Excerpt from the book “Law of startups” partner “Sartin, Jankowski and partners” Roman Yankovsky. Partner of the law firm “Sartin, Jankowski and partners” Roman Yankovsky has released a free book-manual “startup Law” — on the legal aspects of startups, the challenges that may face young team, and possible ways to solve them.
We live in an atmosphere of startups and former startups, surrounded by “Facebook”, “Tinterow” and “Overow”. What is “startup”, and what is a startup?. According to the classical definition, a startup is a company designed to search for efficient and scalable business model. Start-UPS often appear in the sphere of high technologies, because the greatest potential for scaling has intellectual property — patents, trademarks, know-how.
However, in our law, you will not find the word “startup”. The civil code speaks only of “entrepreneurship”. According to the second article of the civil code, an entrepreneur is a person who independently and systematically engaged in a risky activity directed on extraction of profit. Why do we need a legislative definition of an entrepreneur.
The fact that the law requires the owner have to “register in the prescribed manner”. In this situation, it is critical to understand that applies to entrepreneurship and what is not. The first and main criterion — the focus on “profit”.
The tax code says that profit is “the incomes reduced by size of expenses”; means profit means that the money spent outweigh the. However, keep in mind that the criminal code punishes entrepreneurship without registration, if it resulted in “the generation of income in the large size”. Pay attention. Is “revenue”, not profit. So if you bought goods for four million rubles and sold it for three, then profits in the sense of tax laws does not arise, but from the point of view of the Criminal code, you will be illegal entrepreneur.
The second criterion, no less important is the presence of risk. Business risks relate to loss of financial stability and liability for debts. There are risks of non-property nature. For example, the risk of loss of business reputation, if you are at fault failed execution of the contract.
At the same time work under an employment contract is not considered to be risky by definition. Even working on very dangerous work, you dont become an entrepreneur. The third criterion — the systematic. A single transaction will not be considered business.
For example, if you sell the car, this does not mean that you need to get the status of an individual entrepreneur, but if you want to open a dealership. Unfortunately, the legislation does not provide a clear answer to the question, what is systematic. For example, the Tax code under the “systematic” understand “twice a year or more,” and the law “On protection of competition” — “two times within three years.”.
The fourth criterion of entrepreneurial activity, which, unlike the first three, not specified in the Civil code, it is. This legitimate business activities differ from illegal. Legally conduct business only in the form of individual entrepreneur (IP) or by creating a legal entity. Entrepreneurial activity without registration is prohibited, but here (as well as in Russian law) the key is not the ban itself, and the measure of potential liability.
“Simple” entrepreneurial activities without registration shall entail an administrative fine from 500 to 2 000 rubles under article 14.1 of the administrative code. To prosecute can the police, the CPS or the IRS. However, it is for the business without registration, they are fined very rarely. Such activities come to the attention of the authorities is that when conducted right out in the open. Antonina V. was bought at a vegetable warehouse a few pounds of greens and sold them at the metro station “Prague”, giving the products of their farms.
The patrol police fined five thousand rubles for trade in the 25-meter zone from the lobby of the metro (article 11.13 of the code of the city of Moscow about administrative offences). Another thing — when your business takes a particularly large amount. So, shady businessman to retrieve a “large income” to 2.25 million roubles face liability under article 171 of the Criminal code.
Despite the fact that he will most likely prescribe the same penalty (only larger), the fact that the prosecution will leave a serious stain on the biography. Mitya hosted in the country underground shop on vodka production. He equipped a room, hired for cash, employees and began to supply their goods shops. The bill has raised suspicion among the local utility company, and called the police detained Mitya.
He faces an administrative fine under article 14.1 of the administrative code, and if the prosecution succeeds in proving the receipt of a large income — criminal liability under article 171 of the criminal code. Tutoring, home health aides and similar workers going for a long time allowed to work without registration — in this case they receive the special status of self-employed persons. Recently “the provision of services for personal, domestic and other similar needs” appeared in the Tax code.
Self-employed will be able to register in the tax, to receive INN (individual taxpayer number) and thus not (yet) to pay taxes. If the new procedure is to be popular — is still unknown. All the foregoing applies to foreign citizens who are in Russia and want to be entrepreneurs.
They are also subject to provisions of the Civil code and sanctions for violations. However, there is additional regulation. So, to become an individual entrepreneur may be the only one foreigner who has a temporary residence permit or residence permit. In Russia there are no business visas and work visas (as the patent for a foreigner) provides only work under an employment contract.
Another option is to open a company in Russia (this can be done and a foreign company and a foreign citizen). In accordance with the law for registration of the LLC from the alien required only a notarized translation of the passport, other documents standard. Taking the documents, the Registrar does not verify on what basis the foreigner is in Russia and whether he has a temporary residence permit.
Pay attention. If the foreigner has no work permit, he cannot work in their own company, including cannot be its Director. Of course, such permission can be requested on behalf of the company, but the request must sign an acting Director, yet hes still. Therefore, to establish a company in Russia without a Director-the Russians will not work. He will appear in the application for registration, and then issue a permission to a foreigner has taken his place.
In Russia to do business in three ways: Profit debit card product to keep at home, bills to write by hand, keep the books in a notebook and not tell anyone about their finances. As I described in the previous Chapter, is not the best way, if your business is profitable.
Provides for administrative and even criminal penalties. Individual entrepreneur (IE) is a person (individual) that has registered with the tax office and got a special number. It gives you the right to do business and pay lower business taxes — especially on the famous simplified system, simplified taxation system.
This does not create any legal entity. Individual entrepreneur is the physical body, the name (“IP DOE”), place of residence and other attributes of his human personality. Commercial legal entity or a company is an artificial legal construct created for entrepreneurship. To understand how it works legal entity, please refer to the history.
In Ancient Rome, Ancient Greece, Ancient Babylon and other ancient countries the company in the modern sense were not used because they did not need. Trade merchants were involved in singles, which was enough for modest international exchange. Did not exist scalable businesses, no factories, and therefore, there was no need to do big business.
This requirement appeared only in the years of the great geographical discoveries, when Europeans began to compete in the robbery overseas colonies. Wealth of individual merchants and even kingdoms was not enough to outfit new expeditions, and then there was the idea of getting money not from one wealthy merchant, or a Prince, and immediately collect shares from many people. On the one hand, it is going to a significant amount, on the other, the risks are shared among all investors depending on the investment volume. So there was the first joint-stock companies — of course, they were much easier than the current one, but its task was done.
Their mechanism worked so. Pre-defined a sufficient amount of contributions (authorized capital), which is divided into shares (shares). So each share acquired a formal value. Everyone could buy a certain number of shares and thus become shareholders of the company.
With the return of merchant ships, the profit is distributed in accordance with the number of shares of each shareholder. This process is called distribution of profits or payment of dividends. Shares are called securities is not just. Denomination and name of the owner was really filled with ink on paper, and dividends paid to those who could present the original document.
Then the shares were uncertificated. Stock print, and take into account as well as money in banks — special accounts. After the successful expeditions of the first shareholders faced a choice. To distribute profits among themselves and close the company or to invest part of the profits to a new journey.
To address this question took on managing the company — first of all, determines what portion of the profits to pay shareholders. The most obvious solution is to collect shareholders and ask them; so there is a Supreme governing body in companies — the General meeting of shareholders, taking decisions by majority of votes. As shareholders in large companies a lot and collect them is a difficult task, to determine their views on current issues was created a permanent body — the Board of Directors, consisting of representatives of the shareholders. With the advent of the first corporations was a question of responsibility.
Should shareholders pay for the debts of “their” company. To answer this question, lets look at the key features of the legal entity: Property. A legal person may have in the property office, computer, car and other things.
All this belongs not to the shareholders and Directors, and the legal entity. Will. Amazing fact. A legal entity is considered a full-fledged subject of law; he has his own desires — in other words, its will.
Although this will form the bodies of the legal entity (the General meeting of shareholders and the Board of Directors), in certain situations, the will of the legal entity may not correspond to the will of its members or leadership. Director of the company is going to make a risky big deal. He brings this question to the General meeting of members by a majority of ¾ of votes refuses. The transaction is not committed, although the Directors will and ¼ of the shareholders were directed to the transaction. However, in this situation the will of the General meeting, and hence the will of the society in the transaction is denied.
Once a legal entity has a property and is valid itself (his will), then obviously it should be able to answer for the decisions. This is called limited liability. If the companys assets not enough to pay off debts, for it paid neither the shareholders nor the leadership (managers). The most that shareholders can lose is the money transferred in the beginning in exchange for shares.
Legal entity, which will cease the income, over money and property, but will remain debt, will be bankrupt. Such an entity will have to eliminate, then only the entry in the registry will remind of its former existence. So proceed with caution and work with companies when they run out of money, will not ask with whom.
However, it is impossible to think that limited liability would protect shareholders and the management in any situation. Actually, there are exceptions. So, if the Director would try to cheat their counterparties would commit fraud, it will use criminal liability. Limitation of liability of the Corporation applies only to business risk — when the entity acts in good faith and if that fails, it inadvertently.
In addition to the limited liability of the legal person is another important advantage. It can be organized jointly with partners, identifying each its share. Unlike every “conceptual agreements” that exist only on paper, the entity has a certain resistance to corporate conflicts. This means that if a partner wants to cheat you, all the easy loopholes (such as a revision of the Charter, amendments to the contract, the removal of money from the account) is blocked. In extreme cases you can restore justice via the police and court.
Consider a few situations: Light and Bob decided to open a service station, without creating a legal entity, and “conceptual” dividing the deposits. Light bought the building, and Bob — equipment. At a cost of deposits was equal to. All, apparently, to be honest.
However, a year near a service station paved Federal highway. The flow of customers has increased dramatically and the Light drove the Bob along with his jacks outside. Because the contribution of Lights (building service centre) has increased in price, she rightly decided that she will be able to buy all the tools without washi. The lawyer.
Light absolutely right. The building is in its ownership, registered in her name, and she has the full right to dispose of them as you want. Light and Bob decided to open a car service. Equally chipped in and bought the space and the tool in half, becoming common by the owners.
But after six months, Bob began to drink, to score to work, stole a spare from a client of the jeep. Light tried to persuade Bob to leave, but he called a very large amount of compensation. The lawyer. Bob is quite right — half of the estate belongs to him and nobody can force him to sell the property at an unacceptable price.
Now the story with a good ending. Light and Bob decided to open a car service. They registered a limited liability company, bought the building and equipment and transferred all the company having received an equal share. What will happen next. If the car service will pave the road, they share the same will rise in price.
If Bob starts to drink, the world will be able to buy him out at fair value, and in particularly advanced cases — do it forcibly. The main thing is to make the companys Charter. Now compare the financial (especially tax) cost of doing business. Without registration as individual entrepreneurs and legal entity.
We assume that all taxes are paid regularly, in full accordance with the law. The individual-not the employer pays 13% income tax (pit). If a citizen (lets call him Pete) is working on official work, these 13% are deducted from his salary.
If the employment contract is the “100 000”, Peter will get 87 000 rubles on the card, and the rest the employer will list for Pete state. If Peter works independently (never officially arranged), it must annually submit to the tax inspection the Declaration is actually a statement of their income. Of course, much depends on the integrity of Peter and his desire to share information with the government. At the same time, the tax may know about his income from other sources.
For example, the policeman knocks at Petyas apartment rented by a friend Galya. That will show the district lease agreement with Peter, the district will take a picture and send it to the tax office. After some time, the tax authorities will send Pete a “letter of happiness”. Okay, lets not about sad.
The entrepreneur pays another tax. What exactly — depends on his choice. The hardest — General taxation system (core), it is a scary acronym “VAT” and other such things. Mainly includes several taxes, each of which has its own interest rate and tax base. Property, income, value added and so on.
Consider some taxes long and hard, but big business resources are. About the DOS we will discuss in Chapter “Taxes”. Small business, including the absolute majority of entrepreneurs usually choose a simplified tax system (STS) — it is available before reaching the limit (150 million roubles of turnover).
STS involves the rate of from 1 to 6% of income, or from 3 to 15% of the profits, rates vary by region. Next, Ill use Moscow (peak) rates. 6% and 15%, respectively. By the way, do you remember the difference between income and profit.
Income (turnover, revenue) — its all coming entrepreneur money. Profit (margin) is the part of the money that remained after making the entrepreneur costs (for the purchase of a new product, the salaries of employees and other). Suppose Mike sells bananas. He bought bananas for 100, sold for 150 rubles.
This amount — 150 rubles — Mike bought bananas and sold for 250 rubles. Calculate its indicators: So, on STS Michael will pay 400*6%=24 roubles of the income or 150*15%=22.5 rubles of profits.
Which option is more advantageous. To pay tax on the income or profits. It is easy to calculate. It is sufficient to determine that less than 15% of profit or 6% of revenue. Equilibrium point — the profit at 40% of income.
Explain easier. If for every $ 100 of income you put in his pocket more than 40 rubles, it is beneficial for you to pay tax on the income; if less than 40 rubles — from the profit. Of course, the point of equilibrium in each subject will have its own due to the different ratio of rates. There are a few nuances:
Legal persons are applicable all tax calculations that I have made for individual entrepreneurs, with one important exception. Entrepreneur is a natural person, the person. Income PI is the income of a person. Individual entrepreneur Bob, who earned 100, is entitled after tax to withdraw money from the account and buy food in the store.
Is it Vasina, property. Legal entity has all the property, including a profit in their property, not owned by the founders or Directors. Therefore, creating a company, you not enough to pay the taxes on her behalf, to make a profit. Money, even after taxes will remain on the account of the legal entity and your account will not go.
To withdraw profits from the company to its founder (participant, shareholder) is required to carry out the procedure of distribution of profit, in other words — to pay dividends. For this you need to know if other members and the Board of Directors, and the allocation of more time to pay tax not on profits, but on their income as individuals. In 2015 on dividends paid income tax at the standard rate (13%), all of the enumeration makes the company itself (as for the payment of tax from wages).
Special tax regimes (patent, unified tax on imputed income), I will not consider a book about startups. If your business is “normal”, i.e. not high-tech (household services, sewing, carting, and the like), is not superfluous to read chapters 26.3 and 26.5 of the Tax Code. In addition to taxes the government deducts our income contributions:
These deductions are called contributions and not taxes, because the state does not collect money and forced to “insure” you for that amount. So, in pension insurance you are insured against old age by paying into the Pension Fund of 20% from his monthly salary. With the onset of retirement age (the insured event) the state will begin piece by piece to pay your insurance premium — just as, for example, in the CTP, only the prize in this case will your pension. The contributions for employees paid by the employer.
Remember Pete signatories to the employment contract with the amount of 100 thousand rubles. He received 87 thousand rubles, and knowing that 13% had taken away the government asks social networks. “What are you doing with my taxes?”. But Peter does not know the main — the employer has spent on it is not 100 thousand and 130 thousand rubles. While 22 thousand rubles he paid to the Pension Fund at the expense Petya pension; 2900 rubles — in Fund of social insurance in case Peter is injured in the workplace (reimbursement and hospital); 5100 rubles — in Fund of mandatory medical insurance for Pitino the opportunity to be treated in public clinics.
Thus, of 130 thousand rubles Peter received 87 thousand rubles (about 67%). If Peter is not officially open, and no fees to pay is not required. Unlike taxes, the state does not require citizens contributions from private income. Of course, you can make voluntary contributions to the pension Fund, but it is cheaper just to put your hard earned on a foreign currency account with fixed Deposit.
The same applies to Pete — party legal entity. If you remember, he remains a physical entity, despite the fact that he opened his firm and, therefore, can allocate to himself the profit of the company, to pay personal income tax and not to pay contributions. Even if Peter is the Director of the legal entity, not just the founder, in some cases he could still not pay his salary and withdraw funds through the “distribution of profits” (dividends) and to pay only 13% tax.
From individual entrepreneurs all the more difficult. The law requires them to pay contributions for themselves even in the absence of hired employees. But there are advantages. First, SP is not required to pay contributions to the social insurance Fund. Secondly, he pays contributions is not a real income and minimum wage (SMIC) is the minimum salary in the country.
That is, the entrepreneur pays contributions as if settled by the employer at the lowest possible salary. So, in 2017, the SP will pay contributions in 27 990 rubles — as if he worked for a salary of 7500 rubles. If the income of the entrepreneur will be more than 300 thousand rubles a year, he will pay 1% of income at the top, but in any case not more than ≈190 thousand rubles per year (this corresponds to an income of 19 million rubles).
Of course, here, as with taxes, there are a number of nuances. For example, the tax of the simplified tax system “Income” can be reduced by the amount paid (partially or fully). For individual entrepreneurs with a turnover of one million roubles, it will give about 30 thousand rubles savings. Benefits for it firms, which employs more than seven employees, for residents of special economic zones and so on.
Register IP is the easiest. You only need to fill out an application and take it to the tax. To create a legal entity requires more documents to prepare, which is harder. The fee for the registration of IP — only 800 rubles for a legal entity — four thousand rubles. In some cases, the founders of the company will be forced to spend extra on the notary.
The cost of current activities is primarily accounting (accounting for taxes, contributions and personnel issues). Prepare and submit documents remotely. Using online systems such as “Contour” or through hired an accounting firm.
So, SP is perfect if you need a simple, quick registration and do not want to overpay in the distribution of income. On the other hand, a legal person can do business together, gives the limitation of liability and additional benefits. Any.
The individual entrepreneur is much more difficult to make investments, because he has no stocks or shares that can be transferred to the investor. The most that you can count on is a cunning loan agreement under which the entrepreneur would take money to develop (often a Bank loan which must be returned with great interest). However, in the presence of an investor to register a company for a week. SP convenient when you do not need to expand.
Why waste time on a complex system of corporate governance, if, for example, sell boiled corn on the beach. Another thing, when business becomes complicated, massturbate and you have to control the financial flows from around the black sea coast. In a legal entity you can create a special organ for the collective management — Board of Directors. It will be a place for professional auditor and General of police in resignation.
Walks on the Internet myth that “IP is a ruin, a little owes, and will remove last shirt”. In fact, unlimited liability entrepreneur often exaggerating. Yes, it really is liable for the debts with all its assets, because unlike the company, SP can not separate the property business from the property “for life”. The PI risks everything, but. No more than an ordinary citizen.
Think about it. We are constantly risking their property. Gape at the wheel, hit the Porsche — and goodbye to the apartment; he falls off a window sill flower pot on the head of the downstairs neighbor — the same, plus the state house for a couple of years. Non-entrepreneurs rarely assess surrounding risks, preferring to ignore them.
So, if FE “does not put the flower pot on the window sill” (not taking loans, do not store large quantities of goods for realization, not is a dangerous job, and so on), he can sleep peacefully. So, SP, engaged in the development and implementation of software (i.e. an execution), has little chance to get into debt. Penalties and fines relatively small, and in relations with the government will cover the risks of Bank guarantee. Again, the shirt, the creditors will not remove — you cant have a single housing (while — even if it is Villa), as well as furniture, clothes, food. Will not take orders and “breeding animals” (the cat is not considered).
Conclusion. Unlimited liability sole traders are not always evil. In some types of business it does not much interfere and kompensiruet advantages of IP. What Im saying?.
SP is much easier to use that money. Enough to have a Bank account and transfer his money to your card. Profit juridical persons, as you remember, there is a special procedure. Every three months, with the consent of the other participants, with 13% tax.
The individual entrepreneur has more incentives and bonuses on city programs to support small business. Read online in their region about support for entrepreneurs, there are very interesting things like rent-free premises, co-financing (state ruble for ruble SP) and so on. SP can also use DOS (General taxation system).
It is important for the trade and the b2b sector in General. However, such a business requires a large turnover and, consequently, the potential debts, so limited liability is getting critical. Therefore, the PI working as DOS, are rare. In most of the regions registered for the first time, SP provided a tax holiday, that is, in certain areas the first couple of years they do not pay taxes.
However, this does not apply to contributions as well as on businesses that operate under DOS. When a legal person is liquidated, it disappears forever. Because of this, the government carefully examines each case. If there are any taxes unpaid, disgruntled employees or disgruntled creditors.
Unlike the company, IE not disappear, but remains in the availability for creditors and the state, therefore, closing it almost did not check. If workers were not, the PI simply writes a statement to the IRS and continues to live as an ordinary citizen (paying 13% personal income tax instead of 6% STS). Administrative fines. Pay them all.
Undelivered statements errors in cash transactions, improper maintenance of employment records and so on — it is absolutely impossible to do business without penalties (if youre not an accountant). Now. The penalties provided for citizens is much lower than fines for organizations; UI belongs to the citizens, and penalties for it below dozens of times. SP is registered at the home address, as opposed to, for example, from joint-stock companies.
To come to SP with a search warrant, you must have the courts decision (not that it was the main reason to become entrepreneurs, but still). So, what we came. A legal person is fitted to doing business in shares. As additional bonus offers limited liability.
However, for the state preferable to the SP. They are easier to control and impossible to lose. Therefore, the conditions of registration, liquidation and other bureaucratic procedures the PI easier. So consider whether you need limited liability the price of the complex and the elimination of restrictions on withdrawals.