Individual entrepreneur. Legal status of an individual entrepreneur - is the entrepreneur a legal entity?

Legal status individual entrepreneur raises many questions. First of all, it is not clear to many that an individual or legal entity from the point of view of legislation is an individual entrepreneur.
We will tell you in the article what the tax office thinks about this and how individual entrepreneurship is characterized by law.

○ The concept of an individual entrepreneur.

From the point of view of legislation, an individual entrepreneur is not a legal entity. This follows from the definition.

Art. 11 Tax Code of the Russian Federation:
Individual entrepreneurs are individuals registered in accordance with the established procedure and carrying out entrepreneurial activity without forming a legal entity, heads of peasant (farm) households. Individuals carrying out entrepreneurial activities without forming a legal entity, but who have not registered as individual entrepreneurs in violation of civil law requirementslegislation Russian Federation, when performing the duties assigned to them by this Code, do not have the right to refer to the fact that they are not individual entrepreneurs.

In accordance with this text of legislation, an individual entrepreneur is an individual who conducts commercial activities. This is quite clear. However, the legal status of an individual entrepreneur implies some similarity with the status of a legal entity. Let us further understand the similarities and differences between these concepts.

○ Signs of individuals and legal entities.

Individual is a person who has rights and responsibilities within legal regulation states. An individual has certain characteristics:

• Identification is carried out by full name.
• There is no need to undergo additional registration, except for obtaining a birth certificate and a general passport.
• Availability of the right to carry out economic transactions with other persons and organizations.

A legal entity is an organization registered in the register and having separate property to which it is liable for its obligations.

Art. 48 Civil Code of the Russian Federation:

1. A legal entity is an organization that has separate property and is responsible for its obligations, can acquire and carry out civil rights and bear civil responsibilities, be a plaintiff and defendant in court.
2. A legal entity must be registered in the Unified State Register of Legal Entities in one of the organizational and legal forms.
3. To legal entities whose property their founders have real rights, include state and municipal unitary enterprises, as well as institutions.

Legal entities have the following characteristics:

• Availability of registration in a unified register.
• Certain property owned.
• Separate name and registered address.
• The presence of a structured team with managers and subordinates.
• The right to obtain licenses for certain types of activities that are not available to other forms.
• Mandatory presence of a stamp and a bank account.

A legal entity is responsible for conducting activities with the property belonging to it. This sign is identical to the responsibility of an individual and an individual entrepreneur.

○ Comparison of individual entrepreneurs and ordinary individuals.

In fact, an individual and individual entrepreneur have many common features. However, maintaining certain types entrepreneurial activity without registration is not allowed. Let us tell you what the similarities and differences are between an individual entrepreneur and an individual.

✔ General signs.

Common features include the following facts:

1. Legally, an individual entrepreneur and an individual are equal.
2. This is a specific person with a full name and identification number.
3. The place of permanent registration is the same.
4. An individual entrepreneur can act as a citizen when concluding transactions.
5. Individuals and individual entrepreneurs have the right to conduct business transactions, enter into transactions, formalize Required documents and perform legally significant actions.
6. In case of debt formation, individuals and individual entrepreneurs are liable with property in their ownership.

From the point of view of legislation, an individual entrepreneur is the status of an individual. However, there is still a difference between these concepts.

✔ Features.

The difference between an individual entrepreneur and an individual lies in the income tax system and the permissible scope of activity. For example, an individual who has the status of an individual entrepreneur cannot be an employee and at the same time conduct business activities. A person, being an individual entrepreneur, can be an employee, but as an individual.

An individual who does not have individual entrepreneur status is not available to many types of commercial activities. So, for example, he cannot open a pavilion and sell any goods there or provide services household services to the population.

○ Comparison of individual entrepreneurs and legal entities.

Quite often you can find identification of the statuses of individual entrepreneurs and legal entities. This is not entirely correct from the point of view of legislation, but nevertheless there are certainly similarities between these statuses. Let's look at the similarities and differences.

✔ Community in activity.

The commonality of activities lies in the following factors:

• The purpose of creation is to conduct business and make a profit.
• The need to undergo the procedure state registration.
• Availability of taxation systems - simplified tax system, UTII, etc.
• Possibility of employment of employees in accordance with the Labor Code of the Russian Federation.
• They may have a bank account (not required for individual entrepreneurs).
• In court there can be a plaintiff and a defendant.

This is where the similarity ends. Let's look at the differences between individual entrepreneurs and legal entities.

✔ Distinctive characteristics.

The main differences are as follows:

• IP is a specific person entity is an organization.
• Registration of a person as an individual entrepreneur is carried out at the place of permanent residence, and a legal entity is registered at the legal address.
• An individual entrepreneur operates independently, a legal entity is a group of people (however, both of them can be employers).
• The property of the organization and its founders is separate from each other, the individual entrepreneur, in turn, is liable with all his property, as an individual.
• Individual entrepreneur does not have its own name.
• A legal entity is required to have a seal and a bank account; for individual entrepreneurs, both are advisory in nature.
• The activities of a legal entity are impossible without the presence of statutory documents.

Organizations have the right to conduct commercial activities in any area that does not contradict the law. There are certain restrictions for entrepreneurs.

Is an individual entrepreneur a legal entity or an individual? What is known about the status of an individual entrepreneur? The Civil Code of the Russian Federation (Article 23, paragraph 1) allows a citizen to conduct business activities without forming a legal entity. Upon completion of state registration, an individual becomes the owner of a business, but not a legal entity.

Is an individual entrepreneur an individual or a legal entity?

As Pyotr Sergeevich Bochkin was, he remains so. No JSC, LLC, CJSC or other companies arose, but individual entrepreneur Petr Sergeevich Bochkin appeared. And just a few lines later (Article 23, paragraph 3), the same Civil Code of the Russian Federation practically equates a citizen with a legal entity in terms of the rules mandatory for commercial organizations.

True, there is a clause “unless otherwise follows from laws or other legal acts.” This clause contains the meaning of the issue under consideration. If legislators came up with and adopted a certain law specifically for individual entrepreneurs, a difference from “firms” immediately appeared. And, I must say, they have already come up with a lot! But first things first.

Individual entrepreneur- individual, having the right to conduct business activities, and at the same time bearing responsibility in accordance with the laws adopted for it. It cannot be equated to a legal entity, for which its rules and regulations are its own. Sometimes these norms may coincide, but you still need to be guided regulations, in which the link “for individual entrepreneurs” is clearly established.

First, let's figure out how our new Pyotr Sergeevich differs from his former self? He was an individual and still is. Only before he could not sell goods in his store, offer taxi services, make shoes, renovate apartments and do much more on a commercial basis. It would be.

The Civil Code gave a clear definition of entrepreneurship: it is an independent activity carried out at one’s own risk, aimed at systematically generating profit.

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Two points are important: systematic and profit-making. As an individual, it is not forbidden for a person to install air conditioners for everyone, even every day, but for free. Or once a year “help your neighbor” for some compensation. Then the regulatory authorities will not have any complaints. But if you install air conditioners and take “money” (or other remuneration) for it, then registration as an entrepreneur is required in order to register with the tax service and insurance funds, keep records, pay taxes and fees, etc.

Now let's talk about the rights and responsibilities of an individual in comparison with the rights and responsibilities of an LLC: what do they have in common, what are the differences, what are the differences.

What is the difference between an individual and a legal entity?

Similarities between individuals and legal entities:

1. Required to pay taxes and insurance premiums.
2. Keep records and report to the appropriate authorities.
3. An individual entrepreneur, like an LLC, has the right to hire workers. He registers employees according to Labor Code, pays wages, complies with labor discipline rules.
4. An individual as an individual entrepreneur has the right to open a current account. Organizations must open a current account.
5. An individual entrepreneur can have a seal with the necessary attributes, just like a society.
6. Penalties are provided for violations of both organizational and legal forms. For the same offense, an individual entrepreneur will be fined less than an LLC, but you will still have to pay.

Differences between individuals and legal entities:

1. LLC is a legal entity that is independent from the moment of its registration. The founders may not interfere further with the company; the company then acts only in accordance with the instructions of the director. In case of problems of an LLC, the founders are liable only to the extent of their share in the authorized capital (sometimes they are held liable, but rarely). Otherwise, the company is responsible for its obligations only with its own assets (money for current account, property, etc.).

The individual entrepreneur is responsible to creditors, the state and other interested structures with all of his property. Both that which is used for business, and that which is his personal property, which is in no way connected with the business. Of course, his only home will not be taken away to pay off debts, but he risks not only shop windows and shopping carts, but his own car for trips to the country.

2. A limited liability company is registered. A rented office, owned premises, personal living space... Individual entrepreneurs are registered only at the place of residence. You can conduct business anywhere, but registration is only with the Federal Tax Service that corresponds to your registration. incomparably simpler: you don’t need an authorized capital or legal address. , passport - and in three days there will be one more businessman.

3. For individuals, the law also provides for a special tax regime - a patent. A legal entity cannot; PSN is not applicable to it. The patent makes accounting and reporting easier.

4. An individual entrepreneur, even if he works alone, without hired employees, is obliged to pay. These fees are fixed. Companies pay contributions only for employees. But there is also consolation: in some tax regimes, it is possible to reduce the tax due to paid insurance premiums. The main thing is to approach the issue carefully and responsibly.

5. For an individual, while a legal entity can do almost everything. For example, you cannot produce and sell alcohol (), while an LLC quietly acquires a license and operates.

6. What’s really good about an individual entrepreneur is that he can freely manage all the money received from the business! When , it is enough to indicate “income of an individual entrepreneur” in the purpose of payment. At the same time, not a single bank will refuse this transaction. But for the director of a legal entity, it is not so easy to withdraw money: either for the company’s expenses (documented), or for salaries, or for dividends. Accounting is very strict, and the bank does not always satisfy the manager’s requests.

7. Individuals do not submit financial statements, and the terrible word “balance sheet” is unknown to them. At the same time, tax reporting, cash discipline rules and reporting for employees are common, whether you are a legal entity or an individual entrepreneur.

8. If the idea arises to “sell the business,” then it is enough for the LLC to change some founders for others. Individual entrepreneurship cannot be sold, it will have to.

9. An individual entrepreneur can have two different bank accounts: an individual account and a current account. The first one deals with transactions related to personal needs, and the second one - only transactions related to business activities. For an LLC, such a situation is impossible in principle.

If it's easier and without large quantity letters - here is a short but informative video:

Now you know, what is the difference between an individual and a legal entity, and that an individual entrepreneur is an individual, received the right to conduct business. We also wrote a separate article. If you still have questions, ask them in the comments - we won’t delay in answering!

An individual entrepreneur (IP) can be considered the starting point of a business. According to statistics, more than 80% of people who have their own business or enterprise today have gone through the individual entrepreneur stage. This status is considered one of the simplest for many factors, from registration to reporting. That is why he is chosen to start.

However, anyone who plans to become a businessman has a huge number of questions. They are interested in the legal side, the peculiarities of the status of an individual entrepreneur, its differences from an individual and a company such as an LLC.

Who is a sole proprietor?

The legislation says that an individual entrepreneur is “an individual registered in the manner prescribed by law and carrying out entrepreneurial activities without forming a legal entity.” If translated to accessible language, then an individual entrepreneur is a special status of an ordinary adult and capable person, which gives the right to engage in permitted commercial activities.

The term replaced the abbreviations PBOYUL (entrepreneur without the formation of a legal entity) and PE (private entrepreneur), which were in effect previously. Today, individual entrepreneur is the only name denoting this status.

Is an individual entrepreneur a legal entity?

No is not. There is a widespread belief in everyday life that all structures engaged in business (or, in other words, permitted commercial activities) for the purpose of obtaining benefits are legal entities. Although logic dictates that a farmer who took a couple of buckets of apples to the market, collected in own garden, clearly falls out of this category. Just like a shoemaker repairing shoes with his own hands in a small kiosk, the size of a doghouse.

That is, we understand that not only a legal entity, but also an individual can legally engage in business. It is the individual entrepreneur (special status) that gives him the opportunities and authority to conduct business.

This phenomenon is widespread - sole proprietorship in the USA, autonomo in Spain, sole trader in Australia - all this foreign analogues Russian individual entrepreneurs, allowing a person to conduct commercial activities in order to obtain benefits without creating a legal entity.

It is believed that the individual entrepreneur has a number of advantages, thanks to which he enjoys high level popularity in business. Although it is worth noting separately that an individual entrepreneur is not a legal entity, therefore there are a number of functions of a “company” that are not available to him.

Comparative table of individual entrepreneurs and legal entities

The first and main difference is that an individual entrepreneur is a natural person, while a legal entity implies the use of completely different organizational and legal forms.

Advice: if you ask yourself at the start what is better, an individual entrepreneur or an LLC (as an example of a simple legal entity), then understand one thing. To pose the question this way is to essentially compare sandals and winter boots. That is, both are shoes in which you can walk. However, these two types perform different functions and provide different capabilities. It's the same in business. Individual entrepreneurs and LLCs allow you to conduct commercial activities, but differ significantly in details. Therefore, before making a decision, carefully and thoroughly analyze which type of business entity is suitable for your purposes. At the same time, take into account not only the “immediate moment” or the coming months, but also the distant future, as well as options for the development of your project.

You can often find information on the Internet that individual entrepreneurs are preferable, especially at the beginning, that it is simpler. Let's try to understand the issue based on our realities. Actually, we are more concerned not about the differences in the application of various regulatory documents that regulate the activities of individual entrepreneurs or any legal entity (LLC, JSC), but about those practical features that will affect our business.

So, let’s compare individual entrepreneurs and LLCs (as the most common legal entity submitted as an alternative) with all their pros and cons. At the same time, several common myths will be debunked.

1. is extremely simple, but opening an LLC involves a lot of difficulties.

There is some truth in every statement. However, the facts indicate that:

• registration period is the same (5 days);
• the set of documents required to open an LLC is only three more pieces of paper, and, or rather, their templates are freely available;
• it is possible only if there is one participant, as well as when organizing an individual entrepreneur;
• the state duty for an LLC is higher (no one argues), in addition, you will need to contribute the authorized capital (there is a period of 4 months, as well as the opportunity to make this an equivalent - materials, equipment, goods), which is not required in the case of creating an individual entrepreneur;
• closing an individual entrepreneur is easier and much cheaper, but claims can be brought against him to the former owner, who has not been an entrepreneur for “eleven” years, which is impossible after the liquidation of a legal entity.

Separately, it is worth mentioning the need for an LLC to have a legal address, which is not necessary for an individual entrepreneur. There are also a bunch of pitfalls here. A legal address can be obtained without much difficulty, it can even be non-residential premises or a business center that rents out office storage rooms with an area of ​​6 square meters. And individual entrepreneurs have a strict connection to registration. That is, business in Tomsk for an Omsk resident will be complicated by the need for mandatory registration, submission of reports and payment of taxes in his native Omsk.

Important: in the legislation there are no restrictions on registering an LLC with a legal address at the place of residence (registration) of the founder, one of them or general director. Tax authorities who refuse this act according to their own rules, which, in fact, violate the law.

1. The biggest “scare” for individual entrepreneurs and a plus for LLCs is property liability. In the first option - with all your property, in the second - only with what was contributed to the authorized capital.

And again, there is only a grain of truth here:

• Indeed, an individual entrepreneur is liable with all his property, even those received before the start of his activity. However, there is a list (clause 1 of Article 446 of the Code of Civil Procedure of the Russian Federation), which indicates the property of an individual entrepreneur, which is never collected for debts, for example, a single dwelling or a plot of land.
• For an LLC, which is liable only for part of the property it owns, this is a kind of bonus. That is, the personal property of the founders is, as it were, protected. And this is precisely what is considered a huge advantage of this format. Although if you delve deeper, it becomes clear that this is, to put it mildly, a fiction. If an LLC is declared bankrupt in judicial procedure, then the principle of subsidiary liability will come into force, where the founders will have to pay off debts with their own property.

Important: that is, the biggest advantage of an LLC (such protection of personal, unbearably acquired property) in the event of troubles for the company is not at all so reinforced concrete. And the individual entrepreneur has an inviolable minimum that allows him to at least stay in his pants, even without socks.

1. Money, reporting and taxes - for individual entrepreneurs, the withdrawal of the former is easier, the latter - less, and there are more benefits. As a rule, most of the privileges of individual entrepreneurs in tax and financially upon thorough study, they turn out to be either far-fetched or not so tempting. Same with reporting:
   • Content employees for both organizational and legal forms are the same, and LLCs are almost identical.
   • In most tax regimes the rates are also identical. Differences exist in common system(OSNO - 20% for LLC and 13% for individual entrepreneurs), as well as the ability of individual entrepreneurs to use the PSN (patent system).
   • Insurance is considered the main disadvantage of individual entrepreneurs. But these funds form health insurance and a future pension for the owner, that is, they are by no means useless expenses. And an LLC cannot do without payroll, even if its only employee (he is required) is the general director. And here, too, there will be contributions to all funds. The icing on the cake is that an individual entrepreneur has the right to reduce the accrued tax amount by 100% of fixed payments, an LLC - only by 50.
   • What is really attractive in terms of individual entrepreneurs is the withdrawal of earnings. There are no restrictions - take as much as you need, the main thing is that there is enough left for mandatory payments, the rest is at the owner’s disposal. An LLC has a number of restrictions; its owner(s) cannot easily withdraw a couple of million from their current account to buy a yacht. Here you will have to arrange everything correctly.
   • Individual entrepreneurs have much less paperwork, reporting is simpler, communication with the tax office is easier... The statement is not entirely true because reporting on employees is the same for individual entrepreneurs and LLCs, as well as tax returns. The type and complexity of the latter depends on the system used, and not on the legal form.

As a conclusion, saving on insurance premiums and taxes depends not so much on the format, but on certain conditions and the literacy of the accountant, as well as the ability to get funds at your own disposal.

Here you also need to take into account that tax liability for violations for individual entrepreneurs and LLCs in most cases is almost the same, which cannot be said about administrative and criminal ones. Much more lenient measures are applied to violators who are individual entrepreneurs, both in monetary terms and in punishments in accordance with the Criminal Code of the Russian Federation.

1. Prospects and opportunities for business development - on this issue everyone agrees that an LLC is more profitable. This format has a little more potential:
   • The first and main advantage is that LLCs have a much wider list of activities. It is unlikely that his entrepreneur will be able to include in the details of the contract for the sale of alcohol, as well as its production and medicines. An individual entrepreneur cannot engage in banking and insurance activities, be a tour operator, or holder of pawnshops and investment funds.
   • Another advantage of an LLC is that this format is more attractive to investors, that is, investors in a business project. Although competent management of one’s own business by an individual entrepreneur can interest many, from the immediate environment of an individual to a bank, and all of them can give money.
   • VAT and nuances. This point is maximally promoted in the discussion “for” and “against” IP. Although the VAT payer can be either an individual entrepreneur or an LLC, it all depends on the tax system applied. That is, cooperation with large companies, which are “endessniks” (as they say in certain circles), can be difficult for those who do not pay value added tax and are not registered as its payer.

Important: if you are planning to develop your business by attracting investments or are focused on working with large companies, then the success of these two areas will depend not so much on the chosen organizational and legal form, but on the taxation system. Moreover, it can be changed during operation.

For clarity, all information is combined into a short table:

Individual entrepreneur	Limited Liability Company
Registration is cheaper, the procedure is simpler, there is no need for a legal address or authorized capital.	The duty is much higher, a larger package of documents, authorized capital is at least 10 thousand rubles.
Individual entrepreneur – one individual.	Partners in an LLC can be up to 50 individuals or legal entities. It is possible to attract, exit, and dispose of your shares in the authorized capital.
Receiving money from business is easier and cheaper, there are no additional taxes on income. Mandatory payment of insurance premiums for yourself, regardless of income.	Profit distribution is quarterly, dividends are subject to 13% personal income tax. There are no insurance premiums for owners.
An individual entrepreneur is liable for obligations with all his property, with a few exceptions.	The participants are not liable for the debts of the LLC, except in situations where the principle of subsidiarity applies.
The fines are lower, and the interest of the inspection authorities is also lower.	The fines are higher; both the organization and its leaders are subject to sanctions.
Closing is quick and relatively easy, and debt claims may still arise after liquidation.	Liquidation of an LLC is more expensive and the process is lengthy and complex. Upon final closure, all debts are considered cancelled.

To give preference to an LLC or an individual entrepreneur - this question must be answered comprehensively and taking into account all the nuances. But the familiar statements of Internet experts do not give the overall picture. Study the equipment before making a decision.

Frequently asked questions and a little more about what is rarely voiced:

• Question: Why do many people recommend starting an independent swim in the business world by registering the status of an individual entrepreneur, although from a comparison of an individual entrepreneur and an LLC as a business unit it is clear that the advantages of each of them are not so great?
• Answer: An individual entrepreneur can be closed at any time, this is easy to do, the procedure is much simpler than in the case of an LLC.
• Question: What is the main difference between individual entrepreneurs and other legal forms?
• Answer: Only the status of an individual entrepreneur allows an individual to engage in commercial activities. All other organizational and legal forms that participate in business processes require the creation of a legal entity.
• Question: Why not bring the business environment into uniformity by removing, for example, individual entrepreneurs and leaving only legal entities?
• Answer: The activities of individual entrepreneurs can be reduced to the simplest business processes. An individual entrepreneur can make all stages as easy as possible, from creation to liquidation. He has the right to choose the least complex taxation system, work without VAT, independently, without employees, and maintain simplified accounting. In addition, only an individual entrepreneur can apply the PSN, a special taxation system that provides for the acquisition of a patent.
• Question: Do individual entrepreneurs need a current account?
• Answer: Legally, no. An individual entrepreneur has the right to conduct commercial activities without opening and using a bank account.

Advice: if your line of work requires you to provide services or sell goods to individuals, then it is worth considering that today a plastic card As a payment instrument, it is already much more popular than cash in your pocket. By opening a r/account, you can cover larger number potential buyers, improving the service for them.

• Question: Do you need an individual entrepreneur seal?
• Answer: At the legislative level, the mandatory seal is not fixed. This moment is left to the businessman himself. Although it adds a kind of weight to the written out documents.

And a little more about the details. In a professional environment (among tax specialists, financiers, lawyers) you can find such slang names as physicist and... no, not lyricist, but lawyer. The first are individual entrepreneurs, the second are all legal entities. In addition, in almost every service, from tax to various funds As a rule, there is a division into departments. Some serve individual entrepreneurs, others serve legal entities.

Can an individual entrepreneur be converted into a legal entity?

Actually, the law does not provide for an algorithm for directly converting an individual entrepreneur into a legal entity. And in fact, this is not possible, because an individual entrepreneur has the status of an individual, although it is not a limiter on the rights and freedoms of a citizen. That is, an individual entrepreneur as a common person can become a founder or co-founder of any legal entity (LLC, JSC).

However, the law does not oblige the registration of a legal entity to indicate this status in any of the documents. The founders (individual citizens) here act exclusively as individuals. The rule does not apply to founders who are legal entities.

Can an individual do business without registering as an individual entrepreneur?

Yes and no. It all depends on what a person understands by the term “business”. If, in his opinion, it consists of selling cucumbers grown on his personal plot or providing the services of a tutor, then that is one thing. If your plans are to open a permanent retail outlet or a shoe repair shop, then this is completely different.

In many cases, it can be several times larger than the amount required for registering an individual entrepreneur and fixed payments to funds.

Although there are a number of exceptions where an individual entrepreneur is not needed or optional:

• For the sale of agricultural products of a plant nature grown on a personal plot, dacha plots or on a private farm. To do this, you only need a certificate from the administration of the gardening partnership or an extract from the business book. Relevant for 2018, starting next year they plan to change the rules of the game.
• For those who receive profit from transactions no more than twice a year, and the amount of turnover on them (indicated in the documents confirming payments) does not exceed 200 thousand rubles.
• Those who work under civil contracts and declare their income do not have to become an individual entrepreneur. The list of permitted ones includes any agreements of the specified nature for the provision of services, contracts, purchase and sale, royalties and a number of others. They (agreements) can be one-time or oriented for a long period. The main thing in these cases is to report your income and pay taxes due as an individual.
• For those who carefully engage in dropshipping.
• Those who perform intermediary functions.

The last two points have a lot of similar points that nullify all the charms of business beyond forms and statuses:

• you need to look for partners, suppliers and buyers who will agree to a certain scheme, where the intermediary (dropshipper) does not participate as a unit in the chain of documents;
• Since such systems do not imply the responsibility of the intermediary or dropshipper, you need to be absolutely confident in the quality of the product, the capabilities of suppliers or sellers to obtain permission conflict situations with clients;
• a person working under such schemes without an individual entrepreneur or legal entity is always dependent on his partners, their methods of doing business, as well as on how they will make payments.

As a result, in most situations, agency or intermediary due to all the costs of paying taxes may turn out to be less than when using an individual entrepreneur for the same transactions. Also, if you help someone with housework, work as a nurse, or sell your crafts or knitted hats via the Internet, then you absolutely do not need the status of an individual entrepreneur.

Let's sum it up

• individual entrepreneur (IP) – a special status of an individual, giving him the opportunity to engage in commercial activities and not limiting other declared rights (for example, the same person can become a member of an LLC);
• they show justified interest in individual entrepreneurs both at the start of entrepreneurial activity and in the future, this status has diversity in the possibilities for applying the taxation system, allocation of VAT, simplified accounting and the like;
• the ease of closing an individual entrepreneur is a kind of bonus for those who are not confident in their business endeavors;
• Individual entrepreneurs have many advantages for mini-projects that are designed for small profits, turnover and deadlines.

Registering an individual entrepreneur or LLC is your choice. The main thing is that the idea that was born and promises profit does not remain dead. Do it! Although this will not become a grandiose multi-million dollar project, it will bring joy from small results and confidence in the future.

The abbreviation IP is well known today. However, the legal status of a sole proprietor is unclear to many people. Legislative acts contain the answer to the question formulated in the title of this article, but it is quite difficult to understand them without legal training.

A clear knowledge of the nuances of the status of an individual entrepreneur and its common features with a legal entity and an individual will help to understand the essence of the problem.

Who is the IP?

Almost anyone can engage in entrepreneurial activity. But for this, according to the requirements of legislative acts, it is necessary to confirm your own legal status. Commercial activities can be carried out by both legal entities and individuals. There is another category - individual entrepreneur. This is the only person, only he owns all the rights and earned profits.

There is no need for an office. The place of registration may be the place of residence of the entrepreneur.

If a person is not registered as an individual entrepreneur, but is engaged in commercial activities, then he is also considered an individual entrepreneur.

The confusion that causes a lot of annoying trouble with banks and tax inspectorates is caused by the fact that every “individualist” is given the opportunity to carry out activities that are also available to a legal entity. But it would be wrong to assume that the entrepreneur has the status of a legal entity. Because the Civil Code “postulates” that The activities of an individual entrepreneur occur without the formation of a legal entity.

This legal paradox often results in tax authorities making the same requirements. There is confusion in numerous types (forms) of reporting. As a result, complaints and long disputes arise. The situation is no better with banks, where individual entrepreneurs make appropriate payments. Often in practice it is necessary to look for loyal institutions whose employees have the necessary information regarding “individualists”.

Similar features to legal entities. and physical persons

What brings an individual entrepreneur closer to a legal entity?

In first place is financial discipline. Let's give a simple example. The citizen is registered as an individual entrepreneur. He rents out (sells) housing, receiving income as an individual. Two declarations must be submitted to the tax office:

• as a private person;
• as an entrepreneur (income received as a result of business activities is indicated).

The tax inspectorate and other regulatory authorities check individual entrepreneurs and legal entities. faces are almost the same. The individual entrepreneur has the right, if necessary, to attract hired workers. He can also make entries in them work books. This imposes the following obligations:

• conclusion of official employment contracts;
• payment;
• paying taxes for your employees.

Entrepreneurs have the right to choose a taxation system, which also brings them closer to a legal entity.

What does it have to do with an individual?

• Firstly, it is the use of income in your own way and at your own discretion, regardless of time.
• Secondly, it is the conduct of various business transactions, the conclusion of transactions and agreements in the manner of unity of command.

To learn about who an individual entrepreneur is, watch the following video:

Nuances of individual entrepreneur status

An individual entrepreneur is not required to have constituent documents. These requirements apply only to legal entities. The absence of a seal is conditional. There is a certain distrust of the entrepreneur’s signature, so he most often has to create one. Individual entrepreneurs have the right to make payments in cash. Although in practical reality such calculations are rare.

Official preparation of documents is rarely without mistakes, voluntary and involuntary. Such negligence is fined. The amount of fines for individual entrepreneurs is an order of magnitude lower than for legal entities. persons

If commercial activity is officially terminated, the individual entrepreneur status will still be retained. This means permanent. Even if there is no income, you will still have to pay contributions. This requirement does not apply to legal entities.

There are nuances regarding some products. For example, the sale of alcohol is permitted only to a legal entity.

Let's summarize. Our legislation is not without contradictory and controversial issues. Despite this, Individual entrepreneur is an individual. But its activities imply the adoption of regulations and requirements that apply to the activities of enterprises. Direct indications of exceptions to the rules for individual entrepreneurs should be taken into account.

According to the civil code of R.F. An individual entrepreneur is an individual who has the right to engage in commercial activities. An entrepreneur is liable for his obligations with all his property.

 

What form of business is individual entrepreneurship?

Many people cannot understand 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) with founders and authorized capital. An individual entrepreneur conducts business without one.

It is worth noting that an individual entrepreneur in many cases is vested 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 types of activities, with the exception of some of them.

What is the difference?

Table 1. Difference between individual entrepreneurs and LLCs

Individual (IP)	Legal entity (LLC)
Simplified registration procedure, minimal state duty	Registration requires many documents and higher state fees
Responsible to the Law with his personal property	Risks only the share in the authorized capital
There is no need to keep accounting records and open a current account	Constant documentary traffic control Money, mandatory opening of a current bank account
Disposes of profits at his own discretion	The manager does not have the right to withdraw the proceeds received
Cannot engage in any activities	No restrictions on types of activities
Pays contributions to the Pension Fund even if there is no profit	It is possible not to pay contributions to the Pension Fund if there is no income
You can't sell your business	There are no restrictions on selling a business
Lower penalties	High fines in case of detection of violations under the Tax Code of the Russian Federation
Can't attract investors	Opportunity to attract investors

Thus, each of the organizational and legal forms has its own pros and cons, and any existing individual entrepreneur can register an LLC by contacting the Federal Tax Service with documents, but he will have to pay taxes and fees for all forms of activity.

Example: citizen, being the founder of an LLC engaged in the production 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 Compulsory Social Insurance Fund for both organizations.

IN in this case, wondering - an individual entrepreneur is a legal entity. face or ordinary physical face? - it is necessary to proceed from the form of business that the citizen conducts. When resolving legal disputes, filling out documents, submitting reports, he will be a legal entity from an LLC, and an individual from an individual entrepreneur.

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 appeals from organizations and individual entrepreneurs when the following disputes arise:

• 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.
• Transnational economic: in case of failure to fulfill obligations by a company registered in the Russian Federation in relation to foreign citizen, or vice versa.

When making a decision to impose 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 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

Do you have any questions about the nuances of the legal status of an individual entrepreneur or do you need detailed expert advice on another legal issue? Moneymaker Factory recommends using the online service "Lawyer" to receive professional advice from an experienced lawyer. (Receive the first response within 15 minutes after its publication).