Is the individual entrepreneur a legal entity? Legal status of an individual entrepreneur

Among those who are not interested in this issue, there is an opinion that legal entities include any form of entrepreneurial activity. Whether it is a limited liability company or an individual entrepreneur - it’s all the same. Legal entity. But is this really so? After all, there is a huge legislative basis for differences both in doing business and in the various opportunities and restrictions that are imposed on both of these types of commercial activities.

Therefore, for those who plan to open a business and choose a form of activity, it is important to understand what the differences actually are, and how to actually talk about the status of individual entrepreneurship.

The simplest explanation for the average person (that is, someone who is simply interested in this issue, but is not associated with it): An individual entrepreneur is an individual with the rights to conduct the business activities of a legal entity.

From the point of view of the legislative spectrum, an individual entrepreneur is called a private entrepreneur, or “an entrepreneur without forming a legal entity.” But still, this is an individual.

Thus, almost anyone can become an individual entrepreneur, but he will have to fulfill the requirements specified by law. That is, it will be an individual who builds his activities within the boundaries and requirements of the law, but does not register a legal entity.

In even simpler language:

There lives a certain Ivanov Ivan Andreevich. He decided to go into business, but did not want to create any company like Avdrug LLC. Therefore, he registers according to the rules and becomes an individual entrepreneur Ivanov Ivan Andreevich. From this moment on, he has the right to engage in commerce, but only within the framework of legislative norms and legal norms that regulate the work of those who have registered as “investors”. And still, it is not a legal entity.

Why you can’t engage in commercial activities without being an individual entrepreneur

Because without registration of business law, any activity will be considered illegal (we remind you that we are not talking about legal entities).
When a person registers as an individual entrepreneur, he registers with the tax office and chooses a system according to which the tax office will collect taxes from him for his commercial activities.
After registration, an individual entrepreneur assumes property responsibility for everything he owns.
Without registering as an individual entrepreneur, you will not be able to hire employees for your work. And an individual entrepreneur can do this without breaking the laws. After all, everyone hired will need a mark in the work book.

Who are individuals?

But if the entrepreneur remains an individual, then it is worth understanding what is meant by this term.

In fact and in the letter of the law, an individual is a person who has rights and obligations within the framework of the legal regulation of the state system.

An individual has his own characteristics

Identified by the system by full name.
Not required to undergo any registration (except for obtaining a birth certificate and passport).
Has the right to conduct economic transactions with individuals and legal entities in terms of trade, exchange environment, production processes and transport.

What do a simple individual and an individual entrepreneur have in common?

The profit that the individual entrepreneur receives and the individual’s funds are completely at their disposal regarding further actions on them.
No one obliges either an individual or an individual entrepreneur to open a current bank account or keep accounting records.
Nobody obliges you to have a seal.
Individual entrepreneurs and individuals are equally liable before the law for violations committed.
The individual has a registration address. For individual entrepreneurs, it serves as the registration address for business activities.

Important! An individual without an individual entrepreneur cannot conduct commercial activities. And this is the fundamental difference. That is, that same Ivan Andreevich Ivanov cannot start a business if he has not gone and registered himself as an individual entrepreneur. But even after registration, when he receives additional rights to engage in commerce, he remains in the status of an individual.

We looked at the characteristics of individuals and looked at the similarities and differences between those who registered the right to business. Now let’s see, in order to be sure to imagine the whole situation, what characteristic features legal entities have.

Signs of a legal entity

The organization that will engage in business is registered and has certain property.
The legal entity has its own separate name and registration address.
Separate responsibility.
A legal entity operates in the form of a certain team, which is structured, divided into managers and subordinate employees, which operates in a certain formal sphere of rights and obligations of each of its members.
A legal entity has the right to appear in court proceedings as both a plaintiff and a defendant.
It is required to maintain accounting records, submit reports to the Federal Tax Service, as well as extra-budgetary funds.
A legal entity is liable before the law for violations committed based on the chosen organizational form.
A legal entity has the right to obtain licenses for a certain type of activity that is not available to other forms of commercial activity.
A seal is a mandatory tool for conducting the activities of a legal entity, as well as a current account in a banking organization.

Note: with regard to property liability, in the case of organizing a legal entity, its founders invest their parts of the authorized capital into the common “piggy bank”.

Note 2: In legal proceedings, a legal entity is a representative of the entire organization.

What do individual entrepreneurs and legal entities have in common?

The need for reporting to the tax department.
Controlling and inspection bodies carry out inspection activities in relation to both forms of entrepreneurship.
They have the right to hire employees.

Comparison of individual entrepreneurs with legal entities. Face

To finally understand why an individual entrepreneur is not a legal entity, we can list the following characteristics point by point:

Taxes. Both pay.

Accounting. Both lead.

Employees on staff. Anyone can hire.

Current account. The individual entrepreneur has the right. A legal entity is obliged.

Seal. IP has the right. A legal entity is obliged.

Fines. Mandatory for violations by both individual entrepreneurs and legal entities. However, in the case of the latter, they are more significant.

Responsibility. The individual entrepreneur is responsible for everything he has. A legal entity - only within the framework of its share of the authorized capital.

Registration. Registering an individual entrepreneur is simple. You need a passport, application and receipt. The legal entity will need constituent documents.

Address. An individual entrepreneur is registered at his place of residence, but does not necessarily conduct business there. A legal entity has a legal address, which most often coincides with the location of the office.

Types of activities. Individual entrepreneurs have many restrictions on various complex types of commerce. A legal entity can obtain a license for them.

Income management. The individual entrepreneur decides how to manage it himself. When withdrawing cash from the account, you only need to indicate that this is the income of the entrepreneur. The legal entity is obliged to indicate the purpose for which they will then be used.

No matter how similar the two forms of entrepreneurship may be, there are still more differences. Both in quantity and quality, especially in the area of duties and responsibilities. On the other hand, an individual entrepreneur can exercise his right to open a current account, create a seal and recruit employees. Then the level of differences will sharply decrease.

Pros and cons of an individual entrepreneur compared to a legal entity

All these factors (both positive and negative) can be deduced from what we identified earlier based on a comparison of the two forms of commercial activity.

Among the obvious advantages are:

Simplicity of registration actions when opening an individual entrepreneur (and when closing too).
Calm distribution of income from your activities as needed.
Reporting is simple.
An office is an optional requirement. As an individual entrepreneur, you register at your residential address, so you can work from home.
There are a number of forms of doing business that are aimed at simplifying responsibilities - UTII, simplified tax system, PSN.

Flaws:

You will be responsible for all personal property, and not just that which relates to the actions of the individual entrepreneur.
Various activities will remain unavailable to you.
The largest, and most often the most profitable partners will not work with small entrepreneurs. This is most often due to the absence of VAT payments.
You will still pay contributions to the pension fund, even if you work alone, or do not work at all, but the individual entrepreneur is valid.

Bottom line

We figured out the difference between ordinary individuals, individual entrepreneurs and legal entities. You can find many differences, as well as similarities. Exactly the same as the positive and negative features of all forms of economic activity. And, if you again ask the question voiced at the beginning of the article - is an individual entrepreneur a legal entity, then you can confidently say “No”.

An individual entrepreneur is still the same individual. But it has registered its activities in accordance with the rules of registration and accounting of business activities. And accordingly, after this it acquired certain rights and obligations, which in turn are regulated by separate laws and articles of codes.

When registering a business activity, the owner of a future business will definitely encounter terms such as “individual” and “legal entity.” To accurately determine their meaning and use these concepts correctly, it is worth familiarizing yourself with the following information.

What do the terms “individual” and “legal entity” mean?

The term "individual" comes from the Greek "nature" and the English word "man". This is the name given to a person who is a subject of civil law. He may have different statuses, even several at once (unemployed, student, individual entrepreneur, employee, author, stateless person, etc.), but in any case he is a bearer of rights and responsibilities.

Advice: if you don’t have enough personal funds to start a business, you can always find borrowed money on acceptable terms. Profitable ones are offered by Sberbank (“Business Start”), SDM-Bank (“Loan for replenishing working capital”), Trust Bank (“Successful Start”), etc.

A legal entity is an organization that is engaged in business activities (commercial or non-commercial), owns property and is responsible for its obligations, and can act as a defendant or plaintiff in court. The legal form can be different: a limited liability company (LLC), a closed joint-stock company (CJSC), etc. It is enshrined and justified in the Charter - a set of rules that govern the activities of the organization. This document cannot be valid without the approval of the founder or founders, after which the constituent agreement must be signed. Registering your activities in this format is more difficult. In addition to the standard stages that an individual entrepreneur goes through, you will need to create and approve the Charter, contribute 50% of the authorized capital to it, and make a seal.

Advice: a legal entity can exercise its legal capacity only one month after receiving a temporary certificate, returning this document (with marks and necessary certificates) and receiving a permanent permit.

Individuals and legal entities are fundamentally different concepts in many respects: nature of origin, subject, purpose of creation, number of founders, degree of business risk, formation of legal capacity. The choice of the form of running your business depends on the profile of the work and the desired format for running it. But many types of business are available under any option (for example, both an individual entrepreneur and the founder of an organization can).

Individual entrepreneur: individual or legal entity?

An individual entrepreneur is an individual registered in the prescribed manner and carrying out business activities without creating a legal entity. Also, an individual entrepreneur is a small business entity (according to the Federal Law “On State Support of Small Business in the Russian Federation” No. 88-FZ dated June 14, 1995). During the registration process, information about the individual entrepreneur, the validity period of the certificate of the right to operate, information about the license, and bank accounts are entered into the state register. The registration process consists of several stages:

provision of a package of documents to the Federal Tax Service (their list can be found on the tax website), an application for state registration;
drawing up acts of the authorized federal executive body (entering into the register information about the new status of an individual entrepreneur, in other cases - about termination of activities);
issuance of a certificate of entry into the state register.

There is no obligation to open a current account. In the process of registering activities, both individuals and legal entities should be very careful when choosing codes. If you indicate them incorrectly in the application, the procedure will have to start again. Individual entrepreneurs, like organizations, can combine UTII (tax on imputed income) with a simplified taxation system. Using this tax regime will reduce the number of deductions. Design

Conducting business activities by a person who has not passed state registration is prohibited in Russia. But before choosing the organizational and legal form of business, it’s worth figuring out whether an individual entrepreneur is an individual or a legal entity?

What is the difference between individuals and legal entities?

The registration procedure for individuals and legal entities conducting business varies significantly. To understand whether an individual entrepreneur is a legal entity, you need to understand the definitions given by law.

Citizens (individuals) and legal entities acquire and exercise their civil rights of their own will and in their own interest (Article 1 of the Civil Code of the Russian Federation).
A citizen has the right to engage in entrepreneurial activity without forming a legal entity from the moment of state registration as an individual entrepreneur (Article 23 of the Civil Code of the Russian Federation).
When state registration of an individual as an individual entrepreneur ... (Article 22.1 of the law dated 08.08.2001 No. 129-FZ).
A legal entity is an organization that has separate property and is responsible for its obligations (Article 48 of the Civil Code of the Russian Federation).

From these provisions it is absolutely clear that the question of whether an individual entrepreneur is a legal entity should not even arise.

An entrepreneur is an individual, and an individual is a citizen or a person who has a certain legal capacity and capacity. After this, the individual can independently engage in business and manage the income received from it. Moreover, this business exists as long as the citizen is registered as an entrepreneur. After the individual entrepreneur is removed from tax registration, the business entity ceases to exist.

A legal entity or organization does not depend on its founders, the composition of which may completely change. Shares in the authorized capital of a legal entity are sold, inherited, given as a gift or pledge. The organization can be completely purchased as a property complex, and it will continue to exist without its original creators.

And yet there is a certain confusion in the concepts of an individual and a legal entity. It is caused by Article 23 of the Civil Code, which states that the rules governing the activities of legal entities apply to the entrepreneurial activities of citizens. Thus, although an individual entrepreneur is undoubtedly an individual, the same rules can be applied to him as to commercial legal entities.

Administrative responsibility of an individual entrepreneur

It is especially important to understand whether an individual entrepreneur is a legal entity within the framework of administrative responsibility. Why is this so special?

If you open the Code of Administrative Offenses, you will notice in many articles that fines for organizations are several times higher than for individuals. Let's take for example a typical violation - the sale of goods or the provision of services in cases where this is established by law.

Article 14.5 of the Code of Administrative Offenses of the Russian Federation specifies the following sanctions:

for citizens – from 1,500 to 2,000 rubles;
for officials - from 3,000 to 4,000 rubles;
for legal entities - from 30,000 to 40,000 rubles.

Who is an individual entrepreneur in this case - a legal entity or an individual (citizen)? Neither one nor the other, because the status of an individual entrepreneur in administrative legal relations is an official equal in responsibility to the head of the organization.

An indication of this is stated in Article 2.4 of the Code of Administrative Offenses of the Russian Federation. However, a reservation is made here that an entrepreneur is equated to an official, unless otherwise established by the Code. Indeed, there are norms that provide for special responsibility for individual entrepreneurs.

For example, in Article 14.1.2, fines for carrying out business activities in the field of transport without a license are:

for citizens and officials - 50,000 rubles;
for individual entrepreneurs – 100,000 rubles;
for legal entities – 400,000 rubles.

Thus, answering the question whether an individual entrepreneur is a legal entity in administrative legal relations, we can say a firm “no.”

Features of an individual entrepreneur

Not so long ago, the question of whether an individual entrepreneur is a legal entity was of interest not to future businessmen, but to employees. The fact is that individual entrepreneurs received the right to conclude employment contracts and draw up work books only in 2006. Accordingly, employment in organizations gave workers more rights than employment with individual entrepreneurs.

It is interesting that the Labor Code still contains additional obligations of employers-legal entities, as more solvent business entities. Thus, Article 178 of the Labor Code of the Russian Federation obliges only the organization to pay severance pay to employees upon dismissal due to staff reduction. It turns out that although an individual entrepreneur basically bears the same responsibilities as a legal entity, there are still some concessions for him.

Entrepreneur in tax legal relations

Tax laws treat individuals and businesses more fairly, treating everyone as taxpayers equally. If we talk about the amount of fines for tax offenses, they are the same for both individual entrepreneurs and organizations.

And yet, there are certain privileges for entrepreneurs here too. In particular, individual entrepreneurs do not keep accounting records, which means they can easily do without an accountant. In addition, there is a special preferential tax regime (PTS), which is available only to individuals. And finally, tax holidays with the opportunity to avoid paying taxes for two years are also provided only to individual entrepreneurs.

Let's sum it up

Despite the fact that in some situations the law equates the rights and obligations of individual entrepreneurs with commercial organizations, the answer to the question: “Is an individual entrepreneur a legal entity?” – negative.
An individual entrepreneur is an individual who has been registered with the Federal Tax Service and received the right to run his own business.
An individual is an ordinary citizen, therefore his entrepreneurial activity continues until he is removed from tax registration. It is impossible to sell or donate an individual entrepreneur as a legal entity.
In administrative legal relations, when collecting fines, an individual entrepreneur has the status of an official, unless certain articles of the Code of Administrative Offenses of the Russian Federation indicate otherwise. As a rule, fines for individual entrepreneurs are several times less than for legal entities.
As an employer, an individual entrepreneur is not much different from a legal entity, however, organizations have more responsibilities to employees.
The Tax Code practically equalizes taxpayers of legal entities and individuals, however, it must be admitted that organizations fall under tax control more often than entrepreneurs. In addition, when doing business, individuals enjoy additional tax benefits that are not available to legal entities.

An individual entrepreneur (IP) can be considered the starting point of a business. According to statistics, more than 80% of people who have their own business or enterprise today have gone through the individual entrepreneur stage. This status is considered one of the simplest for many factors, from registration to reporting. That is why he is chosen to start.

However, anyone who plans to become a businessman has a huge number of questions. They are interested in the legal side, the features of the status of an individual entrepreneur, its differences from an individual and a company such as an LLC.

Who is a sole proprietor?

The legislation says that an individual entrepreneur is “an individual registered in the manner prescribed by law and carrying out entrepreneurial activities without forming a legal entity.” If translated into accessible language, an individual entrepreneur is a special status of an ordinary adult and capable person, which gives the right to engage in permitted commercial activities.

The term replaced the abbreviations PBOYUL (entrepreneur without the formation of a legal entity) and PE (private entrepreneur), which were in effect previously. Today, individual entrepreneur is the only name denoting this status.

Is an individual entrepreneur a legal entity?

No it is not. There is a widespread belief in everyday life that all structures engaged in business (or, in other words, permitted commercial activities) for the purpose of obtaining benefits are legal entities. Although logic dictates that a farmer who takes a couple of buckets of apples collected from his own garden to the market is clearly out of this category. Just like a shoemaker repairing shoes with his own hands in a small kiosk, the size of a doghouse.

That is, we understand that not only a legal entity, but also an individual can legally engage in business. It is the individual entrepreneur (special status) that gives him the opportunities and authority to conduct business.

This phenomenon is widespread - sole proprietorship in the USA, autonomo in Spain, sole trader in Australia - all these are foreign analogues of the Russian individual entrepreneur, allowing a person to conduct commercial activities in order to obtain benefits without creating a legal entity.

It is believed that an individual entrepreneur has a number of advantages, thanks to which he enjoys a high level of popularity in the business field. Although it is worth noting separately that an individual entrepreneur is not a legal entity, therefore there are a number of functions of a “company” that are not available to him.

Comparative table of individual entrepreneurs and legal entities

The first and main difference is that an individual entrepreneur is a natural person, but a legal entity implies the use of completely different organizational and legal forms.

Advice: if you ask yourself at the start what is better, an individual entrepreneur or an LLC (as an example of a simple legal entity), then understand one thing. To pose the question this way is to essentially compare sandals and winter boots. That is, both are shoes in which you can walk. However, these two types perform different functions and provide different capabilities. It's the same in business. Individual entrepreneurs and LLCs allow you to conduct commercial activities, but differ significantly in details. Therefore, before making a decision, carefully and thoroughly analyze which type of business entity is suitable for your purposes. At the same time, take into account not only the “immediate moment” or the coming months, but also the distant future, as well as options for the development of your project.

You can often find information on the Internet that individual entrepreneurs are preferable, especially at the beginning, that it is simpler. Let's try to understand the issue based on our realities. Actually, we are more concerned not about the differences in the application of various regulatory documents that regulate the activities of an individual entrepreneur or any legal entity (LLC, JSC), but about those practical features that will affect our business.

So, let’s compare individual entrepreneurs and LLCs (as the most common legal entity submitted as an alternative) with all their pros and cons. At the same time, several common myths will be debunked.

is extremely simple, but opening an LLC involves a lot of difficulties.

There is some truth in every statement. However, the facts indicate that:

registration period is the same (5 days);
the set of documents required to open an LLC is only three more pieces of paper, and, or rather, their templates are freely available;
it is possible only if there is one participant, as well as when organizing an individual entrepreneur;
the state duty for an LLC is higher (no one argues), in addition, you will need to contribute the authorized capital (there is a period of 4 months, as well as the opportunity to make this an equivalent - materials, equipment, goods), which is not required in the case of creating an individual entrepreneur;
It is easier and much cheaper to close an individual entrepreneur, but claims can be brought against its former owner, who has not been an entrepreneur for “eleven” years, which is impossible after the liquidation of the legal entity.

Separately, it is worth mentioning the need for an LLC to have a legal address, which is not necessary for an individual entrepreneur. There are also a bunch of pitfalls here. A legal address can be obtained without much difficulty; it can even be a non-residential premises or a business center that rents out office storage rooms with an area of 6 square meters. And individual entrepreneurs have a strict connection to registration. That is, business in Tomsk for an Omsk resident will be complicated by the need for mandatory registration, submission of reports and payment of taxes in his native Omsk.

Important: There are no restrictions in the legislation on registering an LLC with a legal address at the place of residence (registration) of the founder, one of them or the general director. Tax authorities who refuse this act according to their own rules, which, in fact, violate the law.

The biggest “scare” for individual entrepreneurs and a plus for LLCs is property liability. In the first option - with all your property, in the second - only with what was contributed to the authorized capital.

And again, there is only a grain of truth here:

Indeed, an individual entrepreneur is liable with all his property, even those received before the start of his activity. However, there is a list (clause 1 of Article 446 of the Code of Civil Procedure of the Russian Federation), which indicates the property of an individual entrepreneur, which is never collected for debts, for example, a single dwelling or a plot of land.
For an LLC, which is liable only for part of the property it owns, this is a kind of bonus. That is, the personal property of the founders is, as it were, protected. And this is precisely what is considered a huge advantage of this format. Although if you delve deeper, it becomes clear that this is, to put it mildly, a fiction. If an LLC is declared bankrupt in court, the principle of subsidiary liability will come into force, where the founders will have to pay off debts with their own property.

Important: that is, the biggest advantage of an LLC (such protection of personal, unbearably acquired property) in the event of troubles for the company is not at all so reinforced concrete. And the individual entrepreneur has an inviolable minimum that allows him to at least stay in his pants, even without socks.

Money, reporting and taxes - for individual entrepreneurs, the withdrawal of the former is easier, the latter - less, and there are more benefits. As a rule, most of the privileges of individual entrepreneurs in tax and financial terms, when thoroughly studied, turn out to be either far-fetched or not so tempting. Same with reporting:
- The content of employees is the same for both organizational and legal forms, and LLCs are almost identical.
- In most tax regimes the rates are also identical. Differences exist in the general system (OSNO - 20% for LLC and 13% for individual entrepreneurs), as well as in the ability of individual entrepreneurs to apply the PSN (patent system).
- Insurance is considered the main disadvantage of individual entrepreneurs. But these funds form health insurance and a future pension for the owner, that is, they are by no means useless expenses. And an LLC cannot do without payroll, even if its only employee (he is required) is the general director. And here, too, there will be contributions to all funds. The icing on the cake is that an individual entrepreneur has the right to reduce the accrued tax amount by 100% of fixed payments, an LLC - only by 50.
- What is really attractive in terms of individual entrepreneurs is the withdrawal of earnings. There are no restrictions - take as much as you need, the main thing is that there is enough left for mandatory payments, the rest is at the owner’s disposal. An LLC has a number of restrictions; its owner(s) cannot easily withdraw a couple of million from their current account to buy a yacht. Here you will have to arrange everything correctly.
- Individual entrepreneurs have much less paperwork, reporting is simpler, communication with the tax office is easier... The statement is not entirely true because reporting on employees is the same for individual entrepreneurs and LLCs, as well as tax returns. The type and complexity of the latter depends on the system used, and not on the legal form.

As a conclusion, saving on insurance premiums and taxes depends not so much on the format, but on certain conditions and the literacy of the accountant, as well as the ability to get funds at your own disposal.

Here you also need to take into account that tax liability for violations for individual entrepreneurs and LLCs in most cases is almost the same, which cannot be said about administrative and criminal ones. Much more lenient measures are applied to violators who are individual entrepreneurs, both in monetary terms and in punishments in accordance with the Criminal Code of the Russian Federation.

Prospects and opportunities for business development - on this issue everyone agrees that an LLC is more profitable. This format has a little more potential:
- The first and main advantage is that LLCs have a much wider list of activities. It is unlikely that an entrepreneur will be able to include in the details of a contract for the sale of alcohol, as well as the production of alcohol and medicines. An individual entrepreneur cannot engage in banking and insurance activities, be a tour operator, or holder of pawnshops and investment funds.
- Another advantage of an LLC is that this format is more attractive to investors, that is, investors in a business project. Although competent management of one’s own business by an individual entrepreneur can interest many, from the immediate environment of an individual to a bank, and all of them can give money.
- VAT and nuances. This point is maximally promoted in the discussion “for” and “against” IP. Although the VAT payer can be either an individual entrepreneur or an LLC, it all depends on the tax system applied. That is, cooperation with large companies that are “endesses” (as they say in certain circles) can be difficult for those who do not pay value added tax and are not registered as its payer.

Important: if you are planning to develop your business by attracting investments or are focused on working with large companies, then the success of these two areas will depend not so much on the chosen organizational and legal form, but on the taxation system. Moreover, it can be changed during operation.

For clarity, all information is combined into a short table:

Individual entrepreneur Limited Liability Company
Registration is cheaper, the procedure is simpler, there is no need for a legal address or authorized capital. The duty is much higher, a larger package of documents, authorized capital is at least 10 thousand rubles.
Individual entrepreneur – one individual. Partners in an LLC can be up to 50 individuals or legal entities. It is possible to attract, exit, and dispose of your shares in the authorized capital.
Receiving money from business is easier and cheaper, there are no additional taxes on income. Mandatory payment of insurance premiums for yourself, regardless of income. Profit distribution is quarterly, dividends are subject to 13% personal income tax. There are no insurance premiums for owners.
An individual entrepreneur is liable for obligations with all his property, with a few exceptions. The participants are not liable for the debts of the LLC, except in situations where the principle of subsidiarity applies.
The fines are lower, and the interest of the inspection authorities is also lower. The fines are higher; both the organization and its leaders are subject to sanctions.
Closing is quick and relatively easy, and debt claims may still arise after liquidation. Liquidation of an LLC is more expensive and the process is lengthy and complex. Upon final closure, all debts are considered cancelled.
To give preference to an LLC or an individual entrepreneur - this question must be answered comprehensively and taking into account all the nuances. But the familiar statements of Internet experts do not give the overall picture. Study the equipment before making a decision.

Frequently asked questions and a little more about what is rarely voiced:

Question: Why do many people recommend starting an independent swim in the business world by registering the status of an individual entrepreneur, although from a comparison of an individual entrepreneur and an LLC as a business unit it is clear that the advantages of each of them are not so great?

Answer: An individual entrepreneur can be closed at any time, this is easy to do, the procedure is much simpler than in the case of an LLC.

Question: What is the main difference between individual entrepreneurs and other legal forms?

Answer: Only the status of an individual entrepreneur allows an individual to engage in commercial activities. All other organizational and legal forms that participate in business processes require the creation of a legal entity.

Question: Why not bring the business environment into uniformity by removing, for example, individual entrepreneurs and leaving only legal entities?

Answer: The activities of individual entrepreneurs can be reduced to the simplest business processes. An individual entrepreneur can make all stages as easy as possible, from creation to liquidation. He has the right to choose the least complex taxation system, work without VAT, independently, without employees, and maintain simplified accounting. In addition, only an individual entrepreneur can apply the PSN, a special taxation system that provides for the acquisition of a patent.

Question: Do individual entrepreneurs need a current account?

Answer: Legally, no. An individual entrepreneur has the right to conduct commercial activities without opening and using a bank account.

Advice: if your line of work requires you to provide services or sell goods to private individuals, then it is worth considering that today a plastic card as a payment instrument is already much more popular than cash in your pocket. By opening a personal account, you can reach a larger number of potential buyers, improving the service for them.

Question: Do you need an individual entrepreneur seal?

Answer: At the legislative level, the mandatory seal is not fixed. This moment is left to the businessman himself. Although it adds a kind of weight to the written out documents.

And a little more about the details. In a professional environment (among tax specialists, financiers, lawyers) you can find such slang names as physicist and... no, not lyricist, but lawyer. The first are individual entrepreneurs, the second are all legal entities. In addition, in almost every service, from the tax service to various funds, as a rule, there is a division into departments. Some serve individual entrepreneurs, others serve legal entities.

Can an individual entrepreneur be converted into a legal entity?

Actually, the law does not provide for an algorithm for directly converting an individual entrepreneur into a legal entity. And in fact, this is not possible, because an individual entrepreneur has the status of an individual, although it is not a limiter on the rights and freedoms of a citizen. That is, an individual entrepreneur, as an ordinary person, can become a founder or co-founder of any legal entity (LLC, JSC).

However, the law does not oblige the registration of a legal entity to indicate this status in any of the documents. The founders (individual citizens) here act exclusively as individuals. The rule does not apply to founders who are legal entities.

Can an individual do business without registering as an individual entrepreneur?

Yes and no. It all depends on what a person understands by the term “business”. If, in his opinion, it consists of selling cucumbers grown on his personal plot or providing the services of a tutor, then that is one thing. If your plans are to open a permanent retail outlet or a shoe repair shop, then this is completely different.

In many cases, it can be several times larger than the amount required for registering an individual entrepreneur and fixed payments to funds.

Although there are a number of exceptions where an individual entrepreneur is not needed or optional:

For the sale of agricultural products of a plant nature grown on personal plots, summer cottages or in personal subsidiary plots. To do this, you only need a certificate from the administration of the gardening partnership or an extract from the business book. Relevant for 2018, starting next year they plan to change the rules of the game.

For those who receive profit from transactions no more than twice a year, and the amount of turnover on them (indicated in the documents confirming payments) does not exceed 200 thousand rubles.

Those who work under civil contracts and declare their income do not have to become an individual entrepreneur. The list of permitted ones includes any agreements of the specified nature for the provision of services, contracts, purchase and sale, royalties and a number of others. They (agreements) can be one-time or oriented for a long period. The main thing in these cases is to report your income and pay taxes due as an individual.

For those who carefully engage in dropshipping.

Those who perform intermediary functions.

The last two points have a lot of similar points that nullify all the charms of business beyond forms and statuses:

you need to look for partners, suppliers and buyers who will agree to a certain scheme, where the intermediary (dropshipper) does not participate as a unit in the chain of documents;

since such systems do not imply the responsibility of an intermediary or dropshipper, you need to be absolutely confident in the quality of the product, the ability of suppliers or sellers to resolve conflict situations with clients;

a person working under such schemes without an individual entrepreneur or legal entity is always dependent on his partners, their methods of doing business, as well as on how they will make payments.

As a result, in most situations, agency or intermediary due to all the costs of paying taxes may turn out to be less than when using an individual entrepreneur for the same transactions. Also, if you help someone with housework, work as a nurse, or sell your crafts or knitted hats via the Internet, then you absolutely do not need the status of an individual entrepreneur.

Let's sum it up

individual entrepreneur (IP) – a special status of an individual, giving him the opportunity to engage in commercial activities and not limiting other declared rights (for example, the same person can become a member of an LLC);

they show justified interest in individual entrepreneurs both at the start of entrepreneurial activity and in the future, this status has diversity in the possibilities for applying the taxation system, allocation of VAT, simplified accounting and the like;

the ease of closing an individual entrepreneur is a kind of bonus for those who are not confident in their business endeavors;

Individual entrepreneurs have many advantages for mini-projects that are designed for small profits, turnover and deadlines.

Registering an individual entrepreneur or LLC is your choice. The main thing is that the idea that was born and promises profit does not remain dead. Do it! Although this will not become a grandiose multi-million dollar project, it will bring joy from small results and confidence in the future.