The state creates special conditions for the work of small and medium enterprises. They get fewer with checks, they pay taxes at a reduced rate and can conduct more simplified accounting. However, not every company can be considered small, even if it occupies a small area. There are special criteria for small and medium-sized businesses, by which they are determined in the tax office.
The main criteria by which small and medium-sized enterprises are determined
There are three criteria for determining medium-sized businesses and small businesses. The first one is the volume of a share in the authorized capital of third-party organizations, foreign investors or the state. The second criterion is the number of employees. The third is annual pre-tax profit.
What is a small business?
A small business is an enterprise organized in the form of an individual entrepreneur, partnership, cooperative, LLC, which has an annual profit before tax of not more than 800 million rubles and a staff of up to 100 people.
One of the main advantages of small business is that in order to open a small enterprise it is not necessary to have large amounts of initial capital or to have a large base of potential customers. Thanks to this, he can work where large enterprises would fail. For example, in the production of unique goods, works and services.
What is a microenterprise and what are the definition criteria for it
Micro-enterprises are firms with less than 15 employees, and their annual income (profit before tax) is less than 120 million rubles. The same laws and regulations apply to them as to small or medium enterprises.
The main differences between medium-sized businesses
Another type of enterprise subject to preferential terms is medium-sized business. How many people should work in such an enterprise? Not less than 100, but not more than 250. The total profit before tax is 2 billion rubles a year. Medium-sized enterprises can operate in the same forms (LLC, IP, etc.) as small businesses, but they can also be opened in the form of an open or closed joint-stock company, provided that their securities are not quoted on stock exchange.
General terms and conditions for small and medium enterprises
There are criteria for small and medium-sized businesses that apply to both forms. This applies not only to the ability to maintain accounting records according to a simplified scheme, but also to the volume of documents required when registering a company. There are also restrictions for such enterprises regarding the share of other organizations in the authorized capital of the company.
Belonging to a particular category of business should be spelled out in accounting policies and the Charter of the enterprise. It is very important to make this record, since in its absence the company may not be recognized as an object of small or medium business. Then the businessman will lose the benefits that are provided by law for this category of enterprises. Although according to the latest amendments to the law on small and medium-sized enterprises, the tax authorities should automatically rank the company in one or another category based on the data of the tax return, in practice errors are possible. Then the businessman will not receive the benefits set for him. Therefore, in order to prevent such errors, it is better to indicate this information immediately.
With an increase in profit and exceeding its standard size for three consecutive years, the company moves from the medium to large business category. In this case, the businessman must make appropriate changes to the Charter and accounting policy.
Limiting the share in the authorized capital of third-party organizations for small and medium-sized enterprises
Small and medium enterprises can raise funds from outside organizations in their authorized capital. However, there are limitations for them. So, the share of funds received from foreign investors, the state, charity funds, should not be more than 25% of the total amount of the authorized capital of each. The same restrictions on the participation of other legal entities in the formation of the Criminal Code of religious and public non-profit organizations.
The maximum allowable percentage of the participation of firms that are not small or medium enterprises is 49%. These conditions are mandatory for everyone, except for enterprises that are engaged in the introduction of new technologies, computer programs of their own manufacture, as well as for those that are engaged in medical and educational services, the creation of scientific institutions, academies of sciences, budget organizations, etc.
Legislative regulation
Regulation and support of small and medium-sized businesses in Russia began with Presidential Decrees on the development of a special bill that clearly defined the criteria for small and medium-sized businesses by which they could be defined and separated from large enterprises. So, in 2007 the Federal Law “On the Development of Small and Medium Enterprises of the Russian Federation” was born. Subsequently, the law was edited several times taking into account economic changes in the country.
Another legislative act regulating the activities of small and medium-sized enterprises is the decree of the Government of the Russian Federation “On the Limit Values of Income Received from Entrepreneurship for Each Category of Small and Medium-Sized Enterprises”. This resolution indicates one of the three main criteria for determining small business, medium and micro enterprises. For micro-enterprises, the maximum income level is 120 million rubles of income per year. If it earns more, then it is considered to be small.
Previously, before the adoption of this law, firms engaged in this type of activity did not have any special conditions and had to keep tax and accounting records on a par with large enterprises. For their registration also had to collect an impressive package of documents. Today, thanks to the adopted law and regulation, it has become easier to open a business. Reduced administrative costs, the opportunity to register as an entrepreneur online on the website of public services.
Legal registration of small and medium enterprises
A small or medium-sized enterprise acquires its status only after registration and adding it to a special register. However, it can change its status if it ceases to meet the criteria for small and medium-sized businesses that are prescribed in the law. For example, with an increase in the number of employees, exceeding the income or share of another organization in the authorized capital. In order for a status change to occur, at least one criterion is sufficient. The transition occurs automatically. However, the businessman should nevertheless clarify this issue with the tax service. You may have to change the Charter of the enterprise and change the accounting policy.
Small and medium business as an engine of the economy
The peculiarity of small and medium-sized businesses is that their work does not require large material and managerial resources. At the same time, small and medium enterprises solve two main tasks of any modern state: they create jobs and increase the total volume of goods, works and services produced in the country. For example, in the United States, small and medium-sized businesses create two-thirds of all jobs. Even giants such as Apple, Microsoft, and Amazon started out as small businesses.
In Russia, despite strong government support for small and medium-sized businesses, these forms are still in their infancy. According to the country's leading economists, the main reasons for the weak development of small and medium-sized businesses in the country are high loan rates, too frequent changes in tax legislation and the negative attitude of the majority of the population towards business as a kind of activity.
State support of small and medium enterprises
The main differences between small and medium-sized businesses are not only low administrative barriers, but also a whole series of tax breaks, subsidies issued both for opening and developing a business. Since the beginning of the law on small and medium-sized enterprises, the state has provided the following benefits to such enterprises:
- Small and medium enterprises introducing energy-efficient equipment are exempt from property tax.
- Firms working in the field of education and healthcare are exempted from paying income tax during the first 9 years of operation.
- Privileges for the privatization of leased real estate from the state.
- There are special social programs for obtaining subsidies for opening and developing small businesses.
- With the exception of certain types of activities (medical care, pharmaceuticals, education), small and medium-sized enterprises are exempted from unscheduled inspections, provided that during scheduled inspections in the past there were no violations.
Small and medium business is a good opportunity to start a business without breaking the law. Beginning entrepreneurs can take advantage not only of a simplified taxation regime, but also receive financial assistance from the state. Periodically, the state allocates funds to support small and medium-sized enterprises, which includes not only tax holidays, but also subsidies.