Organization own business is a serious undertaking that requires a reasonable approach and consideration of many details. The majority of young businessmen have a question about the choice of the form of entrepreneurship. To accept the right decision, you need to clearly understand how an IP differs from an LLC. Other options ( joint-stock company, partnership) are too complicated to start your own business, so in practice they are used much less frequently.
The role of legal form in business
The future of the company directly depends on the choice. Individual entrepreneurs and legal entities are noticeably different from each other. Even the same type of activity in the organizational and legal forms under consideration will develop in completely different directions, so the choice should be treated with full responsibility and should be oriented towards the future.
In order for a young entrepreneur to be able to make a reasonable decision, he must understand how an individual entrepreneur differs from an LLC. To do this, you need to know the characteristics of each type.
Features of opening IP
To obtain a business license, certain documents will be required:
- notarized application (form p21001);
- copy of the passport;
- receipt of payment of state duty;
- application for the application of the USN.
A young businessman must definitely choose the types of activities that he is going to do. If all documentation is properly executed and the inspector does not find specific reasons for refusal, the procedure will pass safely. Obtaining a legal address, contributing the amount to the authorized capital - all this does not require registration of an individual entrepreneur. The price of the state duty is 800 rubles, and the duration of all events is about a week.
Features of registering an LLC
The process is more complicated and requires the following documents:
- registration certificates;
- order on the appointment of the head of the company;
- charter;
- extracts from the Unified State Register of Legal Entities.
In some situations, you may need a letter of guarantee on the provision of premises for a legal address, copies of the passports of the founders and the head, acts of valuation and transfer of property. The cost of the state duty is approximately 4000 rubles. Legal entities are required to open a bank account and obtain their own seal, while entrepreneurs do not need this - this is how an individual entrepreneur differs from an LLC.
Economic policy of IP and LLC
Despite the fact that the entrepreneur has a low down payment, the legal entity has more economic advantages. Firstly, in most cases, the maintenance of the company requires less expenses, because even if the businessman does not do his business or does not make a profit, he will still be obliged to regularly pay a certain amount to the Pension Fund and tax office. In such a situation, it can provide a “zero” report and an information letter about the lack of payments to individuals.
Secondly, there is stereotypical thinking that an organization is a more reliable partner in business than an individual entrepreneur. In this regard, it is much easier for her to build a deal with partners and counterparties. But this is not all that distinguishes an individual entrepreneur from an LLC.
Sole Proprietor and Limited Liability Company Taxes
There are no special differences in tax liabilities between the organizational and legal forms under consideration (if the same regime is chosen). The rates and terms for both parties are the same. The only difference is that an additional type of taxation is available for individual entrepreneurs.
In 2014, businessmen and legal entities can choose one of the following tax regimes:
- DOS - general system taxation, used by default (if there was no application for another category). For a merchant, it offers unfavorable conditions, since it requires payment of VAT (18%) and personal income tax (13%), and it is also difficult to maintain accounting records.
- USN is a simplified taxation system available for businessmen with an income of less than 64 million rubles. This regime is popular because it assumes no VAT, but instead income tax IP must pay 6% of profits or 15% of revenue.
- UTII - a single tax on imputed income. In this mode, there is no VAT, and the tax rate is 15%.
- PSN - patent taxation system (not provided for legal entities) differs in that the individual entrepreneur will have to pay 6% of possible income, depending on the type of activity.
If there are employees, individual entrepreneurs and LLCs undertake to make additional financial payments.
Lending and administrative fines
In the field of obtaining loans, businessmen may encounter certain difficulties, since banks are more loyal to legal entities. The reason is that credit institutions know the specific amount of authorized capital that they can count on in case of non-payment. Even if the size of the contribution of the founders is minimal, a company with limited liability is more likely to get a loan.
Those who want to understand how an individual entrepreneur differs from an LLC (2014) should know that the legislation is more lenient towards those who have the status of an individual entrepreneur, since the amount of administrative offenses for them is set less than for legal entities.
Difference in liquidation and bankruptcy risks
Almost all activities have to be stopped sooner or later, but not necessarily because of ruin. This may be required in order to start a more profitable business. Then you will need to close the business certificate or liquidate the legal entity. Such events are similar to each other, but a limited liability company goes through them much longer.
In the event of bankruptcy, in order to pay off debts to creditors, a businessman risks losing all his possessions, regardless of whether they are related to entrepreneurial activity. This is where the main danger of doing business in the form of IP lies. In such a situation, legal entities are liable for financial obligations only by the amount of the authorized capital or the property of the organization (which may not be). That is why some people are interested in how to transfer the status of an individual entrepreneur to an LLC.
What is the difference between LLC and sole proprietorship: pros and cons
Based on the above material, the following advantages of IP can be distinguished:
- quick opening of the certificate;
- low cost of registration;
- there are no costs for creating a legal address.
IP Disadvantages:
- payment of contributions to the Pension Fund, regardless of the level of income and activity of a businessman;
- distrust on the part of large firms, difficulties in concluding contracts;
- in case of bankruptcy, an individual entrepreneur risks losing all his property (apartment, car, cottage, house).
Positive aspects of LLC:
- if the income is zero, you do not need to pay money to the Pension Fund (when submitting the relevant documents);
- in case of collapse, it is liable only for the authorized capital.
Disadvantages of an LLC:
- high cost at opening;
- funds are required to form the capital of the company;
- search for a legal address (additional costs).
That's all you need to know about the forms of entrepreneurship in question. A clear understanding of how an individual entrepreneur differs from an LLC will allow a novice businessman to think through everything carefully, avoid unnecessary mistakes and make a reasonable decision that will lead to success.
The legal nature of an individual entrepreneur (IP) has a dual character. An individual entrepreneur can be regarded as an individual, although at the same time it has many of the qualities of a legal entity (LE).
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This means that a citizen who has received the status of an individual entrepreneur enjoys the rights that are enshrined in laws for individuals and norms that reflect the essence of legal entities.
Many tend to characterize IP as individual because at the mention of it, one hears not the name, as, for example, in a legal entity (LLC "Bereg"), but the name of the entrepreneur. Of course, such a characteristic is characteristic of ordinary people who do not understand the legal foundations. For those who are faced with an entrepreneur by virtue of their work, they can confidently judge that an individual entrepreneur is endowed with a large number of rights and obligations of a legal entity.
For example, if between legal entity and an individual, a dispute arose. For resolution of the issue, the parties must apply to the Arbitration Court. This circumstance indicates that the relations of the entrepreneur with other participants in economic activity are based on the rules of law relating to legal entities.
For example, dualities can also be attributed when an entrepreneur makes a purchase in a store. How to understand that he makes a purchase as a legal entity or as an individual? Essentially, no way. Since the purchased goods can be used for both personal and business purposes.
The main thing is that the entrepreneur himself should not have doubts about duality. Even at the stage of the decision to register an individual entrepreneur, it is necessary to distinguish between the status of individual entrepreneurs and legal entities, which will allow creating correct work and discard the question of the duality of concepts.
IP pros and cons
The advantages of a sole trader include:
- simplified cash transactions;
- simple registration procedure that does not require large expenses;
- no complicated accounting is required, no need to prepare reports;
- income received in the course of entrepreneurial activity can be used for discretion and for any purpose;
- no checking account required;
- use of the simplified taxation system (STS);
- reduced tax rates.
The disadvantages of a sole trader include:
- sole responsibility;
- narrowed the scope of activities;
- not all large firms are ready to cooperate with individual entrepreneurs;
- it is impossible to sell the business;
- with a zero balance and losses, it is required to make a contribution to Pension Fund.
Pros and cons of LLC
LLC advantages:
- Its founders are not responsible for the obligations of the LLC, bearing the risk of losses only within the limits of their contribution to the authorized capital.
- It is possible to do business together.
- The right to withdraw from the LLC at any time with the receipt of the value of its share.
- Sale of business.
- Obtaining a license for certain types of activities that an individual entrepreneur cannot carry out.
- If we compare IP and LLC in terms of licensed activities, then LLC has the ability to obtain some licenses that are not available to IP.
- You can hire a director who will act without a power of attorney.
- Ability to choose a name for your business.
Disadvantages of an LLC:
- Complicated registration and liquidation process.
- The obligation to contribute the minimum authorized capital (10,000 rubles).
- Availability of creating a seal and opening a current account.
- Drafting financial statements, bookkeeping.
- The amount of fines has been increased.
- The need to enter into the Criminal Code the equipment used for work and it is required to pay tax for it.
Rights of a legal entity
A legal entity, like any citizen, has its own certain rights. Of course, they will differ in many ways, but the very fact that a person has rights, as a legal entity, indicates that he is a full participant in civil relations.
The rights are necessary for a legal entity to correct construction work, participation in business relations, and, of course, for the realization of their interests.
First of all, the existence of rights is necessary to defend their rights in court. It is no secret that in the work of a legal entity often arise conflict situations demanding the protection of their rights and the fulfillment of their obligations.
The rights that a legal entity is endowed with can be spelled out in the constituent documents.
The emergence of rights correlates with the moment of registration of a legal entity, and ends with the moment of its liquidation. Not all rights may be exercised freely. Depending on the type of activity, a legal entity is required to obtain a license. Rights may be limited only in cases expressly specified in the law. If such a restriction occurs, a legal entity may appeal against it in court.
Status of an individual
An individual becomes the owner of his rights from the moment of birth and uses them throughout his life. A citizen can exercise his rights under his own surname and first name. Among the basic rights enshrined in the norms of the law is the right to open an IP.
Thus, a citizen acquires the status of an entrepreneur. If the status as an individual arises from the moment of birth, as mentioned above, then the status as an entrepreneur arises only after his registration. Having passed it, an individual assumes dual rights and obligations, i.e. not only a citizen, but also the person who opened the IP.
In order for a citizen to be able to open an IP, he needs to reach full age capacity.
The norms of civil legislation are applied to the activities of an individual entrepreneur. While for a citizen - an individual, other laws may apply, for example, on consumer protection.
Accordingly, an individual acquires equal rights and equal obligations, along with other business entities, and the laws that apply to individuals are also applied to him.
The law may restrict a citizen-entrepreneur in the choice of activities or oblige to obtain a license to carry out activities.
If in the course of the activities of an individual as an individual entrepreneur, disputes arise with other participants in economic activities, he cannot refer to the fact that at the time of the violation he acted as an individual. Such norms of the law are aimed at protecting contractors and encouraging citizens to comply with established rules.
The activity as an individual entrepreneur ends with the onset of the following circumstances:
- the fact of death of an individual;
- by personal decision;
- sentencing of an individual;
- making a decision regarding IP.
The right to carry out entrepreneurial activity is not subject to inheritance; it is also impossible to donate an existing IP.
The difference between an individual entrepreneur and a legal entity
Differences:
- Registration: individual entrepreneur - one person, legal entity - 2 or more participants.
- Responsibility: individual entrepreneur - sole proprietor, with all his property, legal entity - limited to the size of the participant's contribution.
- Registration: individual entrepreneur - simplified, minimum term and package of documents, legal entity - creation of a large package of documents (Usta, decision, etc.), the presence of a seal and a bank account.
- State duty: individual entrepreneur - 800 rubles, legal entity - 4,000 rubles.
- Taxes: IE - a simplified taxation system, contributions to the PFR are fixed, regardless of whether activities are carried out or not, legal entities - in the absence of activities, contributions to the PFR are not made.
- Types of activity: individual entrepreneurs - limited by law, legal entities - the scope of activities is unlimited.
- Accounting: individual entrepreneur - optional, legal entity - obligatory, filing of financial statements is required.
- Profit: IP - can be used for personal purposes at any time, legal entity - is distributed no more than once a quarter.
- Authorized capital: individual entrepreneur - not required, legal entity - at least 10,000 rubles.
- Sale of business: individual entrepreneur - impossible, legal entity - has no restrictions.
- Power of Attorney: IP - valid when certified by a notary, legal entity - certified by the seal and signature of the director.
Having outlined all the main points of the work of a legal entity and an individual entrepreneur, drawing a parallel between them, we can conclude that both entities are full participants in economic activity, with equal rights and obligations.
Legal relations arise in the interaction between various subjects, however, in a number of cases, the actual nature of the person is fundamental. This is very important for criminal, civil, administrative, labor law. The division of subjects of legal relations into individuals and legal entities is of particular importance for the state and society. Such a gradation makes it possible to differentiate one or another phenomenon, to take into account the interests of various subjects when making decisions.
Individual is a citizen Russian Federation, a foreign state or a stateless person, endowed with rights and obligations by virtue of the very fact of existence. In other words, this is a person who acts as a subject of legal relations. By virtue of birth, he has legal capacity, by virtue of age and subjective qualities - capacity. Both the first and the second property can be limited only by legislation and only by a court decision.
Entity is an organization created and registered in the manner and on the grounds determined by law.
Individuals and legal entities. What is the difference between an individual and a legal entity?
It can be commercial and non-commercial, have a certain list of property, participate in economic activities. A legal entity is liable for its obligations only with the property that is on its balance sheet. It has a certain legal form (CJSC, OJSC, ALC, UE, LLC), which is determined by the Civil Code of Russia.
Comparison
A legal entity can only be brought to administrative and civil liability, while an individual can also be brought to disciplinary and criminal liability. But in each specific case, the procedure established by the state must be observed. An individual is a product of nature, and it is always represented in the singular. Legal - the creation of man, created in his image and likeness, and may include a whole group of people. The subjects of legal relations can enter into contact with each other, freely conclude transactions.
However, an individual is liable for his debts with all his property, and a legal entity is liable only for that which is on his balance sheet. An organization can be bankrupted or liquidated, but not jailed. Criminal prosecution can be initiated against an individual, it can be liquidated, but only in the literal sense of the word, and this is punishable by law. As for bankruptcy, this issue is debatable. The procedure for economic insolvency can also be initiated in relation to a person, for certain reasons.
Conclusions TheDifference.ru
- Emergence. The physical person is a creation of nature. An organization is created by a person or a group of persons in the manner prescribed by law and quite consciously.
- Legal capacity. A legal entity acquires a full set of rights and obligations at the time of organization. A person must reach the appropriate age and at the same time give an account of his actions.
- A responsibility. A legal entity can be brought to administrative or civil liability, an individual can also be brought to criminal and disciplinary liability.
- Termination. A person stops his activity at the moment of death (with respiratory arrest and loss of heartbeat), organization - only after liquidation.
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 liable for his obligations with all his property.
What form of business is sole proprietorship?
Many cannot figure out the organizational and legal affiliation of an individual entrepreneur: is it an individual or a legal entity? The answer to this question is indicated in Art. 23 of the Civil Code of the Russian Federation, according to which any citizen has the right to engage in 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) that has founders and authorized capital.
Is the individual entrepreneur an individual or a legal entity?
Sole proprietorship conducts entrepreneurial activity without such.
It is worth noting that in many cases an individual entrepreneur is endowed with the same powers as an LLC. For example, he can also open a current account, enter into contracts and carry out almost the same activities, with the exception of some of them.
What is the difference?
|
Individual (IP) |
Legal entity (LLC) |
|---|---|
|
Simplified registration procedure, minimum state duty |
Registration requires a lot of documents, a higher state fee |
|
Responsible to the Law with his personal property |
Risks only shares in the authorized capital |
|
There is no need to keep accounting records and open a current account |
Permanent documentary traffic control Money obligatory opening of a bank account |
|
Manage profits as you see fit |
The manager does not have the right to take the proceeds received |
|
Unable to engage in any activity |
No restrictions on activities |
|
Pays contributions to the FIU, even if there is no profit |
It is possible not to pay contributions to the Pension Fund in the absence of income |
|
Business cannot be sold |
There are no restrictions on the sale of the business |
|
Lower penalties |
High fines in case of violations of the Tax Code of the Russian Federation |
|
Can't attract investors |
Opportunity to attract investors |
Thus, each of the legal forms has its pros and cons, and any existing 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: a 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 separately open an individual entrepreneur, but he is obliged to pay taxes to the Federal Tax Service, contributions to the Pension Fund and the OMS for both organizations.
In this case, asking the question - IP - this is a legal entity. face or ordinary physical. face? - it is necessary to proceed precisely from the form of business that a citizen conducts. When resolving litigation, filling out documents, filing reports from an LLC, it will be a legal entity, and from an individual entrepreneur - an individual.
Consideration of disputes 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 conducting a business that is not legally registered.
- 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.
- International economic: in case of default by a company registered on the territory of the Russian Federation in relation to a foreign citizen, or vice versa.
When issuing a decision on the imposition of penalties, the court has the right to be guided by data on the personal property of an individual entrepreneur. If a fine is imposed on an LLC, then arbitration can take into account only 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
Do you still have questions about the nuances of the legal status of an individual entrepreneur or do you need a detailed expert consultation on another legal issue? The moneymaker factory recommends using the Lawyer online service to get professional advice from an experienced lawyer. (Getting the first response within 15 minutes after its publication).
Questions and answers on the topic
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One of the questions that naturally arises when studying legal acts relating to individual entrepreneurship is the question of the difference between the terms PBOYuL and IP. Consider both concepts in detail and try to find out if they are equivalent?
What is PBOYUL?
PBOYuL is an abbreviation for the term "enterprise without forming a legal entity." PBOYuL indicates the form of ownership and that the enterprise is small.
In this case, the term PBOYuL implies the existence of an entrepreneur operating as an individual (and not a legal!) Person. Often this enterprise consists of one person.
What is an IP?
Individual entrepreneur- an individual who has received state registration in the prescribed manner, who carries out entrepreneurial activities without forming a legal entity, the head of peasant (farm) enterprises.
Persons who have not registered their business activities are liable in accordance with applicable law.
Below is an excerpt from paragraph 2 of article 11 of the Tax Code of the Russian Federation:
"Individuals engaged in entrepreneurial activities without forming a legal entity, but not registered as individual entrepreneurs in violation of the requirements of the civil legislation of the Russian Federation, in the performance of the duties assigned to them by this Code, are not entitled to refer to the fact that they are not individual entrepreneurs" .
In the laws of the Russian Federation, the terms "PBOYuL" and "IP" are equivalent. Previously, the concept of "PBOYuL" corresponded to the concept of "private entrepreneur", but gradually both of these terms were replaced by the term "individual entrepreneur".
We find confirmation of this in the Civil and tax code.
In the Civil Code of the Russian Federation (Part 1) of November 30, 1994 N 51-FZ (adopted by the State Duma of the Federal Assembly of the Russian Federation on October 21, 1994) (as amended on July 21, 2005), there is Article 23 devoted to entrepreneurial activity:
"A citizen has the right to engage in entrepreneurial activities without forming a legal entity from the moment of state registration as an individual entrepreneur."
In the Tax Code of the Russian Federation (Ch.
What is the difference between a legal entity and an individual in practice
2) dated 08/05/2000 N 117-FZ (adopted by the State Duma of the Federal Assembly of the Russian Federation on 07/19/2000) (as amended on 07/21/2007, as amended on 07/22/2005) (with amendments and additions that entered into force on 08/26/2005 ) Article 11. Institutions, concepts and terms used in this Code:
…2. For the purposes of this Code, the following concepts are used: individual entrepreneurs - individuals registered in the prescribed manner and carrying out entrepreneurial activities without forming a legal entity, as well as private notaries, lawyers who have established law offices.
In addition, from 01.01.2005, the Unified State Register of Individual Entrepreneurs was approved by the Unified State Register of Individual Entrepreneurs. Data on individual entrepreneurs, and not on PBOYuL, are entered and registered in the register. Thus, since 2005, PBOYuL no longer exists.
From all of the above, the following conclusions can be drawn:
- The concepts of "PBOYuL" and "IP" are identical and equivalent (both concepts are found in the laws of the Russian Federation, in the Tax and Civil Codes).
- “IP” is a term that replaced the concepts of “PBOYuL” and “private entrepreneur”.
- To date, there is the possibility of using such terminology as:
- IP and PBOYuL;
- IPBOYUL.
All of the above terms are synonymous.
Among those who are not interested in this issue, there is an opinion that legal entities include any form of entrepreneurial activity. Whether it is 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 legislative base for differences both in doing business and in various opportunities and restrictions that are imposed on both of these types of commercial 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 it is actually 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 connected with 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 forming a legal entity." But it's still a physical entity.
So, almost everyone can become an individual entrepreneur, but he will have to fulfill the requirements indicated by law. That is, it will be an individual who builds his activities within the boundaries and provisions of the law, but does not register a legal entity.
In 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 engage in commerce, but only within the framework of the laws and regulations that govern the work of those who have registered as a "peddler". And still, it is not a legal entity.
Why you can not engage in commercial activities without being an individual entrepreneur
- Because without registration of business law, any activity will be recognized outside the law (remember the speech, not is about legal entities).
- When a person registers as an individual entrepreneur, he registers with the tax and selects a system which the tax will collect from him taxes for his commercial activity.
- IP after registration takes on own liability for everything he owns.
- Without IP registration be able to hire employees yourself to work. A IP it can do in not breaking laws. After all, every hired person will need a mark in work book.
Who are individuals?
But if the entrepreneur remains an individual, then it is worthwhile to figure out what is meant by this term.
In fact and by the letter of the law, an individual is a person who has rights and obligations under legal regulation state structure.
Individuals have their own characteristics
- Identified by the system by full name.
- Not is required 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 in terms of trading, exchange environment, production processes and transport.
What do ordinary individuals and individual entrepreneurs have in common?
- The profit that the IP receives and funds of an individual in full their instructions for further action on them.
- No one obliges either an individual or Sole proprietor to open a current bank account or keep accounting records.
- None required to have a seal.
- IP and Individuals are equally responsible before the law for committed violations.
- The address of registration is at the physical person. IP has it serves as the address for registering 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 do business if he has not gone and registered himself as an individual entrepreneur. But even after registration, when he receives an additional right to engage in commerce, he remains in the status of an individual.
We analyzed the signs of individuals and looked at the similarities and differences between those of them who registered the right to business. Now let's see, in order to have a clear idea of the whole situation, which specific traits legal entities have.
Signs of a legal entity
- The organization that will do business is registered and owns certain property.
- At the legal entity has its own separate name and registration address.
- Separate responsibility.
- The legal entity operates in the form of a certain team, which is structured, divided into managers and subordinate employees who operates in certain formal sphere of rights and duties of each member.
- The legal entity has the right to appear in litigation, both by the plaintiff and defendant.
- It is supposed to keep accounting records, submit reports to the Federal Tax Service, and as well as extrabudgetary funds.
- A legal entity is liable before the law for violations committed on the basis of chosen organizational form.
- The legal entity gets the right to obtaining licenses for a certain type of activity that is not available to other forms of commercial activity.
- Seal - a mandatory tool for conducting the activities of a legal entity, as well as checking account in banking organization.
Note: with regard to property liability, in the case of the organization of a legal entity, its founders invest their parts of the authorized capital into the common "piggy bank".
Note 2: In litigation, a legal entity is a representative of the entire organization.
What is common between an individual entrepreneur and a legal entity
- The need for reporting to the tax authorities.
- Controlling and inspection bodies arrange inspection activities in both forms of business.
- They have the right to hire workers in the state.
Comparison of IP with Jur. face
To finally understand why an individual entrepreneur is not a legal entity, the following characteristics can be given point by point:
Taxes. Both of them pay.
Accounting. Both lead and others.
workers in the state. Everyone can hire.
Payment account. IP is right. Legal entity - obliged.
Seal. IP is right. Legal entity - obliged.
fines. Mandatory in case of offenses both on the part of individual entrepreneurs 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 he has. A legal entity - only within its share of the authorized capital.
Registration. The IP is easy to register. 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, business is not necessarily conducted there. The legal entity has a legal address, which most often coincides with the location of the office.
Activities. Sole proprietors have many restrictions on various complex types of commerce. A legal entity can obtain a license for them.
Income management. IP decides how to dispose. When withdrawing cash from the account, you only need to indicate that this is the income of the entrepreneur. The legal entity is obliged to indicate the purpose - for what they will then be used.
As similar as the two forms of entrepreneurship are, there are still more differences. Both in 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 be sharply reduced.
Pros and cons of an individual entrepreneur compared to a legal entity
All of these factors (both positive and negative) can be deduced from what you and I identified earlier by comparing two forms of business.
Clear benefits include:
- Simplicity of registration actions when opening an IP (and when closing too).
- Calm distribution of income from their activities as needed.
- Reporting is easy.
- Office - an optional condition. You how IP register by address of your residence, 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 you will carry all your personal property, and not only those related to IP actions.
- Various activities will remain inaccessible to you.
- The largest, and most often the most profitable partners will work with small entrepreneurs. It is most often associated with no payment for VAT.
- V pension fund you you will still pay deductions, even if you work alone, or not at all work, but the IP is valid.
Outcome
We figured out the difference between ordinary individuals, individual entrepreneurs and legal entities. There are many differences as well as similarities. Exactly, as well as positive and negative traits in all forms of business. And, if you ask again the question voiced at the beginning of the article - is the IP a legal entity, then we can say “No” with confidence.
Sole proprietorship is still the same individual. But it has registered its activities in accordance with the rules for registration and accounting of entrepreneurial activities. And accordingly, acquired after that certain rights and obligations, which in turn are regulated by separate laws and articles of codes.
Why is it necessary to open an individual entrepreneur or legal entity
Any activity that brings systematic income is recognized as entrepreneurial. For example, an individual who is constantly engaged in paid auto repair of someone else's vehicles in a personal box of a garage-building cooperative conducts entrepreneurial activities.
In order not to break the law, you should register an individual entrepreneur or legal entity. Otherwise, a citizen can be brought to administrative (clause 1 of article 14.1 of the Code of the Russian Federation on Administrative Violations (CAO) or criminal (part 1 of article 171 of the Criminal Code of the Russian Federation) liability.
Control in this area is carried out by the Federal Tax Service (FTS). And do not hope that no one will know about you and you will not get anything for it. Neighbors and competitors tend to keep a close eye on each other and often write appropriate claims for unearned income.
What is the main difference between sole proprietorship and LLC
The question of the differences between an individual entrepreneur and an LLC is most often faced by novice entrepreneurs. These forms are the most common in the field of small and medium-sized businesses. It is a mistake to think that one is worse than the other. The choice is made on the basis of specific tasks.
There are several factors that will help determine the feasibility of registering an IP or LLC:
- the number of persons planning to do business;
- the scale of the case being opened;
- activities of the future enterprise.
In accordance with the answers to these questions, a decision is made on the most appropriate form of organization.
However, it should be understood that there is one cardinal difference between IP and LLC. Despite the fact that an individual entrepreneur acts on an equal footing with a legal entity, an entrepreneur is primarily a citizen and therefore bears personal responsibility (including with his property) for all decisions and actions of an individual entrepreneur. And an LLC is an independent player in the market, acting as a screen for the founders: they will not bear any personal responsibility.
Comparative table: what is the difference between IP and LLC
|
Individual entrepreneur |
Limited Liability Company |
|
Number of members |
|
|
An individual entrepreneur is not an organization, but an independent citizen engaged in entrepreneurship |
Both physical and legal persons can act as founders (participants). Quantity - from 1 to 50 |
|
Authorized capital |
|
|
Not required |
From 10 000 rub. |
|
Location |
|
|
Registered at the place of residence |
Ideal if you own or rent non-residential premises for registration. Nowhere is it prohibited to register at the place of residence of one of the founders or directors. Although the FTS does not encourage this practice |
|
Activities |
|
|
It is forbidden to do:
|
No prohibitions |
|
Documents for registration upon creation |
|
|
|
|
liquidation |
|
|
The IP just needs to apply. State duty - 160 rubles. |
The liquidation of an LLC is a very long (more than 4 months) and complex procedure (it consists of several stages). But there are alternative ways:
|
|
Sale of the enterprise |
|
|
IP can not be sold, you can only close and open a new one |
LLC can be sold |
|
Taxation |
|
|
There are 5 types of taxation:
Taxes depend on the activity, and not on the form of business organization. There are only 2 differences:
|
|
|
Accounting |
|
|
Permission not to drive But if the enterprise is large enough, then in any case, one cannot do without primary documents, accounting for expenses and income |
Mandatory |
|
How to get income |
|
|
You can use the money you earn as you wish. |
2 ways to make a profit:
|
|
Investment attractiveness |
|
|
Difficulties in obtaining loans. There is no way to attract new participants to the business. There are restrictions on participation in public procurement tenders |
The organization is always more attractive to banks and investors |
|
Liability and fines |
|
|
An individual entrepreneur is brought to administrative responsibility as an individual. In accordance with Part 1 of Art. 3.5 of the Code of Administrative Offenses, a fine for citizens cannot exceed 500,000 rubles. |
The amount of fines for administrative violations is much higher. By virtue of h. 1 Article. 3.5 of the Code of Administrative Offenses, they reach up to 1 million, but can be higher - up to 60 million rubles. |
|
Branches and representative offices |
|
|
Can carry out its activities throughout the territory without additional registration |
In case of opening a branch or representative office, each such subdivision must be tax registered |
Pros and cons
From the table above, it can be seen that there are a lot of differences between individual entrepreneurs and LLCs. At the same time, there are pros and cons of choosing one form or another of doing business. Here are the main pros and cons of IP.
1. Simple and cheap registration.
2. No need to withdraw money - they are already the property of the entrepreneur.
3. Easier accounting.
4. Simple termination procedure.
5. Possibility of transition to the patent system of taxation.
6. There is no need to rent or buy the location of the IP, it is enough to be registered at the place of residence.
1. The need to pay insurance premiums"for yourself", even if employees no.
2. Responsibility for debts with all the property of the individual entrepreneur.
3. You can not engage in certain activities, such as selling strong alcohol.
4. You can not sell or donate a business partner.
IP taxation
Recall that for IP there are 5 types of taxation:
- the main system of taxation (OSN);
- simplified system (STS) - income minus expenses (15%), or income (6%);
- single tax on imputed income (UTII) - only for certain types of activities;
- unified agricultural tax (ESKhN) - only for agricultural producers;
- patent system (PSN).
All taxation systems, except for the patent one, can be used by an LLC. However, a patent is an IP privilege. A patent is bought for a period of 1 month to a year. The cost of a patent is determined depending on the potential income of the entrepreneur.
At the same time, each region has its own potential income; accordingly, it is necessary to get acquainted with local legislation.
An individual entrepreneur may be on the PSN, which has less than 15 employees and earns less than 60 million rubles a year.
Responsibility and penalties
As already mentioned, an individual entrepreneur bears individual civil liability with all his property. This means that there is no division into the property of an individual entrepreneur as a citizen and the property of an individual entrepreneur as an entrepreneur.
If the individual entrepreneur is indebted to counterparties or the state, then the bailiffs will collect his personal money in favor of creditors, and if the funds are not enough to pay the debts, the enforcement of all property of the entrepreneur will be carried out.
Penalties for individual entrepreneurs are provided for by the Code of Administrative Offenses of the Russian Federation and the Tax Code of the Russian Federation. There are a lot of them, so here are just the main and most commonly used:
1. Penalties for failure to submit reports. For example, for failure to submit statistical reports, Art. 13.19 of the Code of Administrative Offenses of the Russian Federation provides for a fine of 10 to 20 thousand rubles, and for a repeated violation - from 30 to 50 thousand rubles.
2. Penalty for the lack of a book of expenses and income. The amount of the fine under Art. 120 of the Tax Code of the Russian Federation - 10 thousand rubles. If the book is missing for more than one tax period, then the amount of the fine increases to 30 thousand rubles.
3. Penalty for non-payment of taxes. According to Art. 122 of the Tax Code of the Russian Federation, the amount of the fine is 20% of the amount of unpaid tax. A similar penalty is provided for non-payment of insurance premiums.
4. Penalty for the absence of an employment contract with an employee (part 4 of article 5.27 of the Code of Administrative Offenses of the Russian Federation). The amount of the fine is from 10 to 20 thousand rubles.
Recommendations on the choice of legal form for certain types of activities: for trade, construction, transportation
If we return to the question of what is better than an individual entrepreneur or LLC, in relation to specific types of activity, then the volume of the article will not allow covering them all. But there are popular industries in the business world that can be used to illustrate the general line of reasoning.
Trade
For retail non-food products, even if it is a large store with an area of more than 150 square meters. m, IP is the most attractive form due to the ease of opening and the ability to apply the patent taxation system.
Owners of small grocery stores may also like the organizational ease of the IP. However, for large supermarkets, and especially the alcohol trade, an LLC will be required without fail.
Building
This is a huge area of activity, which includes different kinds construction and installation works, such as preparing a construction site, erecting buildings, conducting communications, repair and finishing, etc. To obtain the right to conduct many of them, instead of canceled licensing, membership in self-regulatory organizations for design, survey, construction is required.
Theoretically, nothing prevents an individual entrepreneur from meeting all the requirements and becoming a participant in this market. But we should not forget that construction is associated with very large investments by customers, therefore, the same obligations on the part of individual entrepreneurs. At the same time, an individual entrepreneur, as mentioned above, is responsible for his activities with personal property.
Transportation
Those who wish to engage in passenger and cargo transportation, as a rule, register an individual entrepreneur. The reason is that they prefer to do this business on their own, on their own transport. But even if a company is organized, for example a taxi, the priority is still for the individual entrepreneur. It is in this case that you can take full advantage of all the concessions in the field of abolishing accounting and simplifying financial reporting.
If it is planned to engage in large transportation, then the opening is associated with large cash injections of several persons for the creation of a vehicle fleet. In this case, naturally, an LLC is opened.
Thus, at first glance, an individual entrepreneur is more profitable than an LLC for many reasons - due to the simplicity of organizational issues and simplified reporting. But upon careful analysis, it becomes obvious that, for example, the tax burden (the most pressing issue) does not depend on the form of business organization, but on the type of activity.
By the way, there is a rather stable idea that potential partners often prefer to deal with organizations, so LLC is a more prestigious form. This is not true. In fact, suppliers, customers and resellers do not care who they deal with. The main thing is that the counterparty is respectable.
The conclusion can be drawn as follows. If several people plan to run a business, then you will definitely have to register an LLC. With large-scale plans for the future regarding further expansion by attracting investments, an LLC is also recommended. If the case is individual, chamber, then IP is the best form.
Even more materials on the topic in the heading: "IP".
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