The current legislation grants the right to engage in entrepreneurship in the forms listed by it. One of them is a sole trader.

general characteristics

The legal status of an individual entrepreneur is the legal status of the specified category of citizens, which predetermines the scope of rights and obligations, the limits of responsibility and protection. The peculiarity is characterized in its duality as a citizen (individual) and as a subject commercial activities. Therefore, the rules governing the activities of corporations and individuals (citizens) are subject to application.

Significance for the status of an individual entrepreneur is the nature and type of activity, which involves the personal employment of a person duly registered as an individual entrepreneur.

Other qualities that the considered status possesses are:

• the entrepreneur acts on his own behalf;
• independence of commercial activity;
• the goal is to achieve an economic result, to make a profit;
• increased liability.

A citizen of the Russian Federation, a foreigner or a stateless person has the right to become an individual entrepreneur. This does not affect the general content of rights and obligations, with the exception of restrictions on types of activities. An individual entrepreneur can become a capable person, including a minor, subject to the conditions specified in the law. Thus, a 14-year-old teenager has the right to carry out activities within the framework of the status under consideration with the consent of his parents (guardians, trustees). Persons deprived of legal capacity due to mental illness or incapacitated for other reasons cannot be entrepreneurs.

We must not forget that some citizens are prohibited from engaging in entrepreneurial activities by virtue of the law or on the basis of a court decision (state and municipal employees, deputies, persons to whom such a measure of punishment has been applied, etc.).

For the legality of entrepreneurial activity, it is required to comply with the administrative procedure and register as an individual entrepreneur. State bodies, authorized to act the fact of obtaining the status of an individual entrepreneur, the tax authorities are named. Registration is done by entering State Register relevant information on the acquisition by citizens of the status of an individual entrepreneur, its closure, and other necessary.

Advantages of the legal status of an individual entrepreneur

The following main positive aspects of the considered status are distinguished.

Compared to commercial organizations:

• the legislation provides for a simpler administrative procedure for registration and termination of the status of an individual entrepreneur;
• Individual entrepreneurs are provided with more options for using the simplified taxation procedure, for example, a patent regime;
• the organization must necessarily have an independent balance sheet (estimate), accounting should be kept. Sole proprietors do not have this obligation. They only keep records of income and expenses for the fulfillment of tax obligations.
• using property in commercial activities, an individual entrepreneur is not obliged to separate it from the rest in any way, he and his family continue to use and dispose of it in the usual manner;
• It is easier for an individual entrepreneur to manage the income received from entrepreneurial activity. Participants (shareholders) of the organization, in order to make a profit, need to wait for the decision of the meeting, which is taken only if certain conditions are met.

Compared to ordinary citizens:

• obtaining the appropriate status in the manner prescribed by law eliminates the prospect of holding a person engaged in commercial activities liable for illegal business;
• it is not required to pay tax (personal income tax) on income received as a result of entrepreneurial activity;
• possibility labor activity not only as an individual entrepreneur, but also under an employment contract;
• expand the possibilities of concluding a large number contracts and increase profits, as many suppliers choose not to work with individuals, treating them as retail buyers.

Negative aspects of the legal status of IP

The capital of corporations is formed at the expense of contributions (contributions) of the founders (participants, shareholders), the rights of the latter to this property are terminated. With this capital, the organization meets the requirements of creditors. The founders are not involved in this process.

Individual entrepreneur does not make a separate accounting of property used in commercial activities, is liable in full to everything that belongs to him.

In addition, such a regime carries additional risks for individual entrepreneurs of the loss of property used for commerce. As a result of a divorce, the subsequent division of property or foreclosure on the spouse's debts, an entrepreneur may be left without the fixed assets with which he conducts business (vehicles, real estate, etc.). It is possible to avoid the occurrence of such problems by concluding an appropriate marriage contract.

An individual entrepreneur has the right to carry out a limited list of activities.

So, he is not entitled to sell alcohol (other goods: medicines, weapons, etc.), open an investment fund, transport passengers and goods on certain modes of transport (for example, air), etc. In case of violation of this prohibition, he is threatened with administrative or criminal sanctions.

The use of some simplified taxation systems requires the acquisition of an administrative patent, which leads to additional costs for the entrepreneur.

Regardless of the activity of entrepreneurial activity, from the moment of registration, an individual entrepreneur is obliged to regularly submit reports in the manner prescribed by law and perform other duties of business entities.

When hiring employees, an individual entrepreneur is fully covered by the status of the employer, including the relevant obligations provided for by labor and tax legislation (to maintain personnel records management, transfer personal income tax as a tax agent, etc.).

IP responsibility

If a person violates the current legislation within the framework of his ordinary commercial activities, he is subject to property, administrative, criminal liability. This risk is also present in individual entrepreneurs. At the same time, he becomes the subject of responsibility both as a businessman and as a citizen.

Administrative responsibility involves violations of both tax and labor, customs and other legislation. Practice shows that late submission of reports, payment of taxes, contributions to funds, and other administrative offenses become standard violations for an entrepreneur.

Due to improper performance of obligations under contracts, individual entrepreneurs are brought to civil liability, which in more than fifty percent of cases leads to court proceedings: when selling goods of inadequate quality (in relation to consumers), non-payment or delay in payment for goods. This type of liability is material in nature and involves the application of financial sanctions in the form of fines, penalties, and other compensation for harm.

For the commission of serious offenses in the field of business activities (crimes), an individual entrepreneur faces the risk of criminal liability as a citizen: for trade alcoholic products, weapons, other types illegal business. The size of sanctions under this type of liability is stricter than under administrative liability.

Features of protection of IP rights

A characteristic feature of the status of an individual entrepreneur is also recognized that if the dispute with his participation is of an economic nature, and the other party is also a business entity, it is subject to consideration by an arbitration court. And conflicts with citizens (consumers) or disputes in which an individual entrepreneur does not act as a businessman are the subject of court proceedings. general jurisdiction.

Thus, the dual position of an individual entrepreneur is also manifested in the features of the protection of rights, giving him the right to act both as a business entity and as an individual (citizen).

In addition to judicial protection, an entrepreneur has the right to use other methods of protection, in particular, in relation to acts of state bodies, to appeal against them in an administrative procedure.

In addition, IP is subject to the requirement to comply with pre-trial settlement of the dispute in the event of such a conflict from economic activity.

Termination of IP status. Bankruptcy

In the event that a citizen decides to terminate independent entrepreneurial activity, he has the right to take actions for voluntary closure. The loss of status occurs after the relevant information is entered into the USRIP in accordance with the administrative procedures established by law.

The presence of an entrepreneur in debts for taxes and other obligatory payments is not a reason for refusing to take actions to terminate his activities.

The liquidation of an individual entrepreneur provides for a simplified procedure compared to similar procedures for organizations.

The necessary registration actions are carried out by the tax authorities. After conducting checks, they make an entry about the termination of entrepreneurial activity by the person in the USRIP and issue a notice to the former entrepreneur.

In the event that an individual entrepreneur is unable to satisfy the monetary claims of creditors and / or pay taxes and other obligatory payments, he is declared bankrupt. Since October 1, 2015, the legislation on this issue has undergone changes.

Cases of bankruptcy of individual entrepreneurs or citizens who have lost this status in the presence of unliquidated obligations as a result of entrepreneurial activity are subject to consideration in the framework of arbitration proceedings.
Based on the results of a court decision to declare a person bankrupt, a legal procedure for the sale of property belonging to him is introduced, which takes place in accordance with civil procedural legislation, and the status of an individual entrepreneur is lost.

Entrepreneurs who want to implement their ideas and make a profit from it are required, first of all, to legalize their activities by going through the state registration procedure. At this point, difficulties arise with the choice of organizational legal form business. To make a decision, you need to weigh all the advantages and disadvantages existing forms organizations, but not everyone is aware of what it means to become an individual entrepreneur, and what is meant by its legal status.

Sole Proprietor - individual or legal entity

Those who have not come across the concept of "individual entrepreneur" before would like to figure out who an individual entrepreneur is - an individual or a legal entity. According to the definition given in Article 23 of the Civil Code of the Russian Federation, an individual entrepreneur is a citizen engaged in entrepreneurship without forming a legal entity. It turns out that an individual entrepreneur cannot be classified as a legal entity.

When registering an individual entrepreneur, a citizen not only retains his status as an individual - from the moment the enterprise is legalized, he acquires specific rights and obligations.

An individual entrepreneur has a unique legal status that combines the rights of ordinary citizens and legal entities

It can be concluded that individual entrepreneurs should be classified as a separate group of persons who have rights and obligations acquired in connection with the start of business management, but at the same time are equated with individuals in all other sectors of life.

Definition and characteristics of entrepreneurial activity

Entrepreneurship - an activity that is registered in accordance with applicable laws, begins as a business owner willing to take risks in order to regularly make a profit and consists in performing any work, providing services or selling goods to the population.

The main features of the work of entrepreneurs:

1. Only citizens registered with the tax authorities who have received the right to be called individual entrepreneurs apply for its implementation. If there was no registration, the activity does not cease to be called entrepreneurial, but is recognized as illegal. This should be understood in such a way that a person will not be relieved of the need to pay debts to those with whom he entered into an agreement, the fact that at the time of the transaction he was not an individual entrepreneur. The court will not be on his side.
2. Independence (organizational and property).
3. Extraction of profit (the list of methods for obtaining it is closed).
4. The presence of risk (in case of illiterate business management or by chance, circumstances may arise that will cause the loss of the property acquired by the individual entrepreneur).

Employees are not considered entrepreneurs - their activities do not have the above signs of entrepreneurship.

Legal status of IP

The civil legal status of an individual entrepreneur means the legal status of an individual entrepreneur in the field of commercial relations, which affects the list of his rights, obligations and the level of responsibility and determines their position in the system of legal relations, taking into account the specifics and nuances of their conduct economic activity.

The Constitution of the Russian Federation promises the citizens of Russia the freedom to use their own skills, ideas and savings to organize their own business or realize themselves in other areas of work, if this is not prohibited by Russian laws.

The Constitution of Russia gives every inhabitant of the country the right to use knowledge, skills and savings in order to carry out commercial activities permitted by applicable law.

The legal status of an individual entrepreneur is characterized by duality - at the same time, regulations related to all ordinary residents of the country and business entities are applicable to its work.

The right to engage in entrepreneurship arises from the date of registration of a citizen of the Russian Federation, a foreigner or a stateless person as an individual entrepreneur.

If a person wants to be engaged in cattle breeding or growing cultivated plants, entrepreneurship will take the form peasant economy, which is also not a legal entity.

The heads of a peasant (farm) economy are required to undergo state registration and obtain the official status of an individual entrepreneur

Entrepreneurial legal capacity and legal capacity appear at the same time, and the right to entrepreneurship is exercised exclusively independently - it does not happen that an incapacitated person becomes legally capable due to the fact that a legal representative has assumed part of his obligations.

The right to organize their business as an individual entrepreneur has:

• capable citizens (without obtaining anyone's consent);
• partially capable minor citizens aged 14 years and older (after obtaining the written consent of legal representatives, certified by a notary) and minors who have entered into an official marriage or emancipated by a court decision or guardianship and guardianship authorities.

The law prohibits the following groups of people from opening a company:

1. Those who are in the public service, law enforcement officers, the military.
2. Already registered IP.
3. Deprived of the right to conduct business on the basis of a court decision, if the ban has not expired.
4. The enterprise of which was forcibly closed, if 12 months have not passed after the entry into force of the court decision.
5. Those who have a criminal record or have been prosecuted in the past for criminal acts, after the commission of which it is legally impossible to engage in certain types business (for example, those convicted of murder do not have the right to open children's institutions) or entrepreneurship in general.
6. Stateless persons and foreigners who are on the territory of the country, without having legal grounds(temporary residence permit, residence permit).

The law limits individual entrepreneurs in choosing an occupation. For example, the alcohol trade is available only to business owners who have registered an LLC.

Individual entrepreneurs do not have the right to sell alcohol and medicines, to open a security company and to some other activities

The sole proprietor performs actions on his own behalf and is subject to the same legal regulations that apply to work commercial companies(unless it contradicts the essence of the legal relationship or legislative norms).

Individual entrepreneurs are given the right to enter into any legal commercial contracts. Also, business owners can participate in general partnerships and merge with firms and non-profit organizations for joint activities.

Individual entrepreneurs have the right to conduct business on their own, without the involvement of hired workers, or they can hire personnel for the enterprise.

Individual entrepreneurs have the right to hire employees or work independently without the involvement of hired labor

Individual entrepreneurs pay off the accumulated debts with all the property they own as owners - owned in full or by shares in joint ownership that are not involved in business affairs. Only the property listed in Art. 446 Code of Civil Procedure of the Russian Federation:

Features of the legal status of IP

There are no laws that would contain a complete description of the essence of the civil legal status of an individual entrepreneur. Regional laws are adopted with the expectation of the most active growth of small enterprises, but at the federal level there is no single normative act not accepted.

IP status occupies an intermediate position between the position commercial organizations and individuals. Individual entrepreneurs are participants in economic turnover who themselves have not formed any economic entity. In this regard, the legal status of an individual entrepreneur is special and has its own distinctive features.

Existing laws emphasize the special position of individual entrepreneurs, but they have to rely on a huge number of regulations in order to determine the rules and conditions for doing business.

IP rights and benefits

An individual entrepreneur has certain rights and has benefits established at the federal and regional levels. By the way, regional authorities often provide assistance to the development of entrepreneurship.

1. The right to engage in any legitimate commercial activity for financial gain.
2. IP in certain situations can act like individual. For example, when operating a car in the course of business activities, an individual entrepreneur transfers transport tax to the Federal Tax Service on an equal basis with all car owners.
3. The IP has the right to apply to Court of Arbitration(as an individual entrepreneur) and to the courts of general jurisdiction (as a citizen of the Russian Federation).
4. Income can be used in any amount for personal needs by the individual entrepreneur and his family.
5. IP is exempt from the calculation and transfer to the personal income tax budget.
6. The individual entrepreneur has the right to hire employees.
7. The law allows IP:
   • work on labor contract(but not in any position),
   • become a founder of an LLC,
   • establish or participate in public organizations,
   • exercise all the rights available to ordinary citizens.
8. An individual entrepreneur has the right to make his own seal imprint and open a current account, but is not obliged to do either one or the other.
9. An individual entrepreneur and members of his family have the right to use the property involved in the work of the enterprise for personal needs.

Responsibilities and Restrictions of the IP

The status of an individual entrepreneur imposes certain obligations on its owner, and from the side of the legislation some restrictions are imposed on its work:

1. An individual entrepreneur must pay taxes and fees in accordance with the terms of the taxation regime he prefers, as well as make payments to the FSS, PFR.
2. Individual entrepreneurs are required to submit reports on time as commercial firms.
3. Individual entrepreneurs must take on the role of tax and insurance agent for the employees they hire, withhold funds from their wages to pay insurance premiums and personal income tax.
4. Individual entrepreneurs are subject to a ban on combining business activities with public service, work in the prosecutor's office and other authorities.
5. An individual entrepreneur does not have the right to use real estate acquired during marriage if the spouse did not give him consent to this.
6. The law limits individual entrepreneurs in the choice of types of economic activity. In particular, they are prohibited from selling medicines and alcoholic beverages, as well as from opening a security agency.
7. The individual risks everything he owns. The property of an individual entrepreneur is not divided into personal and participating in business.
8. An individual entrepreneur is not entitled to transfer the right to engage in entrepreneurship by inheritance; after his death, only property passes to the heir.

IP and marriage contract

Family people who are going to register themselves as an individual entrepreneur should take into account one more thing related to property and future earnings. In addition to the fact that an individual entrepreneur is not entitled to use real estate purchased during the marriage without the prior consent of the husband (wife), in the event of a divorce, the income of the individual entrepreneur and the property used in the course of business management will be divided in half.

In the event of a divorce, half of the income of the entrepreneur and property involved in commercial activities will go to the former spouse

The fact that the registration of an individual entrepreneur took place even before receiving a certificate from the registry office will not matter. Therefore, if there is any doubt about the strength of family relationships, you should protect your business by signing a marriage contract, which would directly indicate the procedure for dividing possessions in the event of a break in family ties.

Acquiring the legal status of an individual entrepreneur

The right to open a company is associated with the need to pass the state registration of the business owner as an individual entrepreneur and register it with the Federal Tax Service of the Russian Federation.

Passing state registration as an individual entrepreneur is a sufficient condition for acquiring the status of an individual entrepreneur

To do this, it is necessary that the legal capacity of a person is not limited in relation to opening his own company:

• he must reach the age at which entrepreneurial legal capacity occurs;
• a potential individual entrepreneur should not hold the position of a state or municipal employee, judge, etc.;
• a citizen should not be limited in the ability to do business by a court decision;
• a person should not be declared partially or completely incompetent on the basis of, for example, a medical opinion that he has a mental disorder.

Registration is carried out at the place of residence and is a mandatory and sufficient condition for acquiring the official status of an individual entrepreneur. The procedure must be completed in the division of the Federal Tax Service of Russia serving the corresponding territorial entity.

Acquisition of the legal status of an individual entrepreneur by a minor

In Russia, not only persons who have reached the age of 18 have the right to become entrepreneurs, but also minors in the country. But for this they will need to comply with the requirements established by law.

The legislation of Russia allows minor citizens to register as an individual entrepreneur if there are grounds for recognizing them as capable

The right to register an individual entrepreneur for minors arises if there are grounds for declaring it legally capable:

1. Entering into a legal marriage (in the event of a divorce, legal capacity remains).
2. Emancipation (recognition as fully capable by the court or guardianship and guardianship authorities in the absence of parental consent).
3. Consent of both parents, adoptive parents or guardian to conduct business activities.

The minor must additionally attach one of the following documents to the standard set of papers:

1. Notarized copy of the marriage.
2. The decision of the guardianship and guardianship authorities to recognize the teenager as capable.
3. The decision of the court on the onset of full legal capacity.
4. Notarized written consent of legal representatives. If only one of the parents (adoptive parents) granted a business permit, the following is additionally provided:
   • death certificate of the second parent (if one of the parents has died),
   • a court decision on recognizing a citizen as missing (if the location of one of the parents is not established),
   • birth certificate without information about the father (if the child was brought up in an incomplete family).

In any case, a teenager cannot apply for registration as an individual entrepreneur until he is 14 years old. This is justified by the fact that Art. 28 of the Civil Code of the Russian Federation prohibits persons under the age of 14 from entering into transactions related to commercial activities. And for registration with the Federal Tax Service and registration of a company, a passport is required, which can be obtained no earlier than the specified age.

Termination of the legal status of IP

Termination of IP status is also associated with a number of conditions that must be met, and occurs at the time of putting a mark in Single register(EGRIP) on the completion of its activities by employees of the Federal Tax Service.

Do not confuse the concepts of termination and suspension of the IP - in the second case, the business owner does not carry out commercial activities for various reasons, but has the right to resume business.

The law allows an entrepreneur to refuse the status of an individual entrepreneur on any day by voluntarily refusing to continue working as such. For this you will need:

• draw up an application in the form P26001,
• provide a receipt for payment of state duty,
• submit tax return from the beginning of the last reporting period to the date of completion of the IP,
• report the completion of economic activities to extra-budgetary funds.

To terminate the status of an individual entrepreneur, in addition to own desire There may be other legitimate reasons:

• death of an individual entrepreneur;
• decision by the court to close the enterprise;
• recognition of an individual entrepreneur as bankrupt (insolvent) in a judicial proceeding;
• the entry into force of a court verdict, according to which a sanction is imposed on an individual entrepreneur in the form of deprivation of his rights to conduct business for a certain period of time;
• cancellation of a document (or expiration of its validity), on the basis of which a foreign citizen or stateless person resided in Russia on a temporary or permanent basis.

If one of the above reasons for closing a company occurs state registration IP is no longer valid. Refusal of the IP status does not release the former businessman from obligations under contracts that were signed during the operation of his enterprise.

Termination of activity as an individual entrepreneur does not release the entrepreneur from his obligations under contracts concluded during the period of work

Positive aspects of the legal status of IP

The organizational and legal form of an individual entrepreneur in some aspects of doing business, when compared with an LLC, has a number of concessions, plus an individual entrepreneur can exercise some rights that ordinary residents of the country are deprived of. Within the framework of this article, we will limit ourselves to the positive aspects of entrepreneurship, due to the specific legal status of an individual entrepreneur.

Advantages of an individual entrepreneur over ordinary citizens

The status of an individual entrepreneur expands the possibilities of an ordinary individual, largely due to the fact that:

1. An individual entrepreneur has the opportunity to conduct commercial activities, while concluding transactions and regularly making a profit.
2. Individual entrepreneurs do not have to pay personal income tax.

Advantages of individual entrepreneurs over legal entities

If we compare individual entrepreneurs and LLCs in terms of the advantages of the organizational and legal form, it turns out that in general it is easier for entrepreneurs to start doing business and further develop the business:

Disadvantages of the legal status of IP

Obviously, in addition to the advantages of the legal status of IP, there are also negative aspects:

Video: IP or LLC (pros and cons)

Speaking of legal status IP, it is necessary to supplement it with the rights and obligations of an ordinary citizen in parallel. People who want to organize their own business, but refuse to register themselves as individual entrepreneurs, are stopped by the fear of property liability. However, honest activity without attempts to evade obligations and a realistic view of the risks involved can protect the business owner from the adverse consequences of inept entrepreneurial work. In general, some aspects legal status Individual entrepreneurs contribute to the rapid development of business, while others hinder this. The main thing is to correctly use its advantages.

According to statistics, individual entrepreneurship (hereinafter referred to as IP) is the most common form of doing business. Less than half of new businessmen decide to register a legal entity. What is the reason for this trend?

Professional human rights activists decided to answer the question about the legal status of an individual entrepreneur. The specialists briefly described the status of individual entrepreneurs, highlighted the main advantages of the form of economic activity, and also focused on specific risks.

Comprehensive legal liability of an individual entrepreneur

Analysts consider the low legal literacy of people to be a serious problem for domestic business. According to the results of virtual Internet surveys, more than 70% of all users recognize IP as the safest form of commercial activity. Lawyers, on the other hand, take the opposite view.

Behind the apparent simplicity lies the full legal responsibility of an individual entrepreneur.

The differences lie in the peculiarities of the status of an entrepreneur. According to the Civil Code of the Russian Federation, a citizen who has registered as an individual entrepreneur remains an individual. This means that liability under business contracts extends to all of his property. If, in the event of bankruptcy of an enterprise, foreclosure is levied on authorized capital and property on the balance sheet of a legal entity, then in the event of the insolvency of the entrepreneur, the requirements will cover absolutely everything. As a result of an unfortunate mistake, a businessman risks losing:

• real estate, with the exception of the only residential premises;
• personal transport;
• valuable papers;
• luxury items;
• household appliances;
• family savings.

The list of losses is limited only small list values ​​described in Article 446 of the Code of Civil Procedure of the Russian Federation. Liability cannot be limited. Perhaps, the only way protection of the financial well-being of the family is the conclusion of a marriage contract. However, in this case, there will be no 100% guarantees.

Advantages of the legal status of an individual entrepreneur

What attracts start-up businessmen in individual entrepreneurship? The advantages of this solution, no doubt, are many. Among them:

1. 1. Ease of registration

Read also: Calculation of fixed IP contributions in 2019-2020 and earlier

Opening an IP takes only 3 days (changes in 2016). Preparation of a set of documents includes:

1. 1. • filling out a unified application form P21001;
      • a photocopy of an identity document (passport);
      • payment of state duty.

The amount of the fee has not changed and is only 800 rubles. Experts point out that even underage citizens can engage in independent economic activity. The age limit here is reduced to 16 years. The condition for registering young people as entrepreneurs is the consent of their legal representatives or emancipation. No written decision is required. With a personal appeal to the tax authority, an entrepreneur can avoid spending on notarization.

1. 1. Accounting and taxation

Persons registered in the status of individual entrepreneurs may refuse to maintain cumbersome records. This indulgence is dictated by the patronizing policy of the state. Businessmen have the right to independently fill out reports and calculate payments, while organizations are forced to involve a certified specialist in cooperation. In matters of choosing a tax regime, individual entrepreneurs have great rights. They are free to apply the USN, the patent system, or the DOS.

1. 1. Income management

Legal entities are required to report on each transaction with received funds. The founders are responsible for the distribution of profits. At the same time, dividends are subject to personal income tax. Entrepreneurs, on the other hand, are recognized as the owners of all income. They can spend the money received on the account or at the cash desk, without restrictions. No additional contributions to the state are required.

1. 1. Labor Relations

Entrepreneurs have the right to hire any number of employees. The only condition for the execution of contracts is registration in off-budget funds as an employer. We also draw the attention of novice merchants that the law does not oblige individual entrepreneurs to open a current account and use a seal. You can accept money using CCP, BSO. Moreover, the amount of administrative fines applied to entrepreneurs for violations is an order of magnitude lower. Closing an IP is easier than a legal entity.

Features of the IP status

Many beginners own business ideas, entrepreneurs are faced with the choice of the organizational and legal form of this business. And as a rule, they immediately face the need to compare the pros and cons of various forms of organization, and, consequently, the need to determine their potential legal status when choosing one or another option.

The legal status of an individual entrepreneur is not an entirely unambiguous question, since such a form of management as an individual entrepreneur combines the features of both legal entities and individuals.

Sole Proprietor is a natural or legal person

The first question, which is a stumbling block, is the question of whether an individual entrepreneur is an individual or a legal entity. To answer it, you need to refer to Article 23 Civil Code RF, which provides a definition for individuals leading entrepreneurial activity. So, an individual entrepreneur is a citizen engaged in entrepreneurial activities without forming a legal entity. Thus, current law unambiguously excludes individual entrepreneurs from legal entities.

At the same time, it is also impossible to unambiguously attribute individual entrepreneurs to ordinary citizens, since in connection with their participation in entrepreneurial activities they are endowed with specific rights and obligations.

Therefore, it would be more correct to define individual entrepreneurs as a separate category of citizens (individuals) who are not legal entities and persons, but who conduct entrepreneurial activities and, therefore, have special rights and obligations, but only in those areas that are associated with such activities, and in all the rest they act as ordinary citizens.

Features of the legal status of IP

As for the legal status of an individual entrepreneur, due to the duality of the position of an individual entrepreneur, the nature of his status is also dual - on the one hand, an individual entrepreneur participates in economic activities, but does not form any economic entity. Therefore, the list of rights of a citizen who has received the status of an individual entrepreneur has its own characteristics - these are:

• The most important right that gives the status of an individual entrepreneur is the right to conduct entrepreneurial activities.

  At the same time, there are restrictions on available for IP, for example, an IP cannot be engaged in the sale of alcoholic products or private security practice. Therefore, if you plan to start activities in such areas, you will have to.

• The legal status of an individual entrepreneur does not imply the division of a citizen's property into those participating or not participating in economic activities. This has both advantages (for example, you can use a personal car to generate income) and disadvantages - in case of default on obligations to creditors in payment of debts, it is possible to seize the property of an individual entrepreneur as a natural person. person (of the same car, apartment, land) even if this property was not used in business activities.
• An individual entrepreneur is obliged to pay taxes in a timely manner in accordance with, as well as pay mandatory taxes.
• If there are employees, the individual entrepreneur is obliged to act as their tax and insurance agent and pay for them to the relevant budget funds.
• In cases of litigation against persons having the legal status of an individual entrepreneur, the first thing to do is to determine who the citizen acted at the time of the offense - as an individual entrepreneur or as an individual. Depending on the determination made, the court case is transferred either to arbitration or to a court of general jurisdiction.
• In a number of regions, individual entrepreneurs receive support from local authorities authorities and receive certain benefits aimed at the development of small businesses.

Pros and cons of IP status

Naturally, the dual position of IP has both strong and weak sides Therefore, it is important to determine the advantages and disadvantages of the legal status of an individual entrepreneur.

Advantages of IP status

1. Expanded, in comparison with ordinary citizens, the rights and obligations of individual entrepreneurs - the right to conduct commercial activities.
2. Exempted from personal income tax.
3. Minimum costs for registration of IP status, a minimum set of documents.
4. Fines imposed on entrepreneurs are several times less than fines for legal entities.
5. A current account and a seal are not mandatory requirements for an individual entrepreneur.
6. An individual entrepreneur can independently manage the income received from the business (LLCs are forced to wait for the distribution of profits).
7. Facilitated mode of use of property - both the individual entrepreneur and his family members can freely dispose of all available property, without division into those used in commercial activities or not.
8. The ability to combine entrepreneurial activity with any other forms of relationships in society as an individual.

Disadvantages of IP status

1. An individual entrepreneur is liable for his obligations with his own property, therefore, the potential risks for citizens who are individual entrepreneurs are much higher than, for example, for participants in an LLC.
2. The obligation to pay taxes and submit reports for oneself, as well as the obligatory performance of the function of a tax and insurance agent for hired employees (if any).
3. The obligation to pay a fixed contribution to the FIU, even if there is no actual activity in the reporting period.
4. Restrictions on the types of activities available to individual entrepreneurs.
5. Subjectively, the preferences of many potential business partners are given in favor of legal entities, and not individual entrepreneurs.
6. If an individual entrepreneur starts a divorce process, then all property is divided equally between the spouses (unless otherwise provided by the marriage contract).

Thus, the dual legal status of an individual entrepreneur implies both advantages and disadvantages, which can both contribute to, and vice versa, interfere with the development of your business. The property liability of an individual entrepreneur, which stops many start-up entrepreneurs, in fact, should not be embarrassing if you are going to honestly and carefully conduct the business you have begun, do not try to evade your obligations and sensibly assess the risks from one or another investment option.