision on state registration of a legal entity, an individual entrepreneur, the registering (tax) authority (Interdistrict Inspectorate of the Federal Tax Service of Russia No. 46 for Moscow) makes a corresponding entry in the database of the United state register individual entrepreneurs (EGRIP).
C) individual entrepreneurs may not be engaged in all types of entrepreneurial activities that organizations may carry out. The types of entrepreneurial activities that can only be carried out by organizations and cannot be carried out by individual entrepreneurs include, for example:
- activities related to the production and circulation of ethyl alcohol, alcoholic and alcohol-containing products in the Russian Federation in accordance with Law No. 171-FZ. Thus, the supply of ethyl alcohol is carried out only by organizations that have licenses for the production, storage and supply of produced ethyl alcohol, including denatured alcohol (clause 4 of article 9 of Law No. 171-FZ). Also, Law No. 171-FZ establishes that the production and circulation of alcoholic beverages (with the exception of retail beer and beer drinks, cider, poiret, mead) and alcohol-containing food products are carried out only by organizations (clause 1 of article 11 of Law No. 171-FZ). Retail alcoholic beverages(with the exception of beer and beer drinks) is carried out by organizations (clause 1 of article 16 of Law No. 171-FZ). In addition, Law No. 171-FZ establishes that the production and circulation (except for retail sale) of alcoholic beverages containing ethyl alcohol more than 15 percent of the volume of finished products (with the exception of vodka production) may be carried out by state-owned enterprises, as well as other organizations that have a paid authorized capital (authorized fund) in the amount of at least 10 million rubles. Vodka production is entitled to be carried out by state-owned enterprises, as well as other organizations that have a paid authorized capital (authorized capital) in the amount of at least 80 million rubles. (Clause 2.1, Clause 2.2. Article 11 of Law No. 171-FZ);
- types of activities related to the scope of Law No. 61-FZ. For example, manufacturers medicines there can only be an organization that produces medicines in accordance with the requirements of Law No. 61-FZ;
- activities arising from pawnshops lending to citizens on the security of things belonging to citizens and storage activities (Federal Law of July 19, 2007 No. 196-FZ "On pawnshops" (hereinafter - Law No. 196-FZ)). So, a pawnshop can only be a legal entity - a specialized commercial organization, the main activities of which are the provision of short-term loans to citizens and the storage of things (clause 1 of article 2 of Law No. 196-FZ);
- microfinance activities. Thus, microfinance activities are the activities of legal entities with the status of a microfinance organization, as well as other legal entities entitled to carry out microfinance activities to provide microloans (microfinance) (subparagraph 1, paragraph 1, article 2 Federal law dated July 2, 2010 No. 151-FZ "On microfinance activities and microfinance organizations");
- activities to organize and conduct gambling on the territory of the Russian Federation. So, the organizer of a gambling game can only be a legal entity carrying out activities for the organization and conduct of gambling (clause 5 of article 4 of the Federal Law of December 29, 2006 No. 244-FZ "On government regulation activities for the organization and conduct of gambling and on amendments to some legislative acts Russian Federation "(hereinafter - Law No. 244-FZ));
- private detective activity. Thus, an individual cannot register as an individual entrepreneur to carry out private security activities. Private security activities can only be carried out by private security organizations. In accordance with Law No. 2487-1, a private security organization is an organization specially established to provide security services, registered in the manner prescribed by law and licensed to carry out private security activities. A private security guard can be a citizen of the Russian Federation who has reached the age of 18, who has passed vocational training to work as a private security guard, passed a qualification exam, received a private security certificate and works under an employment contract with security organization(Clause 2, Art. 1.1. Law No. 2487-1). Conversely, Law No. 2487-1 does not contain such a thing as "detective organization" or "private detective agency". A private detective can only be a citizen of the Russian Federation registered as an individual entrepreneur who has received a license to carry out private detective (detective) activities in accordance with the established procedure and provides services under Part 2 of Art. 3 of Law No. 2487-1.
D) before the beginning of 2012, there was another difference in the activities of individual entrepreneurs and organizations. It is on the procedure for carrying out cash transactions. Previously, the Procedure for Conducting Cash Transactions in the Russian Federation was in force, which was approved by the letter of the Central Bank of October 4, 1993 No. 18. It applied to enterprises, associations, organizations and institutions, regardless of organizational and legal forms and areas of activity, and individual entrepreneurs were not mentioned in it ... In this regard, explanations were given that the previously existing procedure for conducting cash transactions in the Russian Federation did not apply to individual entrepreneurs (letter of the Ministry of Finance of Russia dated March 2, 2011 No.
No. 03-01-10 / 1-15; letter of the Federal Tax Service of Russia dated June 14, 2011 No. AS-4-2 / [email protected]). Also in the resolution of the Presidium of the Supreme Of the Arbitration Court Of the Russian Federation dated June 29, 2010 No. 1411/10, it was determined that the legislation in force at that time did not provide for the obligation of individual entrepreneurs to post cash to the cashier and to comply with the procedure for keeping free funds. In the existing after the Procedure for conducting cash transactions in the Russian Federation (approved by the letter of the Central Bank of October 4, 1993 No. 18), the Regulation on the procedure for conducting cash transactions (which was approved by the Bank of Russia on October 12, 2011 No. 373-P), it was established that its effect applied to individuals engaged in entrepreneurial activities without forming a legal entity.
Thus, from January 1, 2012, individual entrepreneurs were obliged to comply with the procedure for conducting cash transactions, determined by the Regulation on the procedure for conducting cash transactions, including:
- determine the limit of the balance of cash;
- keep cash in bank accounts in banks in excess of the established limit on the balance of cash;
- draw up cash transactions with cash receipts and cash receipts;
- ensure the availability cash documents and other documents drawn up during the conduct of cash transactions, within the time limits established by the legislation on archiving in the Russian Federation;
- keep a cash book.
However, the Regulations on the Procedure for Conducting Cash Operations became invalid due to the adoption of the Bank of Russia Ordinance No. 3210-U dated March 11, 2014 "On the Procedure for Conducting Cash Operations by Legal Entities and a Simplified Procedure for Conducting Cash Operations by Individual Entrepreneurs and Small Businesses" (hereinafter - Instruction on the procedure for conducting cash transactions for legal entities and individual entrepreneurs).
In accordance with clause 4.1 of the Instructions on the procedure for conducting cash transactions, legal entities and individual entrepreneurs must conduct cash transactions.
At the same time, in accordance with clause 4.1 and clause 4.6 of the Instructions on the procedure for conducting cash transactions for legal entities and individual entrepreneurs, who, in accordance with the legislation of the Russian Federation on taxes and fees, keep records of income or income and expenses and (or) other objects of taxation or physical indicators, characterizing a certain type of entrepreneurial activity:
a) may not draw up cash documents;
b) may not keep a cash book.
E) legal entities must have an independent balance sheet or estimate and must keep accounting records. In contrast to them, individual entrepreneurs only keep records of income and expenses for calculating taxes that should be paid to the budget. Thus, an individual entrepreneur does not have to keep accounting, he is obliged to keep records of income and expenses and business transactions in the appropriate ledger. On January 1, 2013, a new Federal Law of December 6, 2011 No. 402-FZ "On Accounting" came into force (hereinafter - Law No. 402-FZ). It extends its action to the following persons (economic entities):
- commercial and non-profit organizations;
- state bodies, bodies local government, governing bodies of state off-budget funds and territorial state off-budget funds;
– central bank Russian Federation;
- individual entrepreneurs, as well as lawyers who have established law offices, notaries and other persons involved in private practice;
- branches, representative offices and other located on the territory of the Russian Federation structural units organizations created in accordance with the legislation of foreign states, international organizations, their branches and representative offices located on the territory of the Russian Federation, unless otherwise provided by international treaties of the Russian Federation.
An economic entity is obliged to maintain accounting records in accordance with Law No. 402-FZ, unless otherwise provided by Law No. 402-FZ. However, Law No. 402-FZ establishes that, in accordance with Law No. 402-FZ, an individual entrepreneur, a person engaged in private practice, in particular, may not maintain accounting records if, in accordance with the legislation of the Russian Federation on taxes and fees, they keep records of income. or income and expenses and (or) other objects of taxation in the manner established by the specified legislation. The fact that an individual entrepreneur calculates the tax base based on the results of each tax period on the basis of accounting data for income and expenses and business transactions, indicates paragraph 2 of Art. 54 Tax Code RF. Thus, from January 1, 2013, an individual entrepreneur may also not keep accounting records, since he is obliged to keep records of income and expenses and business transactions in the Book of Accounts.
It should be noted that some regulatory legal acts that relate to the procedure for filling out settlements and other forms of documents contain provisions that they are filled out on the basis of accounting data. At the same time, no distinction is made regarding the procedure for filling out these forms by organizations or individual entrepreneurs. So, for example, in par. 2 p. 1 of the Procedure for filling out the calculation form for accrued and paid insurance premiums for compulsory pension insurance in Pension Fund Of the Russian Federation and for compulsory medical insurance to the Federal Compulsory Medical Insurance Fund by payers of insurance premiums making payments and other remuneration to individuals (form RSV-1 PFR) (approved by the Resolution of the Board of the RF PF dated January 16, 2014 No. 2p) it is indicated that the basis for filling out the calculation in the form of RSV-1 PFR is the data of accounting and personnel records.
Similar provisions are indicated, for example, in clauses 7.10, 7.11, 7.17, 25 of the Procedure for filling out the calculation form for accrued and paid insurance contributions for compulsory social insurance in case of temporary disability and in connection with maternity and compulsory social insurance against accidents at work and occupational diseases, as well as for the costs of paying insurance coverage (Form 4-FSS), approved by Order of the FSS of the Russian Federation dated February 26, 2015 No. 59.
Also clause 1 of Art. 11 of the Federal Law of April 1, 1996 No. 27-FZ "On individual (personified) accounting in the compulsory pension insurance system" indicates that the information of personalized accounting on paid insurance premiums, which policyholders submit to the territorial body of the Pension Fund of the Russian Federation, are formed on the basis of data accounting.
E) some articles of the Code of Administrative Offenses RF, which provide for measures of administrative responsibility for offenses in the field of taxes and fees that apply to organizations, cannot be applied to individual entrepreneurs. So, some measures of administrative responsibility are not applied to individual entrepreneurs, provided, in particular:
- Art. 15. 3 of the Code of Administrative Offenses of the Russian Federation for violation of the term for registration with the tax authority;
- Art. 15.4 for violation of the deadline for submitting information on opening and closing an account with a bank or other credit institution;
- Art. 15.5 for violation of the deadlines for filing a tax return;
- Art. 15.6 for failure to provide information necessary for the implementation tax control;
- Art. 15.7 for violation of the procedure for opening an account for a taxpayer;
- Art. 15.8 for violation of the deadline for the execution of an order to transfer a tax or due (contribution);
- Art. 15.9 for non-fulfillment by the bank of a decision to suspend operations on the accounts of a taxpayer, payer of the levy or tax agent;
- Art. 15.11 for gross violation of the rules of accounting and presentation of financial statements.
Individual entrepreneurs cannot be brought to the administrative responsibility established by the above-mentioned norms as officials. This follows from the footnote to Art. 15.3 of the Administrative Code of the Russian Federation. This rule also applies to cases when an individual entrepreneur, without concluding labor contracts to fulfill the duties of a manager, chief accountant and other officials, he himself exercises the rights and obligations of the named officials (clause 23 of the resolution of the Plenum The Supreme Court RF of October 24, 2006 No. 18 "On some issues arising from the courts when applying the Special Part of the Code of the Russian Federation on Administrative Offenses");
i) the restrictions established for the beginning of the application of the simplified tax system by organizations and individual entrepreneurs differ. This information is described in more detail in clause 13.2 of this Book.
Starting a business is always a serious step that requires a careful approach in all aspects. And one of the main questions that a novice entrepreneur needs to answer: which is better and more profitable to open - an individual entrepreneur or an LLC?
Much in the work of a business depends on the choice of the organizational and legal form. Therefore, when deciding to open your own business, you need to immediately determine what to open. Indeed, in many respects, the difference between the forms is significant, from the procedure to the termination of activities.
Usually the choice is made between individual entrepreneurs and LLCs, since the rest of the forms are either, as practice has shown, not profitable enough(for example, partnerships), or too difficult to start a business(for example, joint stock companies).
Even within the framework of one type of activity, the activity itself will often develop in completely different directions. Therefore, the choice must be approached responsibly, thinking about the future.
What is better to open: an individual entrepreneur or an LLC, how to make the right choice?
When making a choice, you need to have a clear idea what is the difference between an individual entrepreneur and an LLC.
It is necessary to take into account the conditions of a specific type of activity; also, one must not forget that for some types of activity, only one option is possible. For example, a private detective can be registered only as an individual entrepreneur, and only an LLC can provide security services.
What documents will be required for registering an individual entrepreneur and how to draw up them correctly, you can find out
Scheme: Registration differences between individual entrepreneurs and LLCs. What is the difference between a legal entity and an individual?
Property liability
When creating an LLC, 2 types of liability arise:
1. Responsibility of the founders as individuals. persons.
2. Responsibility of society as a legal entity. faces.
Talking about limited liability, then usually the second type of responsibility is implied: LLC is really as a legal entity. the person is liable for the obligations with the property belonging to him.
5. General system taxation.
Employee taxes and payments
Taxes and payments for employees are the same for sole proprietors and LLCs. Any employer must list insurance premiums in the amount of 30% of the issued amount and withhold 13% of the income tax from employees.
Restrictions by type of activity
Individual entrepreneurs are not allowed to engage in certain types of activities, which include the following:
- Drug production.
- Banking activities.
- Investment funds.
- Insurance services.
- Tour operator activity (but you can be a travel agent).
- Alcohol trade and production (except beer).
There are no such restrictions for LLCs.
Money withdrawal
An individual entrepreneur has the right to freely dispose of all available money (the main thing is to have time to pay taxes and transfer insurance premiums). There are no taxes on withdrawal of money.
The situation with LLC is somewhat different: all the funds earned belong to the society, therefore, even if there is only 1 founder, he cannot freely dispose of the money.
You can withdraw funds in the following ways:
1. As dividends (they can be distributed among the founders no more than once a quarter). Withholding personal income tax - 13%.
2. As a salary (for officially registered employees of the LLC). Insurance premiums are credited 30% + income tax withheld 13%.
How can an individual entrepreneur withdraw money from a current account? The answer is
Reporting
Basic moments:
- Individual entrepreneurs and LLCs must comply with the rules of cash discipline.
- SP does not need to take a booze. reporting. Small organizations can draw up accounts. reporting in a simplified form.
- The reporting for employees is the same.
- Tax reporting depends on the tax regime.
You can learn how to correctly draw up a report on the average headcount and see a sample of it.
Wage-earners
There is an opinion that individual entrepreneurs have much less rights, but this is not the case. In both forms of business, employees must be drawn up in accordance with Labor Code(conclude contracts, pay sick leave and vacation, make entries in work books, transfer insurance premiums, etc.).
For an LLC and an individual entrepreneur, only the process of registering the employer itself is different. An individual entrepreneur must write an application for registration after hiring his first employee, an LLC does not need to do this: from the beginning of the company's activities, he already has general manager, therefore the LLC is registered immediately after the registration is completed.
Attraction of investments
LLC is much more preferable in terms of financial investments than individual entrepreneurs. Using the funds raised, the organization can reach a completely new level.
However, in return for the invested funds, the investor will receive a share in the authorized capital, so financial investments are profitable for him.
An individual entrepreneur can theoretically also raise funds, but usually this ends with a regular loan or loan.
Therefore, if you are going to further develop your business through additional fundraising, then you should think in advance about choosing an LLC as a form of organization.
Business closure procedure
It is much faster and easier to close an individual entrepreneur than an LLC. To do this, you only need to submit an application for termination of activities and pay the state fee = 160 rubles.
The LLC liquidation procedure is much more complicated, more expensive and requires a considerable amount of time (usually the procedure lasts at least 4 months); as a solution to the problem, you can sell the LLC or change the founders.
Liability and penalties
- When deciding on the registration of an LLC, you need to remember that a legal entity. the person is much more liable than that of an individual entrepreneur (for example, a fine for violating the rules for using a cash register for individual entrepreneurs is from 3 to 4 thousand rubles, and for an LLC it is 10 times more). Also, officials of the LLC can be brought to administrative responsibility.
- For heads of organizations, criminal liability is much more serious than for individual entrepreneurs.
- Tax liability for LLCs and individual entrepreneurs matches in most cases.
What is the responsibility Chief Accountant Ltd. since 2016, you can find out
Based on the above, depending on your goals, plans and available funds, you will be able to do optimal choice between the forms of organizing your business - LLC or individual entrepreneur.
What to choose: individual entrepreneur or LLC? What's better? What is the difference between a legal entity and an individual? Answers to these and other questions are contained in the following video:
The difference between a legal entity and an individual entrepreneur lies in the fact that these economic entities are created on fundamentally different bases and they have different responsibilities for obligations. A legal entity is an organization of several citizens, an individual entrepreneur acts as a citizen entitled to carry out commercial transactions. Individual entrepreneurs have restrictions on cash turnover, staffing and assets when using simplified tax regimes.
The status of an individual entrepreneur presupposes that a certain citizen who has legal capacity and legal capacity receives the right to commercial activity. He has the right to acquire rights and tangible assets on his own behalf. It is believed that enterprises created on such a basis are a good start for their own business, and small businesses are mostly created by entrepreneurs.
Nevertheless, the burden on individual entrepreneurs as an individual is so great that it is better to register a small business on the basis of a legal entity. The fact is that the founder of the organization is responsible for its debts only within the limits of the contribution to the authorized capital, and the entrepreneur risks losing all his personal property if financial problems arise. But this is only one, albeit the main difference between an individual entrepreneur and a legal entity.
Let's summarize all the differences in a table:
| Comparison indicator | SP | Organization |
| Number of persons participating in registration | One person whose personal data is entered in the state register | One person becoming the only member, a group of individuals, and even other organizations becoming founders |
| Responsibility for the obligations of the enterprise | In the event of a shortage of assets, the enterprise is liable with personal property | Responsible only in the amount equal to the authorized capital. |
| Registration actions | For individual entrepreneurs, they are carried out according to a simplified scheme with a minimum of documents | The registration procedure with the tax authority implies the formation of a package of documents, which includes a multi-page charter of the organization |
| Authorized capital | Not needed | Required, otherwise the organization will not be registered |
| State fee | For registration of status it is equal to 800 rubles, for withdrawal from the register - 160 rubles. | For registration upon creation of 4000 rubles., For changes and exclusion from the register - 800 rubles. |
| Seal | Not required | Mandatory |
| Payment account | Not required | Mandatory |
| Taxation | Tax accounting is kept in the ledger of income and expenses. When choosing simplified system taxation, some of the taxes are collected in a single payment | All transactions with complete set tax registers. If the organization uses the "simplified" tax accounting is facilitated |
| Accounting | No obligation to maintain accounting records | It is required to maintain fully and dock with tax accounting |
| Cash transactions | Cash registers until 07/01/2018 may not use individual entrepreneurs on "vmenenka" and patent | Usage cash registers necessarily |
| Insurance contributions | Once a year, a fixed payment for yourself, even in the absence of income | No salary income - no insurance premiums are charged |
| Types of occupation | There are restrictions on a number of activities | No restrictions |
| Profit distribution | The income received by the individual entrepreneur has the right to use for personal needs | There is a legal framework for using the profit made |
| Sale and transfer of business | Not inherited, donated or sold | Share in the organization is inherited, donated and sold |
| Power of attorney | Another person can act on behalf of the entrepreneur only with a power of attorney certified by a notary | For another person to represent the interests of a legal entity, it is enough for a power of attorney, seal and signature of the head |
There is one more difference between an individual entrepreneur and a legal entity, which cannot be reflected in one line of the table - this is a method of liquidation.
An entrepreneur may lose commercial status for one of the following reasons:
- By on their own.
- Due to the bankruptcy of the enterprise.
- If the court by its decision demanded to terminate the activity as an individual entrepreneur.
- Due to the death of a natural person - an entrepreneur.
Organizations are liquidated for reasons that coincide with this list only partially.
As for employees, both the individual entrepreneur and the organization must comply with general rules hiring and dismissing employees, registration work books... The procedure for settlements with employees in case of bankruptcy of an enterprise is similar: each of them can settle accounts with creditors only after the payment of all the money earned to the staff.
Limited liability company
An enterprise in the form of a legal entity is an organization of several persons who decided to join forces to achieve the goals set by the founders. One individual, a group of citizens, one organization, and a group of legal entities are allowed to participate in the creation of a company. Any combination of the specified participants is allowed. The only prohibition exists for circumstances where a company with a single founder is trying to create. This option is prohibited by law.
A common feature between legal entities and individual entrepreneurs is the ability to buy property rights, non-property assets on their own behalf, have obligations, and act as a plaintiff and defendant in court.
A legal entity, unlike an individual entrepreneur, has capital formed from the contributions of its participants. At first, these funds, tangible or even intangible assets are used to gain momentum. economic development... Throughout the existence of a legal entity, the amounts invested in the authorized capital are accounted for separately from other assets accumulated in the course of activities.
Organizations have another attractive property: if an enterprise has to pay for its obligations by compulsion (for example, in bankruptcy), then the penalty is imposed only on the money in the accounts and in the cash desk, as well as on the property belonging to it. The contributions of the founders remain intact.
An entrepreneur is forced to start with personal or borrowed funds, which increases the risk of losing private money and property.
The legislation provides for fines for organizations, sometimes multiple of the sanctions imposed on entrepreneurs. Thus, the state compensates for the losses resulting from the limited liability of the founders.
For example, for hiring a foreigner to work without registration documents, an entrepreneur will receive a maximum of 50 thousand fines, and a legal entity may be punished for 800 thousand rubles.
Analyzing the table given in the section above, we will sample positive and negative sides each business entity. First, let's look at the pros and cons of IP.
The attractive aspects of this status are as follows:
- simple and quick registration with the tax office, which does not require the preparation of a package of documents (with personal participation, you need a passport, an application and a receipt for payment of state duty);
- you can do without a checking account;
- no round stamp required;
- accounting can be omitted, tax accounting is reduced to fixing business transactions in the ledger of income and expenses;
- the most complex taxes have been replaced by a single budget payment, which is paid once a year (if there were no quarterly advances);
- the size of the single tax paid when using special regimes and "simplified" is significantly lower than those rates that are inherent in VAT, income tax, etc.;
- if there is no staff of employees, reporting is submitted to worst case quarterly, at best - once a year in the form of a declaration;
- it is possible to do without cash registers, accounting for the corresponding transactions is simplified;
- a simple procedure for liquidating the status that does not require phased implementation meetings, notification of creditors, etc.
The IP status also has negative features, such as:
- to be responsible for liabilities not secured by the assets of the enterprise will have to personal funds and property - this is the fundamental difference between an individual entrepreneur and a legal entity;
- not all types of activities are available (excise, some licensed, etc.);
- An individual entrepreneur usually works without VAT, as a result of which it is not profitable for organizations to make transactions with entrepreneurs;
- they are reluctant to enter into export-import contracts with entrepreneurs;
- you cannot hire an executive director of the enterprise;
- the business cannot be inherited, sold or even donated;
- you have to pay insurance premiums for yourself even with zero income.
Positive traits organizations are:
- the members of the company are liable for the obligations of the organization exclusively within the framework of their shares in the constituent capital;
- the participant is by law granted the right to leave the company at any time he needs, he is paid the cost of the share;
- an enterprise can be sold using legal schemes, a share can be donated or inherited;
- the organization has the right to choose from all existing species activities;
- you can hire a company manager;
- purchase of a trademark is permitted.
The negative properties of companies are as follows:
- the registration procedure upon opening is associated with the preparation of a large volume of documents;
- for registration, it is required to form an authorized capital and formalize this process with documents;
- it is difficult to liquidate the company, and it is necessary to carry out a set of measures for holding several meetings of participants, notifying creditors through print media, etc.;
- you cannot work without a checking account;
- a round seal is not required by law, but in practice it will be difficult to conclude a deal without it;
- it is necessary to keep accounting records, in contrast to individual entrepreneurs, in full;
- much greater responsibility than an individual entrepreneur for the offenses committed.
The organization is more difficult to manage, in the number of registers, but this quality cannot be classified as negative, as it is dictated by necessity.
What is more profitable to open an individual entrepreneur or LLC
The comparative conditions given in the table make it possible to understand how an individual entrepreneur differs from a legal entity, and the previous section - what are the pros and cons of these business entities.
The difference between an individual entrepreneur and a legal entity in some positions is significant, in others it is almost not felt. Based on business practice, the following trends have developed when determining which is better - entrepreneurship or LLC.
It is worth choosing a legal entity in cases when:
- There is a desire to enter the market with your own brand.
- Business organization is associated with significant financial risks.
- To be acquired a large number of property objects.
- There is an intention to conclude export or import deals.
- You have to apply to banks for borrowed funds.
- A high profitability of hundreds of millions of rubles can be formed.
- The business is planned to be built in an area where individual entrepreneurs are not allowed.
Individual entrepreneur status is preferable:
- In small business, where there is a desire to reduce accounting and taxation to a minimum.
- If you need to earn insurance points before retirement, but there is no legal job.
- When you need to start a business small, then to develop into a medium-sized enterprise without the burden inherent in the organization.
- If it is possible to cope alone or with the involvement of a small number of employees.
In most cases, the question of choice is not worth it - citizens who start their own business start with an individual entrepreneur, and then, if the business develops successfully, they move to the category of legal entities.