What is better to open: LLC or IP? Pros and cons of sole proprietorship and LLC. The difference between sole proprietorship and LLC

2024 Author: Howard Calhoun | [email protected]. Last modified: 2024-01-17 18:37

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.

IP is an individual who has been registered in the manner prescribed by law as an individual entrepreneur doing business.

LLC - a business company or association established by one or more persons, with a share capital.

This means that by registering as a self-employed person, you confirm that the entire business belongs to you. If it is planned that the management of a company or firm willto carry out several persons, 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 is also what documents are needed to register a business. To start working as a sole trader, you need:

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

To register an LLC, you will need more documents:

• registration form 11001;
• protocol or decision to form an LLC;
• charter in 2 copies;
• receipt confirming payment of 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 a certificate of ownership or a letter of guarantee from the owner).

Amount of 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 amount of 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 LLCsubject 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.

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 pen alty 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 end up suffering much less 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 is locatedorganizations. 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 the general taxation system for LLCs is applied) 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 what to transformsubsequently, an IP in an LLC will not work: you will have to create a new legal entity.

Investment attraction

The difference between sole proprietorship and 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 an authorized capital, 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 make your choice easier, we will combine the pros and cons of sole proprietorship and LLC into one table.

	Benefits	Flaws
IP	For registration, you need a minimum package of documents (certified by a notary application for registration, passport, receipt of payment of state duty). Already within 5 working days you willregistered with the local INFS.	There are certain types of activities that are not available for individual entrepreneurs (for example, banking or insurance).
	Until 2014, individual entrepreneurs were exempted from accounting in general, however, from January 1, 2014, under new laws, they must also submit all reports to the tax authority if necessary.	When a commercial debt appears, the IP is liable with all its property, including that which does not take part in the business (cottage, apartment, etc.).
	The lack of authorized capital allows you not to declare start-up capital when starting a business.	Revenue tax must be paid no later than 30 days from the date of payment.
	The advantages of individual entrepreneurs also lie in the peculiarities of tax accounting of activities: once a quarter it is required to submit a report of one form. In addition, entrepreneurs pay only one of the taxes: either personal income tax from activities, or the one dictated by the general taxation system for individual entrepreneurs.	If the turnover exceeds 3,000 minimum wages/month, the entrepreneur must also pay VAT.
	Opening requires minimal costs - 800 rubles of state duty that you pay to the notary.	At the beginning of the activity, paying a single tax can even cause losses.
	All IP profits are disposed of at their own discretion.	Disadvantagesbanking services - tariffs can reach 30% of the total turnover. It is almost impossible to get a loan from a bank.
	No need to obtain a wholesale and retail license.
	The difference between an individual entrepreneur and an LLC can also be traced during the liquidation period - in the first case, you can close the business within a couple of weeks.
OOO	The advantages of an LLC are, first of all, that the owner is liable for obligations to a limited extent (only in accordance with the paid share of the contribution).	LLC requires several times more documents, time and money (state duty is 4000 rubles) to register and start activities.
	It is possible to change the form of ownership, merge with another legal entity, reorganize the LLC into several companies.	A mandatory condition is the presence of authorized capital (which, however, can be symbolic).
	If there is no commercial activity, the legal entity does not pay any taxes.	The registration algorithm is much more complicated than in the case of IP, and liquidation can take many months.
	The Company reserves the right to open representative offices and branches in other countries and cities.	Having to pay a lot more taxes.
	LLC can be bought or sold by concluding an agreement inpresence of a notary.	The company is obliged to regularly report to the statistical authorities, keep a tax and accounting report.

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.