Which legal entity is better to open. Who pays and how much? How to make a choice: pros and cons

What is better to open: LLC or IP? Having decided to throw off the shackles of office slavery and no longer work "for your uncle", developing your own business, you should know that it must be legal from a legal point of view. That is, you need to register with the Federal Tax Service. And for this, first of all, you should decide which of these two options is more suitable.

Definition

To understand what is the difference between an LLC and an individual entrepreneur, and which of these two forms of doing business is better, you should first look into the Civil Code of the Russian Federation and read their definitions.

An individual entrepreneur is an individual who has been registered in the manner prescribed by law as an individual entrepreneur

LLC - a business company or association established by one or more persons, with an authorized capital divided into shares.

This means that by registering as a self-employed person, you are confirming that the entire business is wholly owned by you. If it is planned that several persons will manage the company or firm, it is more profitable to register an LLC - this form ensures the protection of the interests of each of the founders.

Documents required for registration

The difference between an LLC and an individual entrepreneur also lies in what documents are required to register a business. In order to start working as a sole proprietor, you need:

• application for registration, completed in form 12001;
• application for USN (if necessary);
• receipt for payment of state duty.

To register an LLC, you will need more documents:

• application for registration, drawn up in the form 11001;
• protocol or decision on the formation of an LLC;
• charter in 2 copies;
• a receipt confirming the payment of the state duty;
• application for USN (if necessary).

In some cases, in order to register a new legal entity LLC, you will need to supplement the main package of documents with an establishment agreement (if there are several founders), as well as papers relating to the legal address (a certified copy of the certificate of ownership or a letter of guarantee from the owner).

The amount of the state duty

Trying to understand what is better to open - an LLC or an individual entrepreneur, you, among other things, should pay attention to the fact that the size of the state duty for registering different forms of business will also be different.

In accordance with paragraph 1 of the 1st part of article 333.33 of the Tax Code of the Russian Federation, the creation of an LLC is subject to a duty of 4 thousand rubles. The same document determines the required contribution for those who plan to work as an individual entrepreneur - in this case, the cost will be much lower, only 800 rubles.

A responsibility

Of course, the difference between an individual entrepreneur and an LLC is closely tied to liability for obligations. So, individual entrepreneurs are liable with all the property that belongs to them, with the exception of that to which the penalty cannot be extended by law (Article 24 of the Civil Code of the Russian Federation). But the participants of the LLC bear only the risk of losses associated with the activities of the organization, within the framework of their shares in the authorized capital. At the same time, they are not responsible for personal property.

Administrative responsibility

What is better to open: LLC or IP? In studying this issue, one should carefully consider issues related to administrative responsibility. If any offense was committed by an individual entrepreneur, then, in accordance with the laws of the Code of Administrative Offenses of the Russian Federation, they are liable as officials. At the same time, the measures imposed on LLCs in such cases (for example, fines) are much higher than those applied to officials. That is, individual entrepreneurs brought to administrative responsibility, as a result, suffer much smaller losses.

Registration address

Individual entrepreneurs are registered at the place of residence, at the address of permanent registration, which is indicated in the passport. LLC - at the place where the sole executive body of the organization is located. In fact, in the second case, you will have to rent or buy a legal address, which will entail additional costs.

Features of taxation and withdrawal of funds from accounts

In terms of withdrawing money from a current account, doing business in the form of an individual entrepreneur is certainly a more convenient option. You can contact the bank at any time to receive funds in cash. In this case, your expenses will be limited by the amount of tax - 6% or 15% (if a simplified taxation scheme is used).

As for the LLC, the withdrawal of cash from accounts is rather problematic, and without appropriate justification, it is completely impossible. One of the possible ways is to pay dividends to a member of the organization, which are additionally taxed at a rate of 9% (personal income tax). In addition, as for individual entrepreneurs, it will be necessary to pay the amount of tax in the amount of 6 (if applicable for an LLC) or 15% (for the simplified tax system).

liquidation

Whatever one may say, this question should still be divided into two parts - official and unofficial. From a legal point of view, liquidation of an LLC requires about 3-4 months of time and up to 30-40 thousand rubles for various expenses. The liquidation of an individual entrepreneur requires much less financial expenses (on average, about 5,000 rubles) and time (up to 2 weeks). There are no problems at all with the unofficial closure of an IP, but in the case of an LLC, you will need additional expenses (depending on the appetites of the organization, the amount can reach 30-50 thousand rubles). It’s worth mentioning right away that it will not work to subsequently convert an IP into an LLC: you will have to create a new legal entity.

Attracting investments

The difference between an individual entrepreneur and an LLC can also be seen in how easy it is to find investors for a business of one form or another. Practice shows that it is extremely difficult for an individual entrepreneur to do this, because he does not have and, in fact, he acts on his own. The situation is complicated by the fact that the entire business belongs to a citizen, and therefore investing cannot guarantee anything to the investor.

In the case of an LLC, everything is much simpler. After all, at least a guarantee of the investor's interests can be his inclusion in the list of participants in the organization by buying out a share in the authorized capital.

Reputation and image

Here, IP again loses somewhat. Even despite the fact that with this form of business you are responsible with all your property, the status of an LLC in the eyes of partners and counterparties is valued much higher, and therefore many companies prefer to cooperate with such organizations.

Summing up

In order to simplify your choice, we will combine the pros and cons of individual entrepreneurs and LLCs into one table.

What is better to open: LLC or IP? In fact, it all depends on the situation and the scale of the future business. If you plan to work on a grand scale, cooperate with a huge number of companies and organizations, open branches and expand, attract new investors, then, of course, it is more profitable to open a full-fledged legal entity.

However, it is worth remembering that with all the costs of registration, if you change your mind at some point or something does not work out, you will remain in the red, and the closing process can take more than one month. The advantages of IP allow you to do this much faster and without serious expenses.

This question is asked by many businessmen at the beginning of their journey. In this article, we have collected information about the differences between IP and LLC.

You will not find advice here, because each case is individual, but this information will help you navigate and make a choice.

Registration of an individual entrepreneur or LLC

Already at this stage, one can understand how much more bureaucratic the work of legal entities is compared to entrepreneurs.

The registration package for an individual entrepreneur is just one application, a receipt for payment of the state duty and a copy of the passport.

To register a legal entity, in addition to the application and receipt of payment, do you need to provide at least the minutes of the meeting of the founders or the sole decision of the participant? a document on the basis of which a legal address and a charter are assigned.

An organization can be registered in any region where there is a rented premises or property. An individual entrepreneur is always registered at his home address and reports to the tax office at the place of registration, even if the business is conducted on the other side of Russia. The exception is business on UTII and PSN.

But entrepreneurs do not need to open a separate division to do business in another region.

Finally, the fee for registering an individual entrepreneur is only 800 rubles against 4,000 for registering an LLC.

Activities

Individual entrepreneurs do not have the right to engage in certain types of activities.

Among them:

Banking, investment funds, pawnshops, private pension funds, mutual funds, etc.;
. production and sale of alcoholic beverages (except beer);
. drug production;
. gambling;
. production, sale, repair, development and testing of aviation equipment;
. private security activities;
. media activities;
. production, trade in military equipment, weapons and their components.

Number of participants and management decisions: advantages of individual entrepreneurs and LLCs

If the business is organized not by one, but by several people, then only an LLC will allow them to officially fix the right to a share in the business.

The entrepreneur's business belongs only to him alone, and up to 50 people can enter the company, and everyone will be entitled to a part of the profit proportional to his contribution to the authorized capital. At the same time, any important decision will have to be coordinated with the rest of the participants and documented in the minutes of the meetings.

The individual entrepreneur makes all decisions individually and does not have to coordinate them with anyone.

If there is one participant in the LLC, then he also makes decisions alone, but must document the decisions.

Taxation and special tax regimes. Which is more profitable: sole proprietorship or LLC

The difference in tax rates is only in the general taxation regime: organizations pay 20% income tax, and individual entrepreneurs 13% personal income tax. For other taxes, the rates do not differ.

Both individual entrepreneurs and LLCs also have the right to apply special tax regimes. The exception is the patent system, which can only be used by individual entrepreneurs.

The simplified tax system for individual entrepreneurs is different in that entrepreneurs submit a tax return a month later than legal entities - not until March 31, but until April 30. Also, entrepreneurs can switch to the simplified tax system without complying with the income limit for 9 months of the previous year.

Tax reporting

For property, land and transport taxes, entrepreneurs do not submit tax returns. They make payments based on notifications from the IFTS.

Legal entities calculate the payment themselves and are required to submit declarations.

Accounting

In this matter, individual entrepreneurs have an advantage, which for many turns out to be decisive.

Individual entrepreneurs are not required to keep accounting records and submit financial statements.

For legal entities, these are mandatory procedures.

Cash discipline

Individual entrepreneurs are exempted from the obligation to observe cash discipline.

For them, the execution of incoming and outgoing cash orders, maintaining a cash book is a voluntary matter.

Profit withdrawal

Here, too, everything speaks in favor of individual entrepreneurship.

All the proceeds of a businessman belong only to him, it can be disposed of at any time and in any way. At any time, you can withdraw money from your current account and spend it at your discretion for any purpose, both personal and business-related. In this case, the income is taxed only once.

You can't just use LLC's money. The founder can receive them when paying dividends or wages (if he is on the staff of the organization or provides services under a contract). At the same time, the profit of the enterprise is first taxed depending on the taxation system, and then personal income tax is withheld from the part that was paid to the founder.

Replenishment of funds

Just as in the case of the withdrawal of profits, individual entrepreneurs are free to replenish their current account with personal money when necessary. This will not be considered income and will not be taxed.

You can replenish the company's current account with the founders' money only in strictly defined ways:

Additional contribution to the authorized capital;
. financial assistance of the founder;
. founder loan.

Responsibility for obligations

There are disadvantages for both IP and LLC.

The fattest disadvantage of sole proprietorship is that he risks almost all his property in case of failure. "Almost" everyone, because the last housing, land, livestock will not be taken away. More about inviolable property in paragraph 1 of Art. 446 Code of Civil Procedure of the Russian Federation. All other property, even not related to the business, the individual entrepreneur may lose if he cannot pay debts to creditors.

A limited liability company is called so because the founders are liable only to the extent of the property owned by the company.

There is one big "But".

This rule is valid only if the company has become insolvent due to external reasons beyond the control of the founders. If it is proved that the insolvency was caused by the actions of the founders, they will bear subsidiary liability. In this case, the personal assets of the company's participants will also be used to pay off debts.

Insurance premiums

Regardless of the amount of income and whether an individual entrepreneur conducts business or not, he must pay fixed insurance premiums for himself. Individual entrepreneurs, in addition to this, pay insurance premiums for employees.

An LLC pays contributions for employees, but if the company has one founder who works without an employment contract, then there will be no contributions.

Attracting hired labor

Both entrepreneurs and organizations can hire as many workers as they need.

At the same time, regardless of the status of the employer, it is necessary to withhold personal income tax from accrued wages, as well as transfer insurance premiums for employees at your own expense.

If there is at least one employee, the employer submits reports on insurance premiums to the IFTS, PFR and FSS. There is no difference between sole proprietorship and LLC.

Attracting investments

This is where organizations win.

An investor can become a member of an LLC and have a share in the profits.

An individual entrepreneur cannot give away a share of his business, so he will have to manage with loans and credits.

Penalties

It’s a shame, but often for the same violations, fines for individual entrepreneurs and LLCs are different.

Sanctions for organizations are stricter, while in addition there may be separate fines for managers and other officials of the enterprise.

liquidation

Having decided to stop the business, the entrepreneur must only write an application, pay off tax debts, submit reports and pay the state duty.

The liquidation of a company is a long story, which includes, in addition to paying a fee, several events:

Registration of a decision on liquidation, creation of a liquidation commission;
. filing an application with the tax office;
. publication in the State Registration Bulletin;
. notice to creditors;
. submission of interim and final liquidation balance sheets.

As soon as you decide what is better to open: an individual entrepreneur or an LLC, you can issue registration documents for free in

It is better to open an LLC or an individual entrepreneur - perhaps this is the first question that everyone who starts their own business asks themselves. Each of these two forms of enterprise organization has its strengths and weaknesses for the entrepreneur, and, for each, it is different, it all depends on the specific conditions and on what goals and objectives the entrepreneur sets for himself and his business.

The whole mass of differences, pros and cons, in order to understand whether it is better for an LLC or an individual entrepreneur, we will divide into three groups: organizational differences, economic differences and a group of differences based on legal consequences. An entrepreneur makes a choice after carefully evaluating all the differences, pros and cons of each form.

Organizational differences between IP and LLC

State fee for registration

IP - 800 rubles, LLC - 4000 rubles. The difference between an LLC and an individual entrepreneur is more than significant - it is five times more expensive to open an LLC! An entrepreneur should immediately keep in mind that, working in the form of an LLC, you may have to face the need to make changes to the constituent documents. There can be many reasons for this - a change in the number of founders, a change in legal address, the opening and closing of branches, etc. So, each such change must be registered with the tax service (registration and registration is carried out by the Federal Tax Service) and each time it will be necessary pay the state duty - another 800 rubles each.

Preparation of documents

When registering an individual entrepreneur, it is enough to write an application and present a passport. Everything - IP is ready. Opening an LLC is a bit more difficult. It is necessary to hold a meeting of the participants of the LLC regarding its creation, prepare the minutes of this meeting, and prepare the charter. If some property is contributed as the authorized capital, prepare an act of valuation of this property. All this must be handed over to the tax at registration. Of course, you can use the services of a law firm that registers an LLC: they will prepare everything for you. But you will have to pay for this - these are additional costs.

Seal and bank account

LLC must have a seal and a bank account. Making a seal and opening a current account are additional costs. Although they are insignificant, but at the stage of starting a business, this difference between an LLC and an individual entrepreneur can affect the choice of an entrepreneur. It is not necessary for an individual entrepreneur to start these business attributes. Although, of course, today it is difficult to imagine an entrepreneur who works only with "cash".

Authorized capital

It is not required for IP. For an LLC, you need at least 10,000 rubles. Although property can be contributed to the authorized capital of an LLC, which will then be used in business. Moreover, it does not have to be some kind of industrial equipment: it can be a computer, a cell phone, etc. When contributing property to the authorized capital, you need to prepare an act of its valuation, which will say something like the following: “We, the founders of an LLC, are contributing in the authorized capital of laptop LLC and estimate its value at 10,000 rubles.

Legal address

IP is registered at the place of residence of the entrepreneur. AT LLC charter the legal address must be recorded. It can be a rented office, you can also use the address of one of the founders of the LLC.

Number of founders

Sole Proprietor is the sole owner of the business. An LLC, unlike an individual entrepreneur, can be owned by several people, up to 50 (more - this will already have to register a joint-stock company). Moreover, the number of founders of an LLC can increase and decrease, but this will not affect the work of the company.

Economic differences between IP and LLC

This is the largest group of signs in terms of quantity and the most significant in terms of consequences, according to which, mainly, an entrepreneur will choose: an individual entrepreneur or an LLC.

Activities

LLCs are not limited to this. An individual entrepreneur cannot be engaged in the production and sale of alcohol (beer and beer drinks can be produced and sold both wholesale and retail). An individual entrepreneur will not be able to organize a bank, an insurance company, an investment firm, will not be able to open a non-state pension fund and a pawnshop. An individual entrepreneur cannot be a tour operator (you can be a travel agent). To engage in the production of aviation equipment, pyrotechnics and weapons, as well as some other activities, you will also have to register something other than an individual entrepreneur.

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Taking money out of business

For example, to spend on personal needs. If suddenly an entrepreneur wants to buy a new car, an apartment or go on vacation abroad, then, being an individual entrepreneur, he can easily take the necessary amount from the cash desk or withdraw from the current account and spend it as he pleases. The only restriction: the main thing is that there should be no debt on taxes and mandatory fees, for example, to a pension fund. You can't do that in an LLC. It may seem that if the LLC belongs to the entrepreneur, then the money, respectively, belongs to him, but in fact all this money is the property of the company and can only be used for the purposes for which this LLC was created. The founder can use the LLC's money and spend it on any personal needs in two ways: 1. Receive it as dividends. But, firstly, dividends are the net profit of an LLC, respectively, it is obtained only after paying income tax (20%). And secondly, dividends can be paid no more than once a quarter. 2. The founder can appoint himself the director of the LLC and assign himself any salary, receive it and spend it. But he must pay part of the salary in the amount of 13% to the budget in the form of personal income tax, and also pay all social taxes on the entire amount of the salary (about 30%).

Attracting investments and loans

If a business needs additional financial resources for development, then individual entrepreneurs are very limited in this compared to LLC. In fact, this is one of the important differences that you will have to pay attention to when choosing: IP or LLC. An individual entrepreneur can rely mainly only on his own funds, for example, on the money that a person saved up before he decided to start his own business. For potential investors, IP, as a rule, is not attractive. An individual entrepreneur for development can, for example, borrow money from friends. Or use the limited lending opportunities in banks: most likely it will be a small loan, for example, a consumer loan. Since individual entrepreneurs most often do not keep accounting records, accordingly, banks will not be able to assess the financial position of an individual entrepreneur in the same way as they do in the case of an LLC: assessment of the financial condition, calculation of financial indicators is carried out according to such reports as the balance sheet, profit and loss statement , cash flow statement and others that are in the LLC and not in the IP. Accordingly, individual entrepreneurs cannot count on serious financial support (investments and loans), but LLCs can. LLCs can also attract foreign investment, which is practically impossible for individual entrepreneurs.

Participation in tenders and public procurement

The provision of services and the supply of goods for government needs is a good opportunity for many companies for development and a practically guaranteed stable income. But for individual entrepreneurs, the opportunities to become a supplier for the state are very limited. Firstly, experience in similar work is almost always required. Secondly, reports again: balance sheets, profit and loss statements and others, which in the overwhelming majority of cases IP does not have.

Taxation system

Individual entrepreneurs and LLCs can choose any - the usual one, with the payment of all the usual taxes, simplified or pay UTII. The only difference here is that only individual entrepreneurs can switch to the patent system. Given this difference between individual entrepreneurs and LLCs, it must be remembered that the purchase of a patent is most suitable not even for small, but rather for micro-businesses, which are mainly engaged in individual entrepreneurs.

Mandatory insurance premiums

To the Pension Fund and the Social Insurance Fund. Individual entrepreneurs and LLCs pay these contributions for employees only when there are employees and they are paid a salary (an individual entrepreneur can work alone, and an LLC may not pay wages for various reasons at some time). However, the individual entrepreneur is obliged to make these payments on himself at all times, even when he works alone and even when the individual entrepreneur does not work.

Branches and representative offices

An individual entrepreneur can work in any region of the country, he does not have to open a branch. But an LLC, if you need to organize activities in another region, you will have to open your own branch or representative office there and register with the tax service of that region. And this is at least an additional cost, albeit insignificant.

Cash discipline

Ltd. are obliged to comply with it in full. SPs do not need to follow most of these rules. For example, individual entrepreneurs working under a patent may not use a cash register. If in this case the buyer needs a document confirming the payment of money, the individual entrepreneur can issue him any receipt at his discretion.

Liability and fines

If an individual entrepreneur or LLC is fined for something (for violating the rules of cash discipline, for example, or for violating the deadlines for submitting a tax return), then they will be fined in different ways: an individual entrepreneur, as an individual, and an LLC, as a legal entity. For an LLC, the amount of the fine will be 10 times higher.

Legal differences between IP and LLC

Prestige and reputation

There is such a stereotype: they say that a legal entity, LLC is more prestigious than a simple individual entrepreneur, that serious structures prefer to work with legal entities and dislike individual entrepreneurs. If we are talking about small and medium-sized businesses, then in general there is practically no difference. If we talk about more serious scales, then it will be easier for legal entities, including LLC. State structures, foreign companies indeed more often prefer to work with legal entities. In fact, it all depends on the specific circumstances.

Property liability of the founder

In business, as in any area of ​​life, at one moment something can go wrong: the business can go bankrupt, the finances invested in the business, including borrowed, other people's, may not return. And from the point of view of property liability to other persons (contractors, business partners, banks, investors, etc.), an LLC is more attractive than an individual entrepreneur. The fact is that an individual entrepreneur is liable for his obligations with all his property, regardless of whether this property is used in business activities or not. Moreover, the IP continues to be liable for its obligations with all its property even after the IP has ceased to exist: after the closure of the IP, they can take away an apartment (except for the only one for living), a car, money, valuables and everything else, due to which debts can be covered. The liability of the founder or founders of an LLC is limited by the size of the authorized capital, this comes from the very nature of an LLC - a limited liability company. An LLC is liable to creditors only with what has earned and is on the balance sheet of the LLC: money, equipment, securities, etc. The founders are not liable to creditors in any way, except for the contributed authorized capital. Most often, this liability is limited to a minimum amount of 10,000 rubles. But if suddenly the LLC goes bankrupt, and its money and authorized capital are not enough to pay all debts, then the founder may also have a subsidiary (additional) responsibility for paying off these debts, including at the expense of his personal property. But this can only happen when the founder gave some instructions to the management of the LLC on commercial activities, which eventually led to bankruptcy. That is, if the LLC went bankrupt due to the fault of the founder, and not because of the usual commercial risks.

Business sale

The founder of an LLC can sell his business to another person. To do this, you will need to amend the bylaws. IP for natural reasons cannot do this. An LLC, as a whole business, can serve as collateral for bank loans. For the same natural reasons, IP cannot be mortgaged to a bank.

Closure and liquidation

To close an individual entrepreneur, it is enough to pay the state duty and write an application to the tax office. The liquidation procedure for an LLC is much more cumbersome: it is necessary to hold a meeting of founders and prepare a decision on liquidation, issue an order to create a liquidation commission, appoint its head and members who will be involved in liquidation. It will be necessary to publish an announcement in a special publication “State Registration Bulletin” that the LLC is being liquidated. It will be necessary to notify all creditors in writing that the LLC is in the process of liquidation. This will be followed by an on-site tax audit, when tax officials at the LLC office will examine all tax documents. After that, not one, but two balance sheets will need to be submitted to the tax office: an interim liquidation balance sheet and a simple liquidation balance sheet. Depending on the size of the LLC and the volume of its activities, its liquidation can take months.

Differences between LLC and IP in one table

To make it easier to make a decision, it is better to have an LLC or an individual entrepreneur, we will present all the differences in a convenient comparative table.

In order to understand whether an LLC or an individual entrepreneur is better, an entrepreneur will have to carefully study all the above comparative characteristics, “try on” each of them for his future business. And the more carefully he does, the greater the likelihood of successful development. One small but true piece of advice that will help you choose whether an LLC or an individual entrepreneur is better: if an entrepreneur plans to engage in small commercial activities in a small or medium-sized business, earn money in order to provide for himself, his family, be financially and not only financially independent, then he pay attention to IP. If the entrepreneur has more ambitious plans and the corresponding confidence, register an LLC.