The implementation of commercial activities without registration with the tax authorities is punishable by law. Therefore, a citizen who regularly provides services or sells goods simply needs to register his business. Otherwise, a person can expect fines and even isolation from society for up to several years.
Definition
Entrepreneurship is an activity that is aimed at constant profit from the sale of goods, the provision of services or the performance of work. In order to prove the fact that a person is engaged in business, two essential circumstances are needed:
- systematic;
- benefit in the form of cash.
If a citizen more than twice a year makes a profit from the sale of things or the provision of any services, then, accordingly, he must register with the tax and pay contributions to the state treasury. Otherwise, such a business will be defined as illegal entrepreneurial activity. An individual will be punished in the form of administrative, tax or criminal liability. Everything will depend on the amounts received and the scale of production.
Violations
In the event that a citizen decided to engage in entrepreneurship, he must obtain a license if it is required (for example, banking, opening a gas station), and also register with the tax office as an individual entrepreneur. If a person does not fulfill these two conditions, then his business will be qualified as illegal entrepreneurial activity. In this case, the individual will be punished in the form of bringing to justice under Art. 171 Code of Crime.
Punishment
If a citizen systematically profits from the sale of things and the provision of services, but does not pay contributions to the state’s income and is not registered as an individual entrepreneur, his business is illegal entrepreneurial activity.
Punishment of an individual in this situation may incur one of the three types of liability provided:
- administrative (penalties here range from 500 rubles and reach 2000);
- criminal (isolation from society for a certain period, cash payments from the income of the guilty, arrest, compulsory work);
- tax (in case of violations identified, mandatory payments of the received amounts of 10%, but not more than 20,000 rubles, as well as 20% if the business was carried out for more than three months) are provided.
Law Enforcement Agencies
The following authorized state structures can identify the implementation of unregistered business in the established manner:
- police;
- tax office;
- prosecutor's office;
- antitrust service;
- trade inspection.
The fact of violation of the law should be recorded by the inspection authorities in the protocol. In addition, no more than two months should pass from the moment of detection and suppression of such an offense as illegal business activities. An individual can be punished in this situation only by a court decision.
Illegal business as a criminal act
In this case, a person may be held liable under Art. 171 Code of Crime. It occurs only if the law enforcement authorities reveal the receipt of income by a person in large quantities, i.e. not less than 250,000 rubles. At the same time, it is quite difficult for the police to convict a person in an illegal business, because for this it is necessary to conduct a control purchase for large amounts of money, which is quite problematic. That is why, not having sufficient evidence to open a case, they will not initiate it.
Criminal liability arises for causing particularly serious damage in the amount of 250,000 or more, and only after that, commerce is defined as illegal entrepreneurial activity. The punishment for an individual (2016) bears the following:
- a fine in the amount of up to 300,000 rubles or from the guilty income for a period of up to 2 years;
- obligatory work;
- arrest.
If commercial activities carried out outside the law entailed very large amounts of damage, then the penalties here are from 100,000 rubles and reach 500,000. In addition, the guilty person may be sentenced to isolation from society for up to five years, but with the least cash payments.
It is with these consequences that illegal business (RF) ends. Therefore, it is best for citizens engaged in commercial activities that bring them constant income to register with the local tax inspectorate as an individual entrepreneur and pay business contributions to state revenue.
CAO Responsibility
Provides a fine of 500 rubles and up to 2000 for illegal business activities. The case of bringing to administrative responsibility is considered by the justice of the peace. This can happen at the place of the offense or in the territory of the citizen’s residence, if he reports this. When a fine is imposed, its size will depend on whether the person first committed an offense or was already involved in an illegal business.
There are several types of offenses in the Code of Administrative Offenses:
- work without a license and violation of the rules for its use;
- commercial activities excluding tax.
Of course, the size of the fine will depend on the particular case. Work without special permission may be a more serious violation of the law than activity without registration. That is why fines are always imposed by the court in the study and consideration of the specific circumstances of the case. Law enforcement agencies, the trade inspectorate and the antimonopoly service can only detect such an offense as illegal business activities. The punishment is imposed on a person by the Code of Administrative Offenses in the form of a fine, which will be paid by a person only on the basis of a court decision.
Sanctions
If a person is engaged in business and has not registered in the established manner as an IP, then tax is considered as illegal entrepreneurial activity. An individual (2016) will be punished in the form of a fine in the amount of 20,000 rubles to 40,000. If we consider the percentage, this is from 10 to 20% of all income. If the deadlines for registration with the inspection are not met, an unscrupulous businessman faces a fine of 5,000 to 10,000 rubles.
Protection
If a citizen has received material damage from the implementation of a business that is outside the law, he can appeal personally to law enforcement agencies in order to bring the violator to justice. First of all, the tax inspectorate is interested in making as few illegal merchants as possible. As already known, the Tax Code provides for the responsibility of paying considerable fines for illegal entrepreneurs who have been carrying out their business for a long time without certain documents.
The illegal entrepreneurial activity of an individual is always aimed at obtaining a constant profit from the provision of services or the sale of goods. Such a business is not properly registered with the tax office. This entails unpleasant consequences in the form of payment of fines, and in special cases, imprisonment for the guilty person. Therefore, citizens who are faced with illegal commerce must necessarily report this to law enforcement agencies in order to protect themselves and their loved ones from buying low-quality items, products and providing services.
Registration
In order for an individual’s activity aimed at making permanent profit to be completely legal, he needs to register with the tax office at the place of residence as an individual entrepreneur. To do this, you must provide the following papers:
- written statement;
- check on the payment of state duty;
- passport;
- TIN and its photocopy.
Also, the person needs to determine the tax system. This must be done in order to pay contributions from the business was easier and in a smaller amount. If all the documents are collected and submitted to the inspection, the registration of the IP certificate will take only a few days. A citizen needs to take these actions in order not to pay a fine in the future for illegal entrepreneurial activity, as well as save his time and money.
Varieties
Not every activity for which citizens pay money can be considered entrepreneurial. A person can receive income from:
- use of their property (this may be the rental of housing or vehicles for rent for a day);
- sales of things - products, household appliances, furniture;
- the provision of services - hairdressing, massage, cosmetic.
Even if a woman made her hairdo familiar and received money from her for it, she is not obliged to immediately go to the tax office and register as an individual entrepreneur. Now, if this is her constant occupation, bringing a stable income, then in this situation it will be necessary to register. Otherwise, such a business is illegal entrepreneurial activity, the punishment for which can be up to several thousand rubles.
Arbitrage practice
It is quite difficult and not always possible to identify unregistered merchants to law enforcement agencies. But sometimes in practice there are situations when customers who receive low-quality goods themselves come to the police or the tax office.
An example from the case file:
The citizen asked her friend to help her make a beautiful and modern repair in the kitchen and in the bathroom. The latter agreed, because she is a professional plasterer-painter and receives a good income for such “shabbat”, although she officially does not work anywhere and is not registered as an individual entrepreneur.
After the woman completed her work, the customer asked her to whitewash the ceiling again, because it was not white and clean enough. The citizen did not agree, took the money and left. The customer contacted the tax authorities with a statement on holding the latter liable for an unregistered business and provided evidence that apartment renovation was the main income of her friend.
The tax inspectorate compiled a protocol, on the basis of which the court decided to bring the citizen to justice, which involves a fine to an individual for illegal business activities. In addition, the intruder had to register as an individual entrepreneur within five days.
In this example, it can be seen that the woman simply carried out illegal commercial activities using her own skills and abilities. But she did not want to pay taxes to the state, so she was fined by the court for illegal actions.
If a citizen constantly carried out poor-quality repairs in residential premises, as well as organizations and enterprises where the amount of income was considered impressive and reached, for example, 300 thousand rubles, then the perpetrator could be held accountable for such a criminal act as illegal business . 171 of the Criminal Code.