Often, when registering their business, many newly made entrepreneurs ask themselves the question of choosing the most convenient legal form for their future business. Some are also worried if the IP is a legal entity. There is no doubt that LLC will be better suited for medium-sized businesses, for a large ZAO or OJSC, and for small businesses, IE will be the best option.
Individual entrepreneurship is an economic activity that is aimed at the systematic receipt of income (profit) when using assets, providing services or selling goods. Such a business is conducted at your own risk, it does not require specific knowledge and experience in carrying out this type of activity.
Is an IP legal entity?
An entrepreneur can be any individual who registers with the state territorial tax service inspectorate and begins to conduct business without forming a legal entity.
Due to the fact that IP does not have the status of a legal entity, its activities fall under the regulations of the Civil Code. Nevertheless, an individual entrepreneur is equated with legal entities, as he conducts entrepreneurial activity, has the right to open his current account and choose an acceptable taxation system. In addition, he has the right to conclude contracts on his own behalf, stamp them and hire employees.
Answering the question whether an individual entrepreneur is a legal entity, it can be said that any capable citizen who has reached the age of majority, a person of a younger age can register as an individual entrepreneur, provided that parents, guardians or guardians consent to this activity or if the minor entered into marriage. Foreign citizens or stateless persons permanently residing in Russia also have this right.
You need to know that municipal and government employees cannot become entrepreneurs. Also, regardless of whether the individual entrepreneur is a legal entity or not, in the event that he conducts entrepreneurial activity without registration, he falls under administrative responsibility, and a fine may be imposed on this citizen. After that, he must end the illegal business activities.
IP Benefits
In the activities of IP there are some advantages that legal entities cannot have. This simplified management, registration and liquidation of entrepreneurial activity, saving on costs associated with the registration of IP status. An entrepreneur does not need to create a statutory fund: a person can start a business even without initial investments. To create an IP, a legal address is not required: it can be located at the place of residence. No need to pay rent, look for premises. Due to the simplified taxation system , an individual entrepreneur is not required to pay VAT, he may apply a single tax depending on the method of activity.
IP there is no need to hire an accountant and director, he can keep records, keep records and submit reports in a simplified manner, single-handedly manage and own revenues. For an individual entrepreneur, all earned money is considered his personal income, and in order to receive it from his account, he does not have to pay taxes on dividends that founders of legal entities deduct. In addition, the activities of the entrepreneur are counted in the period of employment.
Summing up, we can say that registration of IP is a great way to start your own business. With minimal expenses, you can earn money while doing what you like.