Nowadays, everyone knows the abbreviation IP - an individual entrepreneur. But not everyone imagines the legal status of this individual entrepreneur. The question is often asked: "IP - an individual or a legal entity?". Let's try to figure it out.
Who can do business?
According to the law, any commercial activity may be carried out with confirmation of one's own legal status in accordance with legislative acts. As you know, any type of business aimed at making a profit refers to entrepreneurial activity . In Russia, legal entities and individuals can deal with it .
As you know, the forms of legal entities are state (as well as municipal unitary) enterprises and commercial organizations. Another category that allows this same commercial activity is individual entrepreneurs. The Civil Code spells out in black and white: "An individual entrepreneur (IE) carries out its activities without the formation of a legal entity (legal entity)." But why, in this case, the question more often sounds: "SP - an individual or legal entity?". Is it really our blatant legal illiteracy?
About problems and confusion
It turns out that is not so simple. The reason for such doubts is that the same Civil Code, after determining an individual entrepreneur, almost immediately reports that the same provisions and rules that regulate the activities of legal entities apply to its activities. Often, tax authorities make demands on entrepreneurs similar to those for commercial organizations. So there is confusion, in which both the IPs themselves and the regulatory authorities to which they are accountable are confused in the numerous types and forms of reporting required by legal entities and entrepreneurs.
An individual entrepreneur has to defend his rights in the tax inspectorate through lengthy complaints and proceedings. Some confusion reigns in the activities of banks related to IP. Not all banks themselves clearly understand: IP - an individual or legal entity? What guidelines apply to entrepreneurs? Because of this, individual entrepreneurs are forced to compose mountains of unnecessary reports, constantly assert their rights and try to change the bank to a more loyal one.
Compare IP and YL
Maybe, nevertheless, IP is a legal entity? Let's see what exactly brings individual entrepreneurs closer to legal entities. Mainly, these are issues of financial discipline. Today, registration of an individual entrepreneur implies the obligation to keep cash books with a clear indication of the receipt and expenditure of funds in the same way as legal entities. They are obliged to file tax reports. If a citizen registered as an individual entrepreneur receives income as an individual (for example, from the rental or sale of housing), he will have to submit two declarations - one as a private individual, the other as an individual entrepreneur indicating income from business activities.
The tax inspectorate checks the IP in the same way as legal entities. The same applies to other regulatory bodies. An individual entrepreneur reports to the labor and fire inspectorates, the Committee for the Protection of Consumer Rights and other numerous instances.
About hired labor
An individual entrepreneur has the right to attract employees, to make entries in work books. It does not matter for working citizens whether the individual entrepreneur is a legal entity or not. The Civil Code of the Russian Federation declares for all workers equal rights in the field of labor legislation, regardless of the organizational form of the employer. To comply with the rights of employees, an individual entrepreneur is obliged to conclude official labor contracts, pay contributions to all extrabudgetary funds, and pay taxes for his employees.
By the way, an individual entrepreneur has the right to choose the taxation system that is most beneficial for him, which also makes him related to a legal entity.
Compare individual entrepreneur and individual
Is there any difference between an individual entrepreneur and a legal entity? There is, and not one. The individual entrepreneur has a lot in common with an individual. In particular, IP can use all revenues at its own discretion and at any time, without reporting to anyone. As you know, in a commercial organization, income is paid only once a quarter in the form of dividends. In this important issue, the IP, without any doubt, enjoys much greater freedom compared to the legal entities.
From a legal point of view, registration of an individual entrepreneur does not oblige him to keep accounting records and to open a bank account for business activities. Such an entrepreneur can settle in cash (of course, observing all the rules of the law). Although in practice these days, this is practically not found.
About fines and stamps
Another important difference relates to the size of fines, which inevitably occur due to errors in the maintenance and official execution of business documents. Penalties for such violations, voluntary or involuntary, are very substantial. Penalties for legal entities are an order of magnitude greater than for individuals who are individual entrepreneurs in this matter.
Like any individual, an entrepreneur is not required to have a seal, unlike an organization. Under the law, a signature is enough for him to certify documents. But it should be noted that in practice, most partners of individual entrepreneurs are distrustful of this form of registration of contracts. Most IPs sooner or later start their own print. Thus, this difference can be considered rather arbitrary.
Other nuances
Recently, only legal entities can trade in alcoholic beverages, so many entrepreneurs had to urgently register LLCs or other forms of legal entities. Despite the right to have employees, an entrepreneur must personally conduct his own business and all documents must bear his own signature. Another person has the right to sign any documents for individual entrepreneurs only by proxy. Thus, the position of director or general director in the staff of IP employees is an absolute fiction, because according to the law, these persons have the right to sign responsible documents without a power of attorney.
The entrepreneur retains his status in the event of official termination of activity. Thus, he must constantly pay contributions to the PF (Pension Fund) regardless of the availability of income, while a legal entity in the absence of activity and income has the right to dismiss the entire staff or send on unpaid leave (and not pay any contributions).
So, is IP a natural or legal person?
From all of the above, it becomes clear that for all the conflicting and controversial aspects of our legislation, an individual entrepreneur is still an individual and not an individual entrepreneur, which is emphasized by the Civil Code, but in his activity this person is obliged to adopt most of the normative acts and requirements governing the activities of organizations, if only there are no direct indications of exceptions to the rules for individual entrepreneurs.