Today we will talk about what it is organizational and legal form of activity, and how to determine what organizational form to choose for business, what you should pay attention to.
So, the choice of the organizational and legal form of conducting business is one of the most important points that anyone who wishes to do so faces.
This will most directly depend on:
- simplicity and convenience of doing business;
- future business expenses associated with paying taxes, and therefore profit;
- degree and frequency of control by government agencies;
- quantity, frequency of submission and complexity of reporting that will need to be submitted to various government agencies;
- the need to maintain an accountant, cashier and other employees;
- many other important points on which success in future business greatly depends.
When thinking about which organizational and legal form to choose for your activities, you must take into account the following points:
- Do you plan to do business on your own or will you hire a manager (director)?
- Will you finance your business alone or will you attract partners/investors?
- How large will your business be, what is your planned monthly and annual turnover?
- What is more priority for your business: cash or non-cash payments?
- Are you considering selling your business in the future?
- etc.
The choice of organizational and legal form of activity will depend on these and other points. Before considering the main types of such forms, you need to understand what they are.
The organizational and legal form of activity is a form of conducting economic activity of an entity, enshrined in the legislation of the country, defining the rights and obligations of this entity, as well as the procedure for disposing of its assets and property.
Since this site is visited by residents of different countries, moreover, in each country the legislation changes periodically, I will not consider the choice of the organizational and legal form of activity in relation to some laws, figures, rates, etc. I will describe general points that are suitable for any country, but I strongly recommend that every businessman starting his own business closely study the current legislative framework relating to his type of business and the chosen organizational and legal form of the enterprise.
So, there are several organizational forms of doing business. The most common among them for small and medium-sized businesses are individual entrepreneur - individual entrepreneur (in a number of countries, private entrepreneur - private entrepreneur, sole proprietor - individual entrepreneur, etc.) and LLC - limited liability company. Most likely, you will have to choose between these two organizational and legal forms of activity. However, in some cases, such forms of doing business as a joint stock company (joint stock company) or an NPO (non-profit organization), or some others (cooperatives, associations, etc.) may be more suitable.
Let's consider all the main organizational and legal forms of activity, their advantages and disadvantages.
Individual entrepreneur, private entrepreneur (individual or private entrepreneur).
Individual entrepreneur (PE, FLP) differs from all other organizational forms in that a businessman can conduct commercial activities without creating a legal entity, on his own behalf. This is the simplest organizational and legal form of activity for small businesses.
Advantages of IP:
- An individual entrepreneur is the easiest to open and close compared to other forms of business;
- The costs of opening an individual entrepreneur are also minimal;
- No accounting required;
- Possibility to use simplified taxation schemes;
- An entrepreneur is the sole owner of his business.
Disadvantages of IP:
- An entrepreneur bears unlimited liability with all his property, incl. and personal;
- More difficult to obtain;
- It is more difficult to legally merge or separate capital from partners;
- You cannot exceed legally established limits on cash flows;
- In many cases, it is necessary to pay taxes and insurance premiums, even if the activity is not carried out or is unprofitable.
LLC (limited liability company).
A limited liability company is already an organizational and legal form of a legal entity, the simplest enterprise for doing business, so to speak. This form, like the individual entrepreneur, is very common for small and medium-sized businesses. The liability of the LLC founders is limited, as can be seen from the name.
LLC advantages:
- Ease of creating an LLC in comparison with other organizational and legal forms of legal entities;
- Makes it possible to competently distribute shares in the business between several founders;
- In many countries, an LLC can have 1 founder;
- The founders of an LLC do not risk personal property, but are liable strictly within the limits of the funds they contributed to the authorized capital of the LLC;
- The minimum possible authorized capital of an LLC is small;
- LLC, as an enterprise, can use bank credit services for legal entities, which, according to their terms, are more profitable than for individuals (IP);
- In a number of cases, an LLC can also operate under a simplified taxation system and at the same time not maintain accounting records, or maintain them in a simplified form;
- It is easy to sell an LLC as a business - it is enough to make changes to the composition of the founders.
Disadvantages of LLC:
- Disagreements may arise between the founders that are difficult to resolve (for example, if there are 2 founders with shares of 50% each, as is often the case);
- To make some decisions (for example, changing the founder), the consent of all other founders of the LLC is required;
- The costs of creating an LLC are higher compared to an individual entrepreneur;
- The procedure for closing an LLC is more complex compared to an individual entrepreneur (it often drags on for many months).
The organizational and legal form of the LLC legal entity is well suited for businessmen planning large turnover on bank accounts, planning to attract credit resources to replenish working capital. It makes sense to choose LLC for small and medium-sized wholesale trading companies, construction companies, transport companies, small and medium-sized manufacturing enterprises, large ones, etc.
JSC (joint stock company).
A joint stock company is a more complex organizational and legal form of a legal entity, which makes sense to use in the case where the financing of a business is planned to be carried out by attracting resources from a limited or unlimited circle of investors. These investors will become shareholders of the company.
JSC can be of two types: closed (CJSC) and open (OJSC). In the first case, the company's shares are distributed strictly among a limited number of founding shareholders; in the second, they are issued for free circulation and anyone can purchase them. Each shareholder has not only the right to receive dividends from the profits of the joint-stock company, but also the right to have a voice in the management of the company.
The joint-stock company maintains complete accounting records; in addition, it carries out all actions related to maintaining the register of shareholders. The JSC is required to publish its reports in the public domain, and register each issue of shares with a special government service. JSC owners need to have a highly qualified accountant and lawyer on their staff who will monitor all changes in legislation so as not to violate anything, because this entails considerable fines.
At the same time, a JSC is considered an organizational and legal form of an enterprise that is more protected from raiding than an LLC, especially if it is an OJSC with many small shareholders. In a joint stock company it is easy to leave the founders: to do this you just need to sell your shares. True, for this there must be someone willing to buy them.
JSC is an organizational and legal form of a legal entity, which is preferably used to create a large business. Large trading, construction, manufacturing, transport companies, banks, and financial structures are created in the form of joint-stock companies.
NPO (non-profit organization).
In some cases, it makes sense to use such an organizational and legal form of an enterprise as a non-profit organization. Already based on the name, an NPO cannot set as its goal making a profit: all funds earned by the company must be used to achieve its goals and objectives. Usually these are some kind of social, humanitarian, educational goals, etc.
At the same time, an NPO can conduct commercial activities, the profit from which will go to its founders, for example, in the form of salary payments.
Typically, non-profit organizations have many tax benefits: they can be exempt from paying income tax and VAT, which, of course, is used by businessmen to benefit.
In conclusion, I would like to note that in some cases it is possible to run a business without forming an individual entrepreneur or a legal entity, for example, this is how you can open a business.
This was general, introductory information about what an organizational and legal form of activity is, what main types of organizational forms are popular, what their pros and cons are. I hope that this will help you in general terms decide which organizational and legal form to choose for your business, but in detail, I repeat, you definitely need to study the current legislation.
That's all. Good luck in your business! See you at!
The right of a citizen to engage in entrepreneurial activity is guaranteed by the Constitution of the Russian Federation, according to which everyone has the right to freely use their abilities and property for entrepreneurial and other economic activities not prohibited by law (Article 34). But not everyone can be an entrepreneur. To become an entrepreneur, you must have initiative, have a creative attitude to business, be in constant search of unconventional solutions, be prepared to take risks and be responsible for your actions.
The presence of certain advantages for individual entrepreneurs in comparison with other organizational and legal forms of entrepreneurial activity (in the field of taxation, accounting, organization of labor relations, etc.) provides the real commercial meaning of doing business in the form of individual entrepreneurship.
Individual entrepreneur a legally competent citizen is recognized who independently, at his own risk and under his personal property responsibility, carries out entrepreneurial activities and is registered for these purposes in the prescribed manner (Article 23 of the Civil Code of the Russian Federation).
In the legal literature there is a proposal to abandon the unfortunate term “entrepreneurial activity without forming a legal entity” and the derivative concept “entrepreneur without forming a legal entity”, since these terms suggest the implementation of entrepreneurial activity with the formation of a legal entity. At the same time, as is known, participants in a legal entity do not carry out entrepreneurial activities (participation in a business company is another economic activity not prohibited by law). Entrepreneurial activities are carried out by the legal entity itself as an independent participant in entrepreneurial relations.
In this textbook, individual entrepreneurship is considered as an independent organizational and legal form of doing business.
Of interest is a comparison of individual entrepreneurship and professional activities carried out by citizens. For example, the activities of lawyers and private notaries are not entrepreneurial, which is directly reflected in federal laws (Article 1 of the Federal Law of May 31, 2002 No. 63-FZ “On advocacy and the legal profession in the Russian Federation”; Article 1 of the Fundamentals of Legislation of the Russian Federation on notaries dated February 11, 1993 No. 4462-1). The arbitration manager is not an individual entrepreneur either: in accordance with paragraph 1 of Art. 20 of the Bankruptcy Law, an arbitration manager is a subject of professional activity and carries out professional activities regulated by law, engaging in private practice. Unlike entrepreneurship, professional activity is not aimed at making a profit.
Based on the definition of entrepreneurial activity contained in the Civil Code of the Russian Federation, the necessary conditions for a citizen to engage in entrepreneurial activity are his legal capacity and state registration as an individual entrepreneur.
It is known that full legal capacity of a citizen occurs when he reaches 18 years of age (Article 21 of the Civil Code of the Russian Federation). As a general rule, it is from this age that a citizen acquires the right to engage in independent entrepreneurial activity.
The question of the moment when a citizen’s right to engage in entrepreneurial activity arises is debatable. There is an opinion that a citizen has the right to engage in entrepreneurial activity after reaching the age of 14. In favor of this point of view A.A. Tyukavkin-Plotnikov gives the following arguments. In paragraph 1 of Art. 27 of the Civil Code of the Russian Federation contains an indication that “a minor who has reached the age of sixteen... is engaged in entrepreneurial activity.” From the linguistic construction of this norm, the author draws a conclusion about the duration of the process of engaging in entrepreneurial activity by the time the possibility of emancipation occurs for a minor who has reached 16 years of age. Guided by the meaning of the above norm, A.A. Tyukavkin-Plotnikov concludes that the law allows minors between the ages of 14 and 16 to engage in entrepreneurial activity with the consent of their legal representatives. Being a supporter of the same point of view, V.V. Rovny writes: “If we take into account that the entrepreneurial activity of a citizen who has reached the age of 16 is one of the prerequisites for his emancipation, then... it should be recognized that the entrepreneurial legal capacity of a citizen arises with the consent of parents, adoptive parents or a guardian from the age of 14.”
I.V. Ershova believes that since, according to the Law on Registration of Legal Entities (subclause 3, clause 1, article 22.1), minors can register as individual entrepreneurs with the notarized consent of parents, adoptive parents, and trustees, minor citizens can also engage in entrepreneurial activity. At the same time, the author expresses the opinion that the minimum age for registering individuals as individual entrepreneurs should be 16 years of age, since it is with its onset that the legislation of the Russian Federation associates the possibility of bringing to tax, administrative, and criminal liability in the area of public relations under consideration. One should agree with the above point of view.
Since the condition for independently engaging in individual entrepreneurial activity (without the consent of legal representatives) is the presence of full legal capacity, it should be concluded that until the age of 18, only emancipated citizens and married citizens can carry out entrepreneurial activities without the consent of legal representatives when the law allows marriage before the age of 18 (Article 21 of the Civil Code of the Russian Federation).
Emancipation- declaring fully capable a minor citizen who has reached the age of 16 if he works under an employment contract or, with the consent of his parents (adoptive parents or guardian), is engaged in entrepreneurial activity. Emancipation is carried out with the consent of both parents (adoptive parents, trustee) by a decision of the guardianship and trusteeship authority, and in the absence of such consent - by a court decision (Article 27 of the Civil Code of the Russian Federation).
An emancipated minor has full civil rights and bears responsibilities (including independently being responsible for obligations arising as a result of causing harm), with the exception of those rights and responsibilities for the acquisition of which an age limit is established by federal law (clause 16 of the Resolution of the Plenum of the Supreme Court of the Russian Federation and the Plenum of the Supreme Arbitration Court of the Russian Federation dated July 1, 1996 No. 6/8 “On some issues of application of part one of the Civil Code of the Russian Federation”).
Note that the right to engage in entrepreneurial activity with incomplete (before reaching 18 years of age - in the absence of facts of recognition of a citizen as emancipated or marriage) or limited legal capacity is limited - for each transaction in these cases, the consent of the legal representatives of such entrepreneurs is required. There is no doubt that persons recognized as legally incompetent in the manner prescribed by Art. 29 Civil Code of the Russian Federation.
A citizen has the right to engage in entrepreneurial activity without forming a legal entity from the moment of state registration as an individual entrepreneur. The procedure for state registration of individual entrepreneurs is of a declarative nature (Chapter VII.1 of the Law on Registration of Legal Entities). State registration is authorized to be carried out by the Federal Tax Service of Russia. If the applicant submits all the necessary documents (clause 1 of Article 22.1 of the Law on Registration of Legal Entities) and there are no other grounds for refusal of state registration (clause 4 of Article 22.1 of the Law on Registration of Legal Entities), the tax authorities within a period of no more than five working days days must carry out state registration and enter information about the individual entrepreneur in the Unified State Register of Individual Entrepreneurs. State registration of an individual entrepreneur is carried out at his place of residence (Clause 3, Article 8 of the Law on Registration of Legal Entities).
Carrying out business activities as an individual entrepreneur without state registration entails administrative liability - a fine in the amount of 500 to 2000 rubles. according to Art. 14.1 Code of Administrative Offenses of the Russian Federation.
Thus, a sign of entrepreneurial activity and a legal condition for its implementation is the state registration of an individual entrepreneur. “Does this mean that the same activity - performing work, providing services, etc., carried out by citizens, as well as a group (self-registered in the form, for example, of a brigade) of citizens, but not registered in the manner prescribed by law - is not entrepreneurial?" - asks M.I. Cleandrov. And, analyzing the provisions of Art. 23 of the Civil Code of the Russian Federation, in particular, concludes that “from the position of civil legislation, an unregistered entrepreneur who, in fact, conducts entrepreneurial activity is not considered - officially - an entrepreneur, but if he must be responsible for his entrepreneurial obligations, he is still an entrepreneur , since he cannot say (at least in this case) that he is not an entrepreneur."
In Resolution No. 34-P of December 27, 2012, the Constitutional Court of the Russian Federation, in particular, indicated that the absence of state registration in itself does not mean that a citizen’s activity cannot be qualified as entrepreneurial, if in essence it is actually such .
Legal capacity of an individual entrepreneur practically equal to the legal capacity of commercial organizations. Individual entrepreneurs have the right to engage in any type of activity not prohibited by law, and when carrying out business activities that require licensing, if they have the appropriate license (for example, private security guards). The procedure for licensing entrepreneurial activities of citizens, as well as legal entities, is established by the Licensing Law and does not contain any specifics determined by the organizational form. Obviously, this approach is correct, since it is not the person who is subject to licensing, but the type of business activity.
Individual entrepreneurs have the right to enter into any civil contracts, with the exception of certain types of contracts when such exceptions are directly provided for by law. Persons engaged in individual entrepreneurship can be participants in general partnerships, as well as enter into agreements on joint activities (simple partnerships). To fully participate in business turnover, an individual entrepreneur has the right to have his own current account at a bank institution, a personal seal, a trademark that individualizes the products (services) he produces.
I would like to support what A.A. said. Tyukavkin-Plotnikov’s point of view on the need to provide an individual entrepreneur with the right to a company name, which in the current regulation in accordance with Art. 1473 of the Civil Code of the Russian Federation, only commercial organizations have the right to have. A citizen’s lack of the right to have a unique brand name can mislead other participants in business turnover and consumers of products (works, services), since in the territory of one administrative-territorial entity there may be several citizen-entrepreneurs with identical last names, first names and patronymics.
The cited author proposes to make other changes to the legislation that would help establish the truly full legal capacity of an individual entrepreneur, equating him in status to a commercial organization. In particular, this is a proposal on the possibility of an individual entrepreneur having branches and representative offices, which should be stipulated in the Unified State Register of Entrepreneurs, since individual entrepreneurs may be interested in creating a place of state registration of stores, warehouses, and offices outside of the implementation of the state registration. Such a legislative solution could help protect the interests of the state, as well as participants in business transactions, since the current situation may lead to a citizen-individual entrepreneur concealing his property from fiscal risks and creditor claims (the bailiff may not know about the location property used by a citizen for business purposes). A.A. Tyukavkin-Plotnikov also proposes to introduce into business legislation a requirement that an individual entrepreneur must have reserve capital and determine its minimum amount. The last sentence, from our point of view, is unnecessary to ensure the interests of creditors, since an individual entrepreneur is liable with all his property, and not just the reserve fund.
The legal capacity of a citizen-entrepreneur is general and not limited. This conclusion is explained, firstly, by the general nature of the legal capacity of any individual; secondly, by the fact that, according to paragraph 1 of Art. 22 of the Civil Code of the Russian Federation, the legal capacity of an individual, including an individual entrepreneur, cannot be limited except in cases and in the manner prescribed by law.
The status of an individual entrepreneur is determined based on the fact that, along with commercial organizations, he is a full participant in business turnover. S. Zinchenko, V. Galov, rightly believing that the status of a citizen and an individual entrepreneur are different, write that for citizens to participate in business turnover, their civil legal capacity is not enough. They acquire the status of an individual entrepreneur, which contains the opportunity to use the properties of a legal entity as a necessary prerequisite for participation in the sphere of circulation and economic turnover.
Today, any citizen who has reached the age of majority and has minimal assets can choose the organizational and legal form of an individual entrepreneur. Meanwhile, when going for registration, a citizen of the Russian Federation must clearly understand which option will be most beneficial for him: to register an individual entrepreneur or a legal entity.
Each option has its own range of advantages and disadvantages. The choice is up to the citizen. After all, when it comes to running a business, no one wants to go broke.
Basic provisions of IP education
The organization of individual entrepreneurs is regulated by many provisions, which you need to familiarize yourself with before contacting the appropriate authority.
In particular, an individual business entity is deprived of a company name. In all documents only his full name will be indicated. This point is important to consider when ordering your own seal or stamp. If you absolutely want the name of the company to appear in the documents, you will have to register as a legal entity.
An individual entrepreneur is registered exclusively at his place of residence, that is, registration. A foreign citizen can also register in this way, but only if he has a registration for a period of at least 3 years or a residence permit. In addition, it is important to understand that an individual entrepreneur is responsible for his actions with the property that belongs to him. If such risks are not included in the plans, it is better to opt for an LLC or CJSC. Here personal assets will be reliably protected.
When planning to become a business entity, a citizen is recommended to have basic knowledge of taxation and reporting procedures. Of course, you can hire an accountant for these purposes, but such a pleasure will not be cheap. And is it worth it to involve a stranger in the affairs? The report in the IP is quite simple, and anyone with basic knowledge of mathematics can easily master its principle.
However, the organization of individual entrepreneurs in the Russian Federation involves several types of management systems. The first of them is the leader and founder in one person, who independently makes all decisions. This scheme is associated with a huge number of risks, for which not every person is able to take responsibility. In this case, the second option, allowing the hiring of a director, may be a salvation.
Before registering as an individual entrepreneur, it is important to understand how responsible this process is and what risks it may bring.
If it is not possible to resolve this issue on your own, it is advisable to seek help from a professional lawyer who will not only tell you about all the intricacies of each organization, but will also help you choose the appropriate option.
What does IP contain?
In order to clearly determine whether it is worth opening an individual business, you should determine for yourself all the advantages and disadvantages of this process.
Among the positive features the following provisions can be highlighted:
- work on a simplified registration and termination system;
- the minimum list of required documents to start functioning; you can open an individual entrepreneur much faster than an LLC or CJSC;
- minimum reporting (however, it must be submitted on time);
- no need for accounting - the entrepreneur himself can handle the reports, but for this it is necessary to adopt at least basic knowledge of accounting.
At the same time, individual entrepreneurs may encounter a number of difficulties, the presence of which must be taken into account when registering:
- some legal entities refuse to cooperate with individual entrepreneurs (there is no basis for such a refusal, but there is an unspoken similar rule);
- in the event of a crisis, entrepreneurs will pay with their personal property;
- responsibility between several founders cannot be distributed and notarized - obligations for the work will be assigned to each equally;
- inability to attract investment from outside, because entrepreneurs are extremely reluctant to invest in individual entrepreneurs;
- it is impossible to sell an individual entrepreneur, it is only possible to sell personal assets by simply transferring them to the buyer, who, in turn, will be forced to open his own individual entrepreneur;
- It is almost impossible to donate or transfer ownership of an individual entrepreneur, because this involves lengthy paperwork.
Any business is, first of all, a huge responsibility and impeccable knowledge of your own rights. Before you begin the registration procedure, you need to soberly weigh the pros and cons in order to finally understand whether the game is worth the candle or not.
Russian enterprises can operate within a wide range of organizational and legal forms. The legislation of the Russian Federation allows citizens to engage in business in statuses optimized for the specifics of production, turnover, number of co-founders and the need for additional financing. What are the features of organizational and legal forms of doing business in Russia? How to choose the optimal format for carrying out commercial activities?
Classification of organizational and legal forms
Russian entrepreneurs are often faced with the problem of choosing the optimal organizational and legal form of doing business. What options do they typically explore? There are not many of them. The organizational and legal forms of enterprise activity, which are provided for by Russian legislation, may include:
- activity as an individual entrepreneur (IP);
- business in the form of an LLC;
- activities in the format of a joint stock company;
- joint cooperation in the form of cooperatives, peasant farms, partnerships.
It may be noted that in rare cases, it is also permissible to conduct a business in the status of an individual without registering as an individual entrepreneur. But even if there were more opportunities for this, such activities, as a rule, are less profitable for the entrepreneur from a tax point of view. Therefore, the organizational and legal forms of entrepreneurial activity that we listed above are more preferable. Let us consider in more detail the essence of each of them.
IP
A fairly popular organizational and legal form of doing business among Russian entrepreneurs is the individual entrepreneur. The prevalence of this option is mainly due to the ease of state registration. In order to become an entrepreneur, a citizen must collect very few documents. The costs associated with registering as an individual entrepreneur are also small. It is not necessary to have a seal. There are no legal requirements to open a bank account (although this is, of course, recommended for ease of interaction with suppliers and clients).
The peculiarity of this 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, individual entrepreneurs can pay taxes in modes that are typical for legal entities.
One of the advantages of running a business as an individual entrepreneur is that a person, having paid tax within the framework of the chosen scheme, can subsequently dispose of the remaining amount at his own discretion. It is very easy, therefore, to withdraw proceeds for personal use in order to spend them in any desired way.
Another useful aspect of conducting business in this status is the minimal burden on individual entrepreneurs in terms of reporting. Other organizational and 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 their parents, Russians from the age of 14 can also engage in business. If a person is in the civil service, then he has no right to register as an individual entrepreneur.
An individual entrepreneur can hire other people, issue work books for them, pay wages, and create work experience for hired employees. A sole proprietor always owns his business solely. You cannot give or sell your share in the enterprise to someone - this organizational and legal form does not allow this. And therefore, many Russian businessmen willingly engage in activities as individual entrepreneurs.
However, working in such a status has a number of disadvantages. For example, individual entrepreneurs must in any case pay fixed insurance contributions to the Pension Fund, Social Insurance Fund and Compulsory Medical Insurance Fund. This is usually not a problem if the entrepreneur has good turnover: the corresponding fees to the state treasury are counted as part of taxes and are therefore not noticeable. But even with zero revenue, the individual entrepreneur must pay them. And if, for example, a person for some reason does not engage in business for some time, he is nevertheless obliged to transfer contributions to the treasury. Even if he is employed somewhere and the employing company transfers the required percentage from his salary to the Pension Fund, Social Insurance Fund and Compulsory Medical Insurance Fund, this obligation remains.
Business in the form of an LLC
Another common organizational and 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. An entrepreneur, owning an LLC, does not bear personal responsibility for obligations, unlike an individual entrepreneur (not counting contributions to the authorized capital). Also, participants in societies of this type are not required to pay contributions to the Pension Fund, Social Insurance Fund and Compulsory Medical Insurance Fund.
An LLC is a full-fledged legal entity. Its state registration is somewhat more complicated than in the case of an individual entrepreneur. An authorized capital of at least 10 thousand rubles, in most cases a bank account, and a seal are required. Reporting for LLC owners is usually more complicated than for individual entrepreneurs.
One more nuance - you cannot simply withdraw proceeds, as in the case of an individual entrepreneur, even if tax has been paid on it. You will have to formalize it as dividends or even in the form of a salary (with which, in turn, it is necessary to transfer contributions to the Pension Fund, Social Insurance Fund and Compulsory Medical Insurance Fund).
LLC specifics
This organizational and legal form of a legal entity, such as an LLC, is among the most common in the Russian Federation. Therefore, let's look at 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 the 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, turns out to be 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 must be (also due to the provisions of the law) liquidated. LLC can be transformed into other organizational and 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 this is provided for by the company’s charter. It is also possible to sell the relevant part of the business. The considered organizational and legal form of a legal entity does not imply the exit of 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 pre-emptive 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
This organizational and legal form of activity, such as a joint stock company, is mainly in demand by those entrepreneurs who plan to develop a large business. A joint-stock company is a commercial structure that also has an authorized capital, but it is issued in the form of shares, which certify the obligatory nature of the rights of the company's participants. Therefore, undergoing state registration and maintaining records within a JSC is somewhat more difficult than under an LLC, not to mention an individual entrepreneur.
JSCs, according to Russian legislation, 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, amendments were made to the regulatory legislation, according to which JSCs began to be classified into ordinary and public.
Public and ordinary joint-stock companies
Such an organizational and legal form as a public joint stock company, according to the Civil Code of the Russian Federation, is characterized by the following features.
- Firstly, shares and other securities that are issued by the organization, are placed publicly (through open subscription), and are also traded on the market in accordance with the provisions of legal acts regulating the circulation of relevant trading instruments.
- Secondly, the founders of a joint-stock company have the right to indicate public status in the organization’s charter, as well as in its corporate name, even if its activities do not meet the first criterion.
Other JSCs are not considered public. That is, they are simply called societies. But if the plans of the organization’s leaders are to issue shares, which will then be publicly subscribed, then they should still indicate the status of a public company in the charter.
Specifics of statutes
Reforms in civil legislation that took place in 2014 predetermined some features of the drafting of organization charters. For example, two different organizational and legal forms of enterprises, LLC and JSC, may have uniform constituent documents, since their only legal form has become a charter, which can be developed in accordance with 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 societies. Following 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 organizational and legal forms of business. For example, partnership. What is unique about this format of business activity? The definition of partnerships and business entities (LLC and JSC) is contained in the same provisions of the Civil Code of the Russian Federation. That is, the organizational legal form of activity under consideration is a legal entity that has an authorized capital.
Partnerships are either full or limited. In organizations of the first type, people are engaged in business and bear subsidiary liability for emerging obligations. Limited partnerships (limited partnerships) are organizations that include investors (or limited partners) who are liable to the extent of their contributions.
Consumer cooperatives
The Civil Code of the Russian Federation provides for such a form of doing business as a consumer cooperative. Organizations of this type are voluntary associations of individuals or legal entities within which the property share contributions of participants are consolidated. How the corresponding amounts should be paid is determined by the charter of the consumer cooperative. Participants of the organization bear subsidiary liability for arising obligations within the limits of the unpaid share of the additional contribution.
Producer 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 the charter may also provide for the participation of legal entities) for the purpose of organizing joint production, processing or marketing of various types of products, performing work, providing services, and conducting trade. Personal labor participation of citizens is assumed. Members of a production cooperative, as a rule, agree on the payment of share contributions. The liability of the organization's participants is subsidiary, within the limits determined by law and the charter.
Peasant farms
Organizational and legal forms of entrepreneurial activity may be associated with the agricultural industry. You can conduct business in this area through a variety of statuses. The Civil Code of the Russian Federation provides, in particular, for the possibility of organizing joint peasant farming by citizens of the Russian Federation.
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 a peasant farm is that all property within this organization is jointly owned by the farmers who founded it. According to the Civil Code of the Russian Federation, a person can be a member of only one farm association. Citizens conducting joint activities within the framework of this organizational and legal form bear subsidiary liability for emerging obligations.
Choosing a form of doing business
What organizational and legal form might be optimal? If a person runs a business independently, does not hire people or forms a small company staff, then he can register as an individual entrepreneur. In this status, you can work with a minimum amount of reporting, without being distracted by bureaucracy and completely devoting your time to work. There are no problems with withdrawal of proceeds.
If a citizen runs a joint business with partners, then an LLC may be the best option. Once the company's turnover has grown, it would be nice to increase it further by issuing shares. In this case, you can pay attention to other types of organizational and legal forms of activity - a joint-stock company with securities by open subscription or a non-public joint-stock company.
In order to effectively consolidate labor, entrepreneurs can unite into production or consumer cooperatives or partnerships. If citizens are engaged in farming activities, then the joint establishment of a peasant farm may well be optimal for them.
These are the main types of businesses provided for by the legislation of the Russian Federation. Other organizational and legal forms of organizational activity, such as, for example, associations or NPOs, also allow you to engage in commerce. Government organizations are not prohibited from making profits either. However, taxation in the case where organizational and legal forms of organizational activity are involved is usually higher than when registering a legal entity, the status of which is more typical for a business.
Below is the table “Organizational and legal forms of entrepreneurship”. The first column indicates the form itself, the second - the type, and the third - its main features.
In general, the legal form is a form of owning and running a business. The amount of taxes you pay, the form of its calculation, the number and type of internal documentation and the general structure of the company will depend on which of them you register.
Organizational and legal forms of entrepreneurship. Table
The procedure for registering a business includes the mandatory choice of an organizational and legal form. Of course, you can always change the uniform. But this takes a lot of effort and time, and therefore the choice must be approached with the utmost seriousness.
Today, the current forms for small businesses are individual entrepreneurs and LLCs. They differ in the complexity of maintaining documentation and some provisions governing their activities.
The simplest form of doing business: individual entrepreneur
IP- Individual entrepreneur. Such a business is always managed by one person, while the rest are on the staff as hired workers. This means that all decisions depend only on the owner. But the responsibility also lies solely with him.
Recently, individual entrepreneurs have been allowed to conduct trading activities without a cash register. And from the documents, an individual entrepreneur can keep one book of income and expenses. If a business is declared bankrupt and the owner has outstanding loans for the development of the company, creditors have the right to compensate the debt with the owner's property. And this is absolutely all you have: an apartment, a car and the rest.
Limited Liability Companies
OOO– Limited Liability Company. A more complex form of doing business. It is created from the contributions of the founders, who are hereinafter referred to as investors. The Company must have a charter approved by the board of directors. The charter prescribes the internal rules, as well as the procedure for distributing profits. Typically, profits are distributed according to the size of the investment.
By the way, the contribution can be not only monetary. These can be any assets: premises, equipment, transport and even accounts receivable.
An LLC is required to have an authorized capital, the minimum value of which must be 10,000 rubles. This is a very convenient and practical item. After all, the LLC is liable for accounts payable only with its authorized capital. That is, if it is impossible to pay the full amount of the debt (bankruptcy), the Company pays the creditor its entire authorized capital, and the issue is considered closed.
Joint stock companies
Joint stock companies are an alternative to LLCs, only on a larger scale. There is also a board of directors, general director, charter and authorized capital. The main difference between a Joint Stock Company is that its entire value is transferred into shares. Initially, the owners of shares are investors, and the share of shares is equal to the share of the contribution. But over time, securities are resold, distributed by inheritance or in other ways.
Before September 1, 2014, joint stock companies were divided into Closed and Open. Nowadays, Societies are usually divided into Public and Non-Public. The meaning of both remains the same.
Public Joint Stock Companies (PJSC) can distribute their shares everywhere. The owner of securities can sell them to anyone.
Non-public Joint Stock Companies (NPJSC) are much closer to the structure of an LLC, since shares (as a formal confirmation of the contribution) can only be held by an employee of the company. That is, they cannot be sold at auction to a third party; they can only be cancelled, donated or sold to another shareholder.
Farming and cooperative
In the table of organizational and legal forms of entrepreneurship, a farm and a cooperative are indicated separately. And from the point of view of legislation, this is the correct division. But in practice both types are very similar. Moreover, farming can be called one of the forms of cooperatives.
Production cooperative is a union of people to produce a product. Moreover, the founders of the cooperative invest here not only their assets, but also their workforce, i.e. work the same as everyone else. This is typical in rural areas and small towns.
Farming. With Farming, everything is clear from the name. This is an association for working on rural land.
Partnerships: simple, full and trust
A partnership is an association of individuals and legal entities with one goal. Two or more persons can join the Partnership, and this union is valid until all participants leave it.
A simple partnership implies that all its members can continue their activities independently of the others. In a general partnership, on the contrary, all decisions must be made by a public meeting. Responsibility and expenses are regulated by the charter; if there is none, then a uniform law for all comes into force. According to it, partners must bear losses in proportion to the size of their contribution.
A limited partnership is a middle form of partnership that combines the provisions of both described above. A limited partnership (its second name) consists of general partners and limited partners. The former risk all their property and make all decisions, while the latter risk only their contribution, but do not make decisions.
