Thinking of starting their own business, many already at the stage of writing a business plan begin to wonder what form of activity to prefer.
What is the difference between IP and LLC? What is the advantage of an individual entrepreneur over society?
And in what cases do you need to choose the second way of managing?
Why choose something?
All these questions are not asked for idle curiosity. The number and size of taxes, restrictions on activity, or, conversely, relief from the state, depend on who you register as. Even at the registration stage, significant differences are noticeable both in the procedure and in the payment.
What to choose: OJSC, LLC, ZAO, IP
Today in Russia it is possible to create limited liability companies, as well as joint-stock companies (closed and open). This is if you are planning to do business with nonprofit partnerships everything is a little different. And it goes without saying that there are individual entrepreneurs. These are citizens who are engaged in business without the procedure of creating a legal entity.
But a limited liability company involves several participants and the presence of authorized capital. Usually this is a very narrow circle of people, friends or relatives. Society is not in vain called "limited"; it is very difficult to accept a face from outside.
But a joint-stock company, on the contrary, is built on the principle of attracting outside investors. Shares can be purchased by anyone who wishes, they are freely sold on exchanges. And if we talk about the differences, then the question is only in the number of participants. Closed companies limit the number of shareholders, but open no.
So, you can, based on your own goals and objectives, choose the necessary form: OAO, LLC, ZAO, IP.
Please note that in some types of activities, only the creation of a society is provided. Therefore, find out in advance whether you can restrict yourself to registering an IP.
How much does it cost to become an individual entrepreneur?
Choosing the perfect formula for yourself, calculate the amount of initial capital. IP opening price is much cheaper. But the creation of society will result in additional costs.
What is needed to register an IP? It is necessary to pay a state duty of 800 rubles. This money issue will be closed. Nobody requires authorized capital from you, you do not need to order a print. True, many are advised to address this issue. You must admit that you will have more confidence if you seal the papers.
Issue price for LLC
Those who decide to create a society will have to pay a state duty of 4 thousand rubles. Plus, the bank must have authorized capital. Its amount is also stipulated in regulatory documents. It should not be less than 10 thousand rubles.
Registration procedure for an individual entrepreneur
Registration for an individual is a simple procedure. It is necessary to write a statement of the established form. Then assure him of a notary public. In addition, you will need copies of personal documents, but not simple, but again notarized.
And be sure to have a receipt on payment of the state duty on hand. All these listed documents are required for registration of individual entrepreneurs. Having picked them up, you go to the tax office, where you get registered. Everything, now you are an entrepreneur and you can start your own business.
As mentioned above, you do not have to print. But if you are interested in cooperating with large network organizations, then it is better to order it. But it’s definitely not necessary to register anywhere.
Register LLC
Now about the registration of the company. The difference between an IP and an LLC is the design procedure.
Here you need to prepare the following documents:
- minutes of the constituent assembly;
- an agreement that confirms the establishment of an LLC;
- application for registration of the company;
- charter of your society.
Whether you will independently prepare the above documents or trust an experienced lawyer, it does not matter. It is important to assure everything to a notary public.
After that, you contact the tax office and you are ready - you become a member of the LLC. There can be several participants, or maybe one person (founder).
A responsibility
What we need to register IP and LLC, we found out. Now let's find out the issues of liability of legal entities and individuals.
To begin with, fines for individual entrepreneurs are much less. But if society commits offenses in its activity, then a considerable amount will have to be paid.
Further LLC without fail maintains accounting records. Will there be an accountant in his staff, or will an intermediary firm begin to perform these functions, this is not important. It is only necessary to provide full reporting.
It is enough for an individual entrepreneur to keep a strict record of all expenses and income. To simplify this procedure, you can purchase a special 1C program.
The company must have a legal address. What does it mean? You will not be registered at the place of registration. It is necessary to purchase or rent a room. Moreover, non-residential premises. The apartment in this case will not work. Such restrictions do not apply to IP. The entrepreneur is registered according to the address where he lives. But he can conduct his activities in another region.
An individual entrepreneur is deprived of anonymity. His name appears on the press (if he orders one), he signs all the documents with his last name.
But data on the founders of society is not necessary to advertise. Sometimes it happens that the same person is a co-owner of several companies. The activities of the company are carried out on behalf of the Director General, who is elected by the founders.
If you still think what to open - LLC or IP, then it is worthwhile to find out what you are risking in case of adverse events. Business may burn out. And if a member of the company is only liable for debts with his share, his personal property does not fall under sanctions, then the entrepreneur runs the risk of being left without an apartment, and without a car. According to a court decision, he pays with all his property.
Who manages the revenue?
There are peculiarities in who and how manages the company's revenues. The individual entrepreneur has complete freedom in this matter. An entrepreneur has the right to dispose of revenue as he sees fit. No restrictions, no paperwork. It is only necessary to strictly monitor the timely payment of taxes (usually the IE has a simplified tax system) and contributions. Even cash discipline bypasses the IP side.
In LLC founders receive dividends. They are paid quarterly after the funds for taxes and contributions have been transferred. Each member of the company is obliged to pay personal income tax from their dividends.
Another limitation is related to cash discipline. Founders cannot dispose of cash from the cash desk at their discretion.
About taxation
Now let's see how to find out your tax system. When registering, IP, LLC choose a system suitable for their type of activity. True, it often happens that in the future, especially if the company has not kept records for some time, the owner cannot remember which form of taxation “subscribed” to. Sure, you can go to the tax office for clarification.But you can independently find out this issue.
Today in Russia there are five systems:
- general taxation system;
- simplified system;
- a single tax on imputed income;
- patent;
- single agricultural tax.
With the agricultural tax, everything is clear. It is paid by farmers and peasant farms. If you do not belong to those, then the first four options remain for you.
With DOS, accounting is required. You pay value added tax, income tax and property tax. And this is not counting the mandatory contributions to various extrabudgetary funds. And even if you are an individual entrepreneur, but your income for the tax (reporting) period is more than 60 million, then you will have to apply DOS.
Now that includes the concept of a simplified tax system. First of all, you get rid of the need to transfer VAT, income tax. Property tax is more complicated, because there is information that from 2015 “simplists” will pay this tax.
The scheme is really simple. You need to pay a single tax of 6 percent of income.
A simplified tax system can be calculated using a more complex formula. This is when an entrepreneur wants to deduct his expenses from income. Then the rate can be from 5 to 15 percent. Why is there such a difference?
It all depends on the region and the refinancing rate set in it. This method of calculation is applicable only in cases where you can confirm your expenses, and the expenses themselves are regular.
“Simplists” are not exempted from paying contributions to the Pension Fund and to health insurance.
Individual entrepreneurs and founders of the LLC can apply to the tax office for the transition to the simplified tax system. But a simplified tax system does not apply to certain types of activities. Therefore, check if you are subject to restrictions.
In addition to the simplified tax system, entrepreneurs whose business is related to the provision of household services to the population, freight or passenger transportation, trade in non-excisable goods (but provided that the outlet is less than 150 square meters) can pay a single tax on imputed income. The UTII rate is calculated not from income, but from physical indicators. That is, the number of employees, seats in the car, fleet, the size of the outlet are taken into account.
Can investors be attracted?
For business development, sooner or later, additional financial injections will be needed. What is the difference between IP and LLC in this matter? The fact that an individual entrepreneur can use only bank credit. But LLC can attract investor money. The investor has his own interest - he enters the company as a shareholder, therefore, receives dividends. This approach is much more profitable than taking a loan. Bank rates are not set by the most gentle, and you need to collect a rather big accompanying package of documents.
Company closure
Not always in life, everything goes according to the planned scenario. Sometimes you have to close a business. And again, the procedure for individual entrepreneurs is simpler.
You just need to write a statement to the tax office that you are terminating your activities.
Then you will be checked for debts, and if they are not found, then you will have a certificate in your hands, which will confirm the fact of liquidation of your business.
With LLC, everything is much more complicated. It is necessary at the meeting to decide on liquidation. Send it to the tax. The local press needs to publish information about the liquidation of your society.
After this, notifications are sent to creditors if by that time you have them.
The tax inspectorate must arrange an on-site inspection and requires surrender liquidation balance sheet. Only after going through all stages can a society be considered closed.
So, what is the difference between IP and LLC, we tried to figure it out.You just have to weigh the pros and cons, determining for yourself the most optimal form of management.
