More and more often, citizens of our country are thinking about starting their own business, and agriculture is always a priority, since our country is agrarian. However, before engaging in entrepreneurial activity, it is necessary to understand the existing organizational and legal forms of enterprises.
Peasant farm - what is it?
Peasant farming is a business that is entirely based on farming. The company may involve several persons, but necessarily related by family ties. It can be not only citizens of the country, but also foreigners, stateless persons, most importantly, that all be relatives.
This type of activity allows for the production, storage, processing and even the sale of products.
The answer to the question: peasant farm is an individual or legal entity, simple - the economy does not imply the formation of a legal entity.
Number of members
Creating an IP involves the participation of only one person who will be fully responsible for making their decisions. For peasant farms, the presence of several persons, or rather relatives, is of fundamental importance. And no matter how many there will be. Relatives include spouses, their relatives, including not only brothers and sisters, but also distant ones. The only restriction on accepting non-relatives is that there should be no more than five. How to regard in the light of peasant farms, is this an advantage or a disadvantage? It all depends on the specific situation.
Members of the peasant farm own common property, which is regulated at the level of legislation in order to avoid possible disputes between relatives. But only property that is stipulated in the agreement between members of the economy falls into the category of common property. When one or several participants exit, they are entitled to a share - either monetary or commodity compensation. If we talk about responsibility, the members of the peasant farm bear subsidiary, unlike individual entrepreneurs. Before finding out the advantages and disadvantages of peasant farming, we consider the features of the structure.
Features of peasant farm
In addition to family ties and exclusively farming, there are a number of requirements that allow you to create a peasant farm:
- the enterprise should be headed by the head of the farm;
- farm members must be over 16 years old;
- the team may include five people who are not relatives, but no more;
- the property of the enterprise is common property, therefore, upon the withdrawal of one of the participants, compensation is due to it.
Before the registration procedure, all members must sign an agreement among themselves, reflecting the basic rules of the "game":
- On the rights and obligations of members.
- The procedure for the election of a chapter.
- Rules for the formation and distribution of common property.
- On the procedure for admitting new members to the KFH.
- The procedure for the distribution of profits and products.
Registration of peasant farms is carried out in the territorial branches of the tax service.
Governmental support
What can farm members count on? KFH or IP - which is better, table of differences:
Name of benefits | Peasant farm | IP |
subsidies for the purchase of fuels and lubricants | + | - |
5 summer tax break | + | - |
government orders for products | + | - |
subsidies for the purchase of equipment | + | - |
the possibility of redemption of land at a cost of not more than 15% of the cadastral price | + | - |
In addition, in developing rural areas, local authorities offer land for individual construction on preferential terms for members of farms and farms.
Possible taxation options
KFH or IP - which is better? The table of differences will allow you to understand tax issues:
Tax system | Peasant farm | IP | Features |
Single agricultural tax | available | not available | Minimum reporting requirements. At the state level, a rate of 6% has been set. At the discretion of local authorities, the rate can be reduced to 4% |
Simplified tax system | available | available | There are two options: “Income” and “Income minus expenses”. Enterprises with minimal costs choose the first option, assuming a rate of 6%. If the costs of entrepreneurial activity are large, then the second option is chosen, in which you will have to pay 15% of the profit. Local authorities are authorized to lower rates, if it is “Revenues” then to 1%, with the second option to 5% |
General taxation system | available but not recommended | available | This system involves conducting complex calculations, accounting documents, but if we talk about peasant farms, they will have the opportunity to collaborate with large network players who choose partners who pay VAT |
By the way, there are times when the head of the farm did not have time to figure out what is better than peasant farms or private entrepreneurs, the table of differences did not help. When registering a farm, he did not choose any of the taxation systems. In this case, the enterprise will automatically apply OCH.
Government Funds and Statistics
There are practically no differences between peasant farms and entrepreneurs in the issue of making insurance contributions. The head of the farm will have to pay fixed contributions for himself and all participants for pension and compulsory health insurance.
All contributions must be paid before the end of this year. Reports are submitted before March 1 of next year in electronic format and on paper.
Registration procedure
The best way to help understand the registration procedure of peasant farms or IP (which is better?) Table of differences:
| List of submitted documents | Peasant farm | IP |
Application in the prescribed form | + | + |
State duty payment receipt | + | + |
Documents of the person who is registered | + | + |
Documents for other participants | + | - |
Creation agreement | + | - |
There are no differences in the timing of registration, no more than five working days are allocated to it.
Activities
When considering options for activities, some may not find the difference table “Which is better - peasant farms or private entrepreneurs” may not be useful. Farm or peasant farming may be engaged exclusively in agriculture or animal breeding, other activities are prohibited. If we talk about an individual entrepreneur, then the choice is wide. Naturally, if the selected type of activity requires a license or a special permit, then it must be obtained.
Private farm
Personal subsidiary farming is a type of activity that does not imply registration as an individual enterprise. The main advantage of private household plots is that you do not need to keep tax records and pay taxes. Persons whose land area does not exceed 250 acres are generally exempt from paying personal income tax. And immediately it becomes clear what is more profitable than LPH or peasant farms. If there is not enough land for farming, then you can always arrange adjacent plots for relatives.
Perhaps the only negative is that this type of activity will not allow you to draw up a certificate of conformity or a declaration. From the very concept it is clear that the economy is intended for personal needs, and the resulting products are not intended for sale.
Limited liability company
KFH has many advantages and disadvantages, but when compared with LLC, the main plus in favor of the economy is a simplified reporting system that does not require an accountant. No need to calculate accounting and tax indicators. At the same time, wholesale buyers have a lot more trust in legal entities.
Practitioners recommend starting all the same with peasant farms, and when the company is already gaining momentum, you can open a legal entity, add new activities, for example, open your own shops or outlets.
Advantages and disadvantages
What to hide, most often choose Peasant farms due to taxation, because for five years it will not be necessary to pay income tax. This is the biggest plus, especially for people who have been engaged in agriculture all their lives, but decided to move to a "new level", expand production by attracting their relatives.
And the second plus is peasant farm taxation; it does not require the creation of bulky reports, especially on a monthly basis. And this is a huge advantage for farmers. It will only be necessary to draw up an agreement between members of the economy in order to resolve material and administrative issues.
To register a peasant farm, it is not necessary to draw up a charter and hold meetings of shareholders, or to issue securities, publicly publish reports, and so on. In this context, it is immediately clear what is better than peasant farms or LLC? Regulatory authorities have much less complaints about farms; they, as a rule, do not come for inspections.
The advantages include the fact that all members of the peasant farm receive full rights to retirement benefits, social protection and sick leave payments, including those issued in connection with motherhood.
Naturally, it is better for private household farms, peasant farms, and LLC to decide individually for each person, but still it’s worth starting a business with the simplest legal forms. In this case, peasant farming would be the best choice.