Russian enterprises can operate in various legal forms. The choice of any of them is determined by a variety of factors: the desired method of calculating taxes or, for example, the scale of the business and the need to raise additional capital. What is the specificity of legal forms of business in the Russian Federation? What varieties are they represented?
The essence of the legal form
The subjects of legal relations in the Russian Federation can have different statuses and legal forms. This is important for the correct delineation of the specifics of their activities, as well as the application of optimal tax regimes in relation to recoverable income (if we are talking about the commercial sphere). The concept of legal form also reflects aspects of the organization’s legal liability for emerging obligations.
In general, doing business in the Russian Federation involves state registration of an enterprise within one of the statuses provided for by law. A fixed legal form of business is a significant factor for banks deciding whether to grant a loan to an enterprise. Likewise, an investor or a potential major partner can pay attention to this.
Varieties of legal forms
In Russia, the legal form of entrepreneurial activity can be represented in the form of one of the following main statuses:
- individual entrepreneur;
- limited liability company (LLC);
- joint-stock company (JSC);
- public joint-stock company;
- partnership (full, limited);
- production or consumer cooperative;
- peasant farming.
Also, in some cases, it is permissible to conduct business in the status of an individual. However, this is usually less profitable in terms of taxation. Actually, the amount of taxes is one of the factors in choosing this or that form of business. The main legal forms that we have listed above allow in some cases to take advantage of significant preferences in relation to the payment of taxes.
It can also be noted that some government agencies and non-profit organizations in the status of legal entities may also engage in certain types of entrepreneurial activities that are not prohibited. A state legal form is possible in which the organization conducts commercial activities. For example, it may be the format of unitary enterprises.
But the range of possible activities in the field of business, open to government agencies and non-profit institutions, is often quite narrow. In addition, no special preferences in the field of tax calculation and payment have been established for such organizations. Therefore, the choice of the optimal form of legal activity is the most important task for an entrepreneur. Moreover, there is plenty to choose from. Consider the specifics of each of the above statuses in more detail.
IP: features
The main legal provisions for individual entrepreneurs are present in the 23rd chapter of the Civil Code of the Russian Federation. It says that Russian citizens have the right to do business, not being a legal entity. True, for this you need to go through the state registration in the prescribed manner. But the corresponding procedure for private entrepreneurs is likely to look the simplest if we take other types of legal forms of business for comparison. In order to register as an entrepreneur, a citizen needs to collect very few documents and pay a small state fee. Authorized capital is not needed, as well as any other constituent documents. Settlement account, printing — attributes characteristic of legal entities — are optional for private entrepreneurs (although in practice they are often necessary). Reporting to the tax and other structures is minimal. Preferential tax regimes an entrepreneur with the rights of a commercial entity can choose almost the same ones that are established for legal entities, i.e., STS, UTII.
This legal form of doing business does not classify an enterprise as a legal entity. In this regard, the IP is responsible for all its obligations as an individual, that is, in full. What unites individual entrepreneurs with legal entities? First of all, the right to hire workers, the obligation to issue them work books. Entrepreneurs can also invite contractors under civil law contracts. The legal form of business under consideration assumes that a citizen will own a business alone. It is impossible to give or donate a company (its share) in the status of individual entrepreneur.
One of the drawbacks of the status we are considering is that the entrepreneur needs to pay his own contributions to the PFR, FSS and MHIF, regardless of whether he has income. At the same time, if they are in sufficient quantity, the corresponding obligations will not be burdensome, since deductions to funds can be set off as part of the tax under certain taxation systems. Even if the entrepreneur is employed somewhere, and his salary transfers the statutory interest to the PFR, FSS and MHIF, then he must fulfill the obligation to pay the corresponding fees for himself. Moreover, the amount of payments to the respective funds may change every year, as Russian legislative practice shows. The significance of this factor varies greatly from one enterprise to another. For some firms, such volatility of norms is not critical, for others it plays an important role in the aspect of profitability. But for start-ups, of course, such payments can present some burden.
Partnerships
Partnerships along with business companies - these are legal forms of legal entities designed to give the correct legal status to entrepreneurs operating in the appropriate trust mode. The business is conducted on behalf of the partnership, the responsibility for the arising obligations lies with the founders of the organization.
This legal form is classified in two varieties. The first is full partnership. This type of organization assumes that none of its participants has the right to make transactions on its behalf related to the competence of the company without coordinating actions with colleagues. The relevant powers of the partner are determined by the power of attorney. Responsibility for possible obligations of the firm is assumed to be joint. The lender can collect the debt both from the organization and from each of its founders.
The second legal form within the framework of this category is a limited partnership. She assumes that the structure of the commercial structure will also be attended by investors, or limited partners. They are also responsible for the emerging obligations of the company, but only within the limits of their contributions. Also, commandists are not entitled to participate in key business decisions.
Partnerships are established on the basis of an agreement signed by all its participants. This document must comply with the provisions of the 70th and 83rd articles of the Civil Code of the Russian Federation. In particular, in the contract it is necessary to fix the size and nature of the share capital, the share of participants, the size and conditions of deposits, register the founders' responsibility for refusing to make payments, etc.
The legal form of organization under consideration is characterized, first of all, by a very high level of responsibility of participants for possible obligations to creditors and other persons.In practice, business in this format is conducted mainly by people who can work in an atmosphere of complete mutual trust, for example, members of the same family.
Specificity LLC
One of the most popular legal forms of doing business in the Russian Federation is a limited liability company. It involves the establishment of an organization through an agreement. It is also necessary to create the charter of the LLC. In this case, the owner of the company may be one person. LLC is a full-fledged legal entity. Its distinctive specificity is as follows: responsibility for emerging obligations does not lie with the founders, but only with the assets of the company.
For the establishment of the LLC also need authorized capital - at least 10 thousand rubles. As a rule, opening a current account, printing is required. Tax reporting is somewhat more complicated than for individual entrepreneurs. The LLC should include no more than 50 co-founders. If a larger number of them is expected, it will be necessary to register an AO, or a production cooperative. The legislation of the Russian Federation provides mechanisms for the transfer of shares in the LLC, the withdrawal of participants from the organization, the sale of enterprises in an appropriate status.
Joint stock companies
If a business does not fit the status of an individual entrepreneur, partnership or LLC, or objectively has significant scales, according to various criteria, an entrepreneur can pay attention to such legal forms of enterprises as a joint-stock company (JSC), as well as a public JSC. What are their specifics?
AOs, as well as LLCs, have registered capital. However, it is expressed not in the form of shares, but in the form of shares. If they are issued by public subscription, a special legal form arises - PAO (public joint-stock company). It can be noted that in this way AOs are referred to in many developed countries. Also, this legal form of organization may bear the same name if it prescribes the corresponding status in the constituent documents. Lawyers recommend the founders of joint-stock companies to fix it if a subsequent issue of subscriptions for shares is planned.
It can be noted that “ordinary” and “non-public” JSCs appeared recently - after amendments to the Civil Code of the Russian Federation in 2014. Prior to this, the relevant structures were referred to as CJSC (a certain analogue of a “non-public” company) and OJSC (prototype of a “regular” AO). It can also be noted that in the process of reforming civil legislation, some unification of the LLC and JSC statuses was carried out, in the sense that such a constituent document as the Charter became uniform for both types of societies, drawn up according to the general scheme.
As in the case of LLCs, the shareholders of the JSC are not personally liable for any obligations arising to the organization: certain penalties are possible only from assets in the form of securities.
Production cooperatives
These legal forms of enterprises may also be called artels. They are a voluntary association of entrepreneurs with the aim of jointly conducting business in the field of production, processing, sale of products, rendering of services, performance of work, trade, etc. The personal labor participation of the founders of the cooperative is expected, as well as the transfer of share contributions by them. Entrepreneurs conducting activities within the framework of this legal form bear additional responsibility for obligations arising in accordance with the provisions of the law and the charter of the organization. The minimum number of participants in a cooperative is 5 people. Property owned by the organization is divided into units, as well as in accordance with the charter, which is considered the main constituent document.
The legal form of business under consideration is quite common in agriculture. At the same time, many farmers prefer to conduct joint activities in the form of other forms of cooperation. Consider one of the most common.
Peasant farming
The Civil Code of the Russian Federation provides for such a form of conducting joint activities as peasant (or farming) farming. Its main feature is that the property is jointly owned by the organization. Also, a farmer cannot be part of more than one peasant farm at a time. The legal form under consideration for joint activities of citizens involves the creation of a legal entity. Organization members carry subsidiary liability on emerging obligations.
Registration Aspects
Most of the types of legal forms of business considered by us require state registration as a legal entity. This procedure is carried out at the place of registration of the relevant executive authority - the territorial department of the Federal Tax Service or another authorized agency, if for any reason the tax service is not present in the region of business.
The most important criterion for the state registration of business is the presence of authorized capital (for LLC, JSC), joint-stock (for partnerships) capital, as well as mutual funds (for cooperatives). These investments form the initial property of the organization.
As for the authorized capital for LLC and JSC, it consists of the value of the shares of the company (or shares). This value may be nominal, that is, the actual net assets of the firm may be higher. Many entrepreneurs prefer to form the authorized capital within the minimum values established by law, for example, for an LLC it is 10 thousand rubles. Following this rule, firstly, reduces the initial financial burden on the founders, and secondly, allows you to somewhat simplify the assessment of deposits. The amount of authorized capital for Russian companies shall be determined in the national currency of the Russian Federation - rubles. When conducting business in the form of an LLC or AO, it is the authorized capital that is the most important criterion in terms of payment guarantees determined by a possible creditor for the company.
Formation of the authorized capital
As a contribution to the authorized capital, which is required by such legal forms of enterprises as LLCs and JSCs, cash, securities or in-kind property may be used. Also, elements of the original ownership of a firm can be, for example, property rights that have a financial value. As for the authorized capital in alternative forms of money, its formation is approved at a meeting of the founders of a business company.
The participants in the LLC or JSC must have time to contribute their part of the authorized capital within the period determined at the level of the memorandum of association, but no later than one year after the state registration of the company. In any case, the founder cannot be relieved of the obligation to contribute his part of the funds or property to the charter capital of the organization being created.
It can be noted that the initial property in partnerships, unlike business companies, can be of any size. The legislation does not include provisions that would determine the minimum size of the respective assets in such organizations. This is quite logical: this legal form of business assumes that participants bear personal obligations. Accordingly, any penalties may be levied not only at the expense of pooled capital.
