Nowadays, it is absolutely not necessary to go through the complex process of registering a legal entity to open a business. It is enough to register as an individual entrepreneur, which is much easier and faster. What are the advantages of entrepreneurial activity without forming a legal entity? Who can be called an entrepreneur of an individual type (hereinafter referred to as IP)? All these questions will be answered in the article.
Who is an IP?
An individual holding a certificate of the relevant registration process is referred to as an individual type of entrepreneur. After registration, a citizen gets the opportunity to engage in legitimate commercial activities. Moreover, it is absolutely not necessary to have an office, a wide headquarters of employees or a hierarchical command system. As a rule, entrepreneurial activity without the formation of a legal entity is carried out by citizens who do not want or are not able to realize a broad business company.
It is worth noting that IP has a large number of advantages compared to a legal entity. It is worth highlighting the fast registration process, facilitated taxation, as well as vesting with special rights, which will be discussed later.
Legal base
Carrying out entrepreneurial activity without forming a legal entity, like any other professional activity, should be based on a number of legal regulatory sources. What exactly is worth highlighting here?
The special law "On the labor activity of entrepreneurs" was adopted back in 1986. In the USSR, this was the first law that made it possible to profit from sole work. Today, of course, this law does not apply. The status of individual entrepreneurs is determined by the Constitution, the Civil Code, as well as the special Federal Law "On Registration of Legal Entities and Individual Entrepreneurs".
About IP rights
The implementation of entrepreneurial activity without the formation of a legal entity involves the endowment of a citizen with a number of special rights. So, the law distinguishes the following types of powers:
- Complete freedom in choosing your own partners or goods to be sold. The most important rule here is the principle of independence of an individual entrepreneur when choosing a market segment in which he will develop.
- The right to hire employees. At the same time, the maximum number of employees who can work at the IP headquarters is established in Russian law (everything depends on the type of enterprise).
- The ability to independently determine the value of their services and goods. However, as part of the antitrust policy, any individual entrepreneur is required to prevent too low prices.
- IP independently solves wage issues for its employees.
- An individual entrepreneur may be a plaintiff or a defendant during a trial.
Thus, a person who has the right to carry out entrepreneurial activity without forming a legal entity has a fairly wide range of rights and powers.
About the obligations of the individual entrepreneur
Empowerment necessarily implies the implementation of a large number of responsibilities. A person engaged in entrepreneurial activity without forming a legal entity is a subject of commercial activity. That is why it is obliged to fulfill certain requirements established by Russian law. Here is what is worth highlighting here:
- Individual entrepreneurs have the duty to constantly comply with Russian law. A person must have high-quality knowledge in the field of pension, labor, tax, antitrust and other types of legislation. This is necessary for the implementation of open and legitimate activities.
- All financial transactions must be documented. In this case, the documents themselves come, as a rule, to higher authorities for verification.
- Employees in the state at the IP should be formalized.
- A person carrying out entrepreneurial activity without forming a legal entity must have a special state license.
- Timely payment of taxes and fees is also the responsibility of the individual entrepreneur.
Naturally, not all responsibilities that Russian law establishes in relation to business entities without forming a legal entity were indicated above. There are separate requirements for individual entrepreneurs, depending on the scope of their professional activities, which are spelled out in the relevant regulations.
On the legal capacity of IP
As you know, the legal capacity of any person is the totality of his rights and types of responsibility. And what is the phenomenon of legal capacity? In the case of IP, this concept is especially important. Article 21 of the Civil Code of the Russian Federation speaks of the ability to exercise their civil rights and discharge duties. This ability is not available to all Russian citizens. In order to be able to carry out entrepreneurial activities without forming a legal entity, a citizen must reach the age of majority, that is, the age of 18 years. It is also possible the so-called emancipation, when full legal capacity is issued by decision of the court to some persons who have reached 16 years of age.
The concept of legal capacity includes transactionability and tort. In the first case, we are talking about the right of a citizen to independently conclude transactions, and in the second, about the possibility of bearing independent property type liability.
Legal capacity may be restricted in an adult. The reason for this can be serious mental illness, as well as alcohol dependence or drug addiction.
Forms of entrepreneurial activity without forming a legal entity
It must be said that the form of activity for an individual entrepreneur is always the same: sole and individual. Of course, a citizen can create a wide headquarters with a large number of employees. However, the founder of the enterprise is always alone, of which IP is.
In its activity, IP uses exclusively independent labor activity. That is why such a subject of the commercial field must have a high level of professional training in various fields. Do not forget about the importance of knowledge in various fields of jurisprudence: only in this way can individual entrepreneurs working alone be able to qualitatively realize all their functions.
Registration IP
The issue of registering individual entrepreneurial activity without forming a legal entity remains probably the most important in the entire area under consideration. Such registration involves several stages.
The first and most important stage is preparation. It is necessary to accurately determine the types of your professional activity according to the OKVED (classifier of activity of an economic type), pay the state duty and choose the most suitable type of taxation. By the way, the further staff and number of employees will depend on the types of taxes paid.
The second stage is the so-called collection of securities. To successfully complete the registration process, the candidate for the status of individual entrepreneur must prepare:
- passport and its copy;
- Certificate with TIN number;
- state duty receipt;
- application for registration of IP and its copy;
- notice on the use of the simplified tax system (simplified tax system).
The third stage includes the direct submission of documentation to the appropriate registration authority.
About IP licensing
Unfortunately, the registration process alone does not end there. For a complete registration of entrepreneurial activity of a citizen without forming a legal entity, it is necessary to carry out a licensing procedure. However, a license is not needed for all activities. Here it is worth turning again to a special classifier, in which all the necessary information will be recorded. So, it is known for sure that the types of activities of the licensed type include passenger transportation, pharmaceuticals, the transport business, etc. An individual entrepreneur cannot engage in closed businesses: selling military products, alcohol, tobacco, etc. The tourist business is also prohibited under the prohibition. , production of pyrotechnic products, military and aviation equipment, etc.
About taxation for individual entrepreneurs
The obligation to register IP is assigned to the Russian tax service. And this, I must say, is not accidental. Still, the functioning of any business company should be beneficial to the state. This benefit manifests itself, of course, in the form of fees and taxes.
In order to choose the most suitable type of taxation, you will have to turn to the Tax Code of the Russian Federation. It is here that the main points concerning tax regimes are fixed: general and simplified type. Typically, IPs apply for a simplified system. However, in this case, the staff may not exceed one hundred people.
The choice of the most suitable taxation system always depends on the type of entrepreneurial activity without forming a legal entity. That is why each candidate for the status of individual entrepreneurs must consult with a lawyer.
Checking the activities of individual entrepreneurs
As you know, the state is obliged to timely carry out a number of control and supervision functions in relation to all subjects of the commercial sphere of activity. This also applies, of course, to entrepreneurs. That is why the IP should not be surprised if suddenly the federal or regional authorities began to show interest in its occupation.
How does the state implement its control and supervision activities? According to the law, there are two types of inspections: scheduled and unscheduled. Inspections of the first type are planned in advance, they should be carried out no more than once every three years. Special authorities must collect data on the IP, check its income and expenses, ask the employees in the state for a license, etc. Based on the results of the audit, all available data is published on the Internet.
Inspections of an unscheduled type are held no more than once a year, but the IP himself cannot know about their preparation. Extraordinary control activities by the state are necessary, no matter how hard to guess, for more impartial and accurate results. So that the state does not exceed the established powers, the individual entrepreneur should be guided by the Federal Law "On Protection of the Rights of Legal Entities and Individual Entrepreneurs".
About IP liability
When organizing entrepreneurial activities without forming a legal entity, a citizen must remember how much responsibility he takes upon himself. In case of any violations, IP may be sanctioned in accordance with the civil, administrative or even criminal legislation of the Russian Federation. It is worth remembering how easy it is to lose your status. In addition to cases of obvious violations, IP status can be eliminated in the following situations:
- death of SP;
- decision-making by the IP itself;
- recognition of a person as legally incompetent;
- suspension of the IP by court decision.
It is worth noting that a complete cessation of activity is possible only after the relevant documentation is submitted to the tax authority and the state duty is paid.