Russian enterprises can conduct activities within a wide range of legal forms. The legislation of the Russian Federation allows citizens to engage in business in statuses that are optimized for the specifics of production, turnover, the number of co-founders and the need for additional funding. What are the features of legal forms business in Russia? How to choose the optimal format for carrying out commercial activities?
Classification of legal forms
Russian entrepreneurs often face the problem of choosing the optimal legal form of doing business. What options do they usually explore? There are few of them. The organizational and legal forms of activity of enterprises, which are provided for by Russian law, may include:
- activities as an individual entrepreneur (IP);
- business in the form of LLC;
- activity in the format of a joint stock company;
- joint cooperation in the form of cooperatives, peasant farms, partnerships.
It can be noted that in rare cases it is permissible to conduct business in the status of an individual without registration as an individual entrepreneur. But even if there were more opportunities for this, such an activity, as a rule, is less beneficial for the entrepreneur in terms of taxation. Therefore, the organizational and legal forms of entrepreneurial activity that we have listed above are more preferable. Let us consider in more detail the essence of each of them.
IP
The organizational and legal form of doing business is quite popular among entrepreneurs of the Russian Federation - IP. The prevalence of this option is mainly due to the simplicity of state registration. In order to become an entrepreneur, a citizen must collect not a lot of documents. The costs associated with registering as an individual entrepreneur are also small. It is not necessary to have a seal. There are no legislative requirements to open a bank account (although this, of course, is recommended to be done for the convenience of interacting with suppliers and customers).
A feature of the considered form of doing business is that an individual entrepreneur is not a legal entity. In practice, this means, for example, that he is personally responsible for his obligations. However, IP can pay taxes in modes that are characteristic of just the same for legal entities.
One of the advantages of doing business as an individual entrepreneur is that a person, having paid tax under the selected scheme, can subsequently dispose of the remaining amount at his discretion. It is very easy, therefore, to bring the proceeds into personal use in order to spend in any way desired.
Another useful aspect of conducting business in this status is the minimum burden on individual entrepreneurs in the reporting aspect. Other legal forms of enterprises require regular interaction with the Federal Tax Service and other structures. For individual entrepreneurs, in some cases it is enough to send a declaration to the tax service once a year, as well as several documents relating to the formation of staff and accounting issues.
Any citizen of the Russian Federation who is already 18 years old can conduct business as an individual entrepreneur.Subject to the approval of the activity by parents, Russians from the age of 14 can also engage in business. If a person is in the civil service, then he is not registered as an individual entrepreneur, however.
An individual entrepreneur can hire other people, draw up work books for them, pay salaries, and form hired employees with work experience. An individual entrepreneur always owns his business alone. You can not give or sell to someone your share in the enterprise - this legal form does not allow this. And therefore, many Russian businessmen are eager to engage in activities as entrepreneurs.
However, working in this status has a number of disadvantages. For example, individual entrepreneurs must in any case pay for themselves fixed insurance contributions to the PFR, FSS and MHIF. This, as a rule, is not a problem if the entrepreneur has good turnovers: the corresponding fees to the state treasury are counted as part of taxes and therefore are not noticeable. But even with zero revenue, the individual entrepreneur must pay them. And if, for example, a person for some reason does not do business for some time, he is nevertheless obliged to transfer contributions to the treasury. Even if he is employed somewhere and from his salary the employer transfers the required percentage to the PFR, FSS and MHIF, this obligation remains.
Business in the form of LLC
Another common legal form of business in the Russian Federation is a limited liability company. It can be established by one citizen or several, but the number of participants should not exceed 50 people. The entrepreneur, owning an LLC, is not personally liable for obligations, unlike an individual entrepreneur (not counting contributions to the authorized capital). Also, participants in this type of company are not required to pay contributions to the PFR, FSS and MHIF for themselves.
LLC is a full-fledged legal entity. Its state registration is somewhat more complicated than in the case of individual entrepreneurs. A charter capital of at least 10 thousand rubles is required, in most cases a bank account, seal. Reporting for LLC owners is usually more difficult than for IP.
Another caveat - you can’t just withdraw revenue, as in the case of individual entrepreneurs, even if tax has been paid from it. They will have to draw it up as dividends or even in the form of a salary (with which, in turn, it is necessary to transfer contributions to the PFR, FSS and MHIF).
Specificity LLC
This legal form of a legal entity, such as LLC, is among the most common in the Russian Federation. Therefore, we consider its specifics in more detail.
We noted above that the number of co-owners of an LLC cannot exceed 50 people. If more people want to join the business, then it will be necessary to transform the LLC into other organizational and legal forms of entrepreneurship - a public or ordinary joint-stock company. If the co-founders do not carry out the appropriate procedure, the LLC may be liquidated by the court.
The authorized capital of LLC, as we noted above, is 10 thousand rubles. Many companies, of course, increase it. But this must be done carefully. If the value of net assets due to market or other reasons is lower than the amount of the authorized capital, then it will have to be reduced - these are the requirements of the law. And if the net assets turn out to be less than 10 thousand rubles, then the company should be (also by virtue of the provisions of the law) liquidated. LLC can be transformed into other legal forms of entrepreneurship.
It is possible for one of the co-founders to leave the organization through the alienation of his share in favor of other owners (with subsequent compensation), but only if it is provided for by the charter of the company. It is also possible to sell the relevant part of the business. The considered legal form of a legal entity does not imply withdrawal from the sole founder, but in this case he can sell the business to another citizen or company.In case of sale of a share in the company, the preemptive right to purchase belongs to other members of the company. The period during which it is valid is determined by law and the organization’s charter.
Joint-Stock Company
Such an organizational and legal form of activity as a joint-stock company is mainly in demand by those entrepreneurs who plan to develop big business. AO is a commercial structure, which also has authorized capital, but it is issued in the form of shares that certify the binding nature of the rights of participants in the company. Therefore, it is somewhat more difficult to pass state registration and keep reports within the framework of AOs than with LLCs, not to mention IP.
AOs, according to Russian law, can be ordinary and public. It can be noted that until 2014 in Russia there were such organizational and legal forms of organizations as closed and open joint stock companies. Then, the regulatory legislation was amended according to which JSCs were classified into ordinary and public.
Public and ordinary joint-stock companies
Such legal form as public joint stock company, according to the Civil Code, is characterized by the following features.
- First of all, shares and other securities issued by the organization are publicly placed (through open subscription), and are traded in the market in accordance with the provisions of legal acts regulating the circulation of relevant trading instruments.
- Secondly, the founders of the joint-stock company have the right to register in the charter of the organization, as well as in its company name, public status, even if its activity does not meet the first criterion.
Other JSCs do not belong to public. That is, they are simply called societies. But if the organization’s leaders plan to issue shares, which will then be in open subscription, then in the charter they should nevertheless indicate the status of a public company.
Specificity of charters
Reforms in civil law that took place in 2014 predetermined some features of the preparation of charters of organizations. For example, two different legal forms of enterprises, LLC and AO, can have uniform constituent documents, as their only legal form is a charter that can be developed according to the recommendations of state registration authorities.
LLC and JSC, according to the legislation of the Russian Federation, belong to the same category of organizations - business companies. In fact, the reform carried out in 2014, their status, as some experts note, has become very similar due to the establishment of a single form of constituent document.
Partnerships
The Civil Code of the Russian Federation also provides for other types of legal forms of business. For example, a partnership. What is the peculiarity of this format of entrepreneurial activity? Definition of partnerships and business companies (LLC and JSC) is contained in the same provisions of the Civil Code of the Russian Federation. That is, the considered organizational legal form of activity is a legal entity that has an authorized capital.
Partnerships are full and limited. In organizations of the first type, people are engaged in business and bear subsidiary responsibility for arising obligations. Limited partnerships (in faith) - organizations involving investors (or limited partners) who are responsible within the limits of their contributions.
Consumer cooperatives
The Civil Code of the Russian Federation provides for such a form of business as a consumer cooperative. Organizations of this type are voluntary associations of individuals or legal entities within which property shares of participants are consolidated. How the appropriate amounts are to be paid in determines the charter of the consumer cooperative.Members of the organization bear subsidiary liability for arising obligations within the unpaid portion of the additional contribution.
Production cooperatives
The organizational and legal forms of organizations provided for by the Civil Code of the Russian Federation include such structures as production cooperatives (also called artels). These are associations of individuals (but legal entities may also include participation in the charter) with the aim of organizing joint production, processing or marketing of various types of products, performance of work, provision of services, and trade. Personal labor participation of citizens is supposed. Members of a production cooperative, as a rule, agree on the contribution of shares. The liability of participants in the organization is subsidiary, within the limits defined by law and the charter.
Peasant farms
Legal forms of entrepreneurial activity may be associated with the agricultural industry. Doing business in this area is possible through a variety of statuses. The Civil Code of the Russian Federation provides, in particular, the possibility of organizing by the citizens of the Russian Federation a joint peasant economy.
This type of joint activity of farmers involves the creation of a legal entity in the form of a voluntary association, which is based on joint work, as well as property contributions of participants. The peculiarity of peasant farming is that all property within the framework of this organization is jointly owned by the farmers who established it. According to the Civil Code of the Russian Federation, a person can be part of only one farming association. Citizens conducting joint activities within the framework of this legal form bear subsidiary liability for arising obligations.
Choosing the form of doing business
What legal form can be optimal? If a person runs a business independently, does not hire people or forms a small company staff, then he can be registered as an individual entrepreneur. In this status, you can work with a minimum amount of reporting, without being distracted by the bureaucracy and completely devoting time to work. There are no problems with the withdrawal of revenue.
If a citizen conducts a joint business with partners, then LLC may be the best option. Once the company’s turnover has grown, it would be nice to increase them due to the issue of shares. In this case, you can pay attention to other types of legal forms of activity - a joint stock company with securities by open subscription or non-public joint-stock company.
In order to effectively consolidate labor, entrepreneurs can unite in production or consumer cooperatives, partnerships. If citizens are engaged in farming, then for them the joint establishment of a peasant farm may well be optimal.
These are the main types of businesses stipulated by the legislation of the Russian Federation. Other organizational and legal forms of organizational activity, such as, for example, associations or NGOs, also allow doing business. Profit is not prohibited for government organizations. However, taxation in case organizational and legal forms of organizational activity are involved are usually higher than when registering a legal entity whose status is more typical for a business.
