Is an individual entrepreneur a legal entity or an individual?

Who is a private entrepreneur

A private entrepreneur is an individual who, without legal education, carries out entrepreneurial activities. Private businessmen in Russia appeared at the dawn of entrepreneurship in the early 90s of the 20th century. At first they began to be called state of emergency, but in the mid-90s the abbreviation PBOYUL (entrepreneur without the formation of a legal entity) began to be used in official documents.

Today, not a single current legal act contains the concept of “private entrepreneur”. Instead of this term, there is now the concept of an individual entrepreneur, so in the article we will talk about an individual entrepreneur.

Is an individual entrepreneur an individual or a legal entity?

In simple terms, an individual entrepreneur is an individual who is given the right to conduct legal activities subject to registration of such status. When creating a business, a citizen continues to be called by his own name, but gets the opportunity to open a business. For example, there was a man Vasily Ivanovich Petrov, registered as an entrepreneur and became an individual entrepreneur Vasily Ivanovich Petrov. From this moment on, he can legally engage in business.

It would seem that there is nothing difficult in understanding that an individual entrepreneur is an individual or legal entity. Meanwhile, upon detailed examination, confusion often arises, the basis for which is the clause in paragraph 3 of the article. 23 Civil Code. Literally the text reads like this: “unless otherwise follows from the law, other legal acts or the essence of the legal relationship.” This means that an individual entrepreneur is controlled at the legislative level in the same way as a legal entity, unless there is a special law that separately regulates the requirements for an entrepreneur.

From the above, we can draw the main conclusion - any citizen, including foreign nationals, has the right to engage in commercial activities after official registration in the Unified Register. In the process of work, an individual entrepreneur must follow the regulatory requirements developed for entrepreneurs, and in the absence of such, the legislative provisions common to individual entrepreneurs and legal entities. Next, in order to clearly understand whether an individual entrepreneur is a legal entity and in what situations, we will understand the similarities and differences between an individual entrepreneur and a legal entity.

Areas of business activity

A person without legal education may, without special permission, engage in activities in the following areas:

• consulting and legal services;
• domestic services;
• printing and publishing activities;
• entertainment sector, event organization;
• creative work (design, photography, painting, etc.);
• wholesale;
• Rental Property;
• transport transportation (category B);
• advertising.

Some activities require licensing , for example, educational activities, private investigation, passenger transportation, drug production and medical activities. In total there are about 50 types of activities on this list.

There are also types of activities that do not require a license, but they require permission and approval from regulatory authorities. For example, catering, beauty salon services, hairdressers.

Another section is activities prohibited for individual entrepreneurs . An entrepreneur may not engage in the production and sale of alcohol, the production of medicines, the sale and disposal of weapons and ammunition, or security activities. This also includes activities prohibited by law, such as drug trafficking.

As a participant in economic relations

Now let's turn to what rights and obligations individual entrepreneurs have as a counterparty. To a greater extent, powers and obligations here are determined by a contract, an agreement between the parties. But there is also a general list. For example, obtaining a license to carry out certain types of activities is mandatory; in some cases, joining self-regulatory organizations with the payment of fees is required. Fulfillment of undertaken obligations is an imperative condition established in the Civil Code, and the right to profit and choice of contractors follows from the very essence of free enterprise.

How to register an individual entrepreneur

If you decide to open your own business and have initial capital, you need to officially legitimize your desires. Registering an individual entrepreneur is very simple. You just need to contact the Federal Tax Service at your place of residence with the following list of documents:

• application for registration of individual entrepreneurs (fill out the application in form P21001 and have it certified by a notary);
• passport + photocopy;
• receipt of payment of the state fee of 800 rubles (you don’t have to pay if you submit documents for registration through the website of the Federal Tax Service, State Services, MFC or notary).

There are several ways to submit documents to the tax office:

1. Visit the tax office or MFC in person with your passport;
2. Use the tax office’s mobile application “Personal Account of Individual Entrepreneurs,” and then visit the tax office with your passport to sign the documents;
3. Submit electronic documents signed with an enhanced qualified electronic signature through the website of the Federal Tax Service or State Services;
4. Send by mail with a declared value and a description of the attachment (the signature on the application must be certified by a notary);
5. Contact a notary.

An individual entrepreneur can choose different tax regimes, having thought through and calculated their profitability in advance. Here we told you what is more profitable - a patent or a simplified version.

The tax office will issue you a certificate of state registration of an entrepreneur indicating the OGRNIP number and an extract from the Unified State Register of Individual Entrepreneurs. By default, the documents will be sent to your email in electronic form with an enhanced qualified tax signature. Paper copies can be obtained if you tick the appropriate box on the application. The inspectorate independently sends information about the registration of individual entrepreneurs to the Pension Fund and the Compulsory Medical Insurance Fund.

The registration period for an individual entrepreneur is no more than 3 working days. The state has the right to refuse registration of an individual entrepreneur for the following reasons:

• you are subject to restrictions on business activities (for example, you are in the civil service or work as a magistrate);
• typos were found in documents;
• you were declared bankrupt, and less than a year has passed since that moment.

Difference 4: current accounts of individual entrepreneurs and individuals

Funds in the individual entrepreneur's current account are income from business activities. Such an account is created for interaction with suppliers, employees, partners; to make tax or utility payments.

An individual’s account stores personal funds and is used for personal needs. Money from such an account can be transferred to another account, withdrawn in cash, or used to pay for any purchases.

An individual entrepreneur can operate without a current account, but cannot use an individual’s account to conduct business.

JurisprudenceComment

Rights and obligations of an individual entrepreneur

The individual entrepreneur enjoys the following rights:

• manages his own activities;
• freely chooses partners;
• decides how and in what amount to pay wages to employees;
• disposes of the received profit at its own discretion;
• can act in court as both a plaintiff and a defendant.

Responsibilities of the entrepreneur:

• document monetary transactions;
• all employees hired must be officially registered;
• submit tax and employee reports;
• pay taxes, employee salaries and insurance premiums on time.

Features of the legal status of individual entrepreneurs

Due to the duality of the position of an individual entrepreneur, which has the characteristics of both a legal and an individual, the nature of its legal status is also dual. On the one hand, an individual entrepreneur is a citizen (and may even be a stateless person or a foreign national), on the other, an economic entity.

This duality is confirmed by paragraph 3 of Art. 23 of the Civil Code of the Russian Federation, according to which the procedure for individual entrepreneurs to conduct business activities is regulated by the provisions of the legislation applied to legal entities.

Based on the analysis of the above characteristics of an individual entrepreneur, we can conclude that the features of its legal status are:

• availability of the right to carry out entrepreneurial activities;
• full liability for all debts of the individual entrepreneur with his own property not used for business development;
• the presence of obligations to maintain records, prepare reports, pay taxes and insurance premiums.

If a citizen working as an individual entrepreneur has committed an offense, it is necessary to find out in what capacity he acted at the time of the violation of the law. Depending on this, it is determined which court - general jurisdiction or arbitration - the case of an offense will be sent for consideration.

If the actions of an individual entrepreneur do not affect the interests of others, there is no need to differentiate between them. Thus, an entrepreneur can buy any product (for example, office supplies) and use it both for his own needs and for the needs of his business. In such a situation, a representative of a legal entity, purchasing goods for use within the organization, must receive the appropriate document (cash or sales receipt, delivery note, etc.), and take the money spent into account as expenses (this will allow him to reduce the tax base, and therefore increase net profit of the enterprise).

What to indicate when transferring money

An individual entrepreneur can dispose of money as he wishes without paying additional taxes when making financial transactions, and the organization’s money is property and disposal of profits. Transferring money to organizations is a complex procedure that requires special skills. The question often arises as to whether an individual entrepreneur is an individual or an organization when transferring money. As a rule, this applies only to Russian and international bank transfers through a personal visit to a financial institution. In other cases, payment systems provide for all the nuances of how to transfer money to such people. Both forms include bank transfers, transfers through electronic payment wallets, cryptocurrencies, and international payment systems.

Individual entrepreneur with translation organization

Is an individual entrepreneur the same as an organization?

The similarities between an individual entrepreneur and an organization are that it is necessary to register activities, create the necessary technical conditions for employees, and undergo various labor safety inspections, including a special assessment of working conditions. If defects are found, forced elimination is required. Otherwise, the enterprise may be closed. As for the individual entrepreneur, he may be deprived of this status or deprived of the right to engage in specific activities for a certain time.

Experts who answer the question whether an individual entrepreneur is an enterprise or an organization note: like an organization, an individual entrepreneur acts as a founder. Has the right to hire workers by concluding employment contracts or documents for the provision of certain one-time services. Moreover, the amount of taxes for permanent cooperation is less than for one-time transactions in both cases.

Attention! As for tax liability, it is the same for organizations and individual entrepreneurs due to the fact that tax legislation does not specify a specific organizational and legal form, but applies the term taxpayer to all entities.

On the legal side, both forms must organize their activities within the framework of the law. Otherwise, there is a risk of receiving administrative and criminal penalties. Both forms are accountable to legislation and state tax authorities. Therefore, the question of whether an individual entrepreneur is an organization or not is a deep one.