) directly on our website. With their help, you will be able to prepare a package of documents that meets all the requirements for completion and legislation of the Russian Federation.
What is better to open an individual entrepreneur or LLC?
This question arises for most beginning entrepreneurs. Do right choice in such a situation is very important, since the registration procedure, further payment of taxes and other related factors will depend on this decision.
The importance of choosing a legal form should not be overestimated. The most important thing is to start your own business, and its form is essentially just an agreement with the state, under the terms of which you agree to conduct business.
Property liability of individual entrepreneurs and LLCs
Many articles on the topic have been published on the Internet: “What is the difference between an individual entrepreneur and an LLC” or “What is the difference between individual entrepreneur and LLC”. Almost in each of them, the main difference is the fact that the individual entrepreneur is responsible for his activities with personal property.
At the same time, the founders and participants of the LLC are not liable for the obligations of the company, but only risk the funds contributed to the authorized capital (the size of which is usually only 10,000 rubles). This is partly true:
Firstly, as for LLC. When creating it, two types of responsibility arise:
- Responsibility as legal entity.
- Responsibility of founders and participants as individuals.
When people talk about limited liability, they usually mean the first type. Indeed, an LLC as a legal entity is liable for its obligations only to the extent of its property.
However, if, for example, an LLC cannot pay off its debts on its own, then during the bankruptcy process these obligations may be assigned to its founders and participants (subsidiary liability).
Secondly, as for IP. All his property is not divided into personal property and that which he uses in business activities. Therefore, if debt obligations arise, claims will extend even to the property that was received before the start of business.
However, it should be noted that there is a list of property that cannot be recovered from an individual entrepreneur (for example, his only home or land). Full list listed in paragraph 1 of Art. 446 Code of Civil Procedure of the Russian Federation.
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Registration procedure for individual entrepreneurs and LLCs
Here we will look at the main differences between individual entrepreneurs and LLCs at the opening stage:
- You can register an LLC for one or several persons (up to 50), unlike an individual entrepreneur, where the owner is only one individual.
- To open an individual entrepreneur, you need to submit only 3 documents to the tax office: an application for registration, a receipt for payment of state fees and a copy of your passport. For an LLC, the package of documents is 2 times larger.
- The state duty for individual entrepreneurs is 800 rubles, and for LLCs – 4,000 rubles.
- Within 4 months after registration of the LLC, it is necessary to deposit the authorized capital in the amount of at least 10,000 rubles. IP does not need to do this.
- The registration period for individual entrepreneurs and LLCs is the same - 5 working days.
Legal address of individual entrepreneurs and LLCs
To register an LLC, you must first find a legal address. The future organization has 3 options for obtaining an address:
- Buy or rent non-residential premises(office, warehouse, etc.). From a legal point of view, this option is considered the most preferable location of the organization. However, it is quite expensive and therefore, in practice, not all founders can afford it.
- Enlist the help of a specialized company(bulk address). This method will cost much less than, for example, renting an entire premises, however, you need to be very careful when choosing a specialized company, because if it ends up on the blacklist of the Federal Tax Service, you may be denied registration of an LLC. Instead of using the services of a commercial company, a more reliable way may be to purchase an address at a territorial business support center (for example, a business incubator).
- Use the home address of the founder or CEO(you don’t have to be the owner, registration is enough). This method completely eliminates the cost of a legal address. note, that despite the fact that registering an LLC at a home address is not prohibited by law, some tax inspectorates may refuse registration.
As for IP. An individual as an individual entrepreneur must be registered with the tax office at his place of residence. Therefore, even if an entrepreneur lives and works in one city, but is registered in another, he will have to personally go to his city and submit documents for registration (or issue a notarized power of attorney to his representative).
At the same time, individual entrepreneurs are allowed to conduct their activities in any region of Russia without opening additional branches. However, an entrepreneur still needs to pay taxes and submit reports at his place of residence (with the exception of UTII and PSN, where tax payment and reporting are carried out at the place of business).
What is more profitable in 2019 – individual entrepreneur or LLC?
Asking this question, future entrepreneurs are primarily interested in which form of business (individual entrepreneur or LLC) is more profitable in terms of payment taxes And other payments.
Let's look at the most important points:
Insurance premiums for individual entrepreneurs
Individual entrepreneurs, regardless of the presence of employees and the chosen taxation system, are required to transfer insurance contributions for compulsory health and pension insurance for “themselves.”
Note: until 2018, the amount of these contributions changed annually, depending on the minimum wage, but since 2018, the amount of fixed contributions is no longer tied to the minimum wage, its exact amount is established in Art. 430 of the Tax Code of the Russian Federation (in 2019, the total amount of fixed contributions is 36 238 rubles).
Fixed payments are usually called the most the main disadvantage of IP in comparison with LLC, however, if you look at it, it turns out that this is not such a big minus:
- Firstly, insurance premiums of individual entrepreneurs are not taxes on business, but deductions for future pensions and health insurance.
- Secondly, even if there is only one participant in the LLC (general director), he still needs to pay a salary, from which insurance premiums are also transferred (even with the very minimum wage, the amount of contributions will be approximately the same as for an individual entrepreneur).
- Third, in almost all tax regimes, an individual entrepreneur has the right to reduce the calculated tax by all sum fixed payments paid, in contrast to an LLC, where it is allowed to use only up to 50% of the transferred insurance premiums.
Taxes depending on the taxation system
As for paying the taxes themselves, their size depends entirely on the chosen tax regime, and not on the applied organizational and legal form.
As of 2019, there are 5 tax regimes in Russia:
- General taxation system (OSNO).
- Simplified taxation system (STS).
- Unified tax on imputed income (UTII).
- Unified Agricultural Tax (USAT).
- Patent taxation system (PTS).
Tax rates for individual entrepreneurs and LLCs on the simplified tax system, UTII and unified agricultural tax the same. The only difference is provided common system, where the profit tax for organizations is equal to 20% , and the income tax for individual entrepreneurs is 13% . Only individual entrepreneurs have the right to use the patent system.
Taxes and payments for employees
Taxes and payments for employees for individual entrepreneurs and LLCs the same.
All employers, regardless of whether it is an individual entrepreneur or an LLC, are required to withhold personal income tax (income tax) from income paid to their employees, as well as transfer insurance contributions for mandatory pension, medical and social insurance.
Income tax is withheld at the time of payment of salaries and is 13% (for almost all payments to employees). The amount of insurance premiums depends on the type of tariffs applied (in general, 30% of the amount issued to the employee is transferred to the funds).
Learn more about taxes and payments for employees.
Restrictions on types of activities for individual entrepreneurs and LLCs
Individual entrepreneurs are not allowed to engage in certain types of activities.
The most common ones include:
- Production and trade of alcohol (except beer).
- Insurance services.
- Banking activities.
- Investment funds.
- Activities of pawnshops.
- Tour operator activities (in this case, you can provide the services of a travel agent).
- Production of medicines.
There are no restrictions for organizations, so by registering an LLC, you can engage in absolutely any type of activity.
Withdrawal of money from business
The main goal of entrepreneurial activity is to make a profit. However, in order to freely dispose of the funds earned, they must first be taken out of business.
For individual entrepreneurs there is no such problem. All the money he earns is considered his own and therefore he can withdraw it from the cash register or withdraw it from his current account at any time.
The amounts that an individual entrepreneur can spend on his personal needs are not limited (the main thing is to avoid arrears in paying taxes and insurance premiums). You do not need to pay any additional taxes when withdrawing money.
Regarding LLC the situation is somewhat different. Everything an organization earns is its property. Therefore, even if there is only one founder in an LLC, he still does not have the right to dispose of the organization’s money at his own discretion.
LLC founders can withdraw earned money in the following ways:
- Dividend payment.
- Calculation and payment of salaries.
- Conclusion of a loan agreement.
- Drawing up an agreement with an individual entrepreneur.
- A fictitious agreement with another company.
The payment of dividends is a safe and legal procedure that is expressly provided for the purpose of distributing the income received by the company.
Dividends are paid from the company's net profit, which remains after paying all necessary taxes and fees. LLC income can be distributed quarterly, semi-annually or at the end of the year. The frequency of payments is prescribed in the company's charter. Most best option- based on the results of the year.
It is necessary to withhold income tax from salary in the amount of 13% and transfer insurance premiums to extra-budgetary funds (usually about 30%). Personal income tax is also withheld from dividends in the amount of 13% (before 2015 it was 9%).
Example. Profit calculation for individual entrepreneurs and LLCs
LLC "Company" with one founder and individual entrepreneur I.A. Petrov. without employees, the simplified tax system Income (6%) is used.
Let’s assume that in 2019 each of them received an income of 950,000 rubles, but there were no expenses. The calculated amount of the simplified tax system in this case will be the same: 57,000 rubles. (RUB 950,000 x 6%).
The individual entrepreneur paid “for himself” insurance premiums in the amount of 36,238 rubles. By law, he has the right to reduce the amount of tax by 100% of the contributions paid. Therefore, he will pay the simplified tax system tax for 2019 in the amount of: 20,762 rubles. (57,000 rubles – 36,238 rubles).
Net profit of individual entrepreneurs in this case it is equal to: 893 000 rub. (950,000 rub. – 57,000 rub.).
The founder of the LLC set himself, as the general director, the minimum possible salary (minimum wage) of 7,500 rubles and paid insurance premiums from it in the amount of: 27,000 rubles. (RUB 7,500 x 12 months x 30%). By law, he has the right to reduce the amount of tax, but not more than 50%. In this case, the simplified tax system tax for 2019 will be equal to: 30,000 rubles. (57,000 rub. – 27,000 rub.).
Note: in our example, the amount of contributions was less than 50% of the calculated tax, therefore, when it was reduced, the amount of contributions was used in full.
Additionally, personal income tax was withheld from the salary at a rate of 13% in the amount of: 11,700 rubles. (RUB 7,500 x 12 months x 13%). Thus, the general director received clean: 78,300 rubles. (90,000 rubles – 9,678.24 rubles).
Dividend calculation: 950,000 rub. – 90,000 rub. (salary) – 57,000 rub. (USN tax + insurance premiums) = 803,000 rubles. Dividends are additionally subject to tax at a rate of 13%, which is equal to: 104,390 rubles.
Dividend income amounted to: 698,610 rubles.
CEO's net income in this case it is equal to: 788 610 rub. (RUB 698,610 + RUB 90,000).
Thus, other things being equal, the net profit of the individual entrepreneur turned out to be greater by 104 390 rubles
Reporting of individual entrepreneurs and LLCs
I would like to note just a few main points:
- Tax reporting (declarations and KUDiR) depends on the taxation system, and not on the form of doing business.
- Reporting for employees for individual entrepreneurs and LLCs is the same (at the same time, if the individual entrepreneur does not have employees, then there is no need to submit reports).
- Individual entrepreneurs are not required to keep books and submit financial statements. At the same time, small organizations (number of employees no more than 100 people and revenue no more than 400 million rubles per year) have the right to draw up accounting records in a simplified form.
- Individual entrepreneurs and LLCs that use cash in their activities are required to comply with the rules of cash discipline (it is worth noting that for individual entrepreneurs these rules are much simpler than for LLCs).
Wage-earners
There is an opinion that employees who work for individual entrepreneurs have much fewer rights than employees of organizations. In reality this is not the case. The responsibilities of employers are practically independent of the form of business.
An individual entrepreneur, just like an LLC, must register employees in full compliance with the Labor Code (conclude employment contracts, make entries in work books, pay for vacation and sick leave, transfer all necessary payments to extra-budgetary funds, etc.).
Since the organization already has at least one employee (general director) from the very beginning, it is registered automatically immediately after registration.
From January 1, 2017, the application procedure for registration has been canceled for individual entrepreneurs. Registration and deregistration with the Pension Fund of Russia can be carried out on the basis of information contained in the Unified State Register of Legal Entities, the Unified State Register of Individual Entrepreneurs and the Unified State Register of Entrepreneurs and it is not at all necessary to submit additional documents (letter dated January 31, 2017 No. BS-4-11/1628@).
Attracting investments
In terms of attracting investments, an LLC looks more preferable than an individual entrepreneur. With the help of additional funds, an organization can expand its business and reach a completely new level in terms of profit.
However, we should not forget that investing is not charity. In return for their investment, new members may demand a significant stake in your organization. Therefore, before approaching investors, it is better to think things through first.
In principle, an individual entrepreneur can also attract additional funds, but, as a rule, this ends not in investments, but in a banal loan, leasing or credit. Under " honestly“Getting money is quite difficult, since it is almost impossible to prove to an investor that someone else took part in the development of the individual entrepreneur’s business.
Therefore, if you are planning to run a business not alone or in the future legally decide to increase the number of participants and attract investments, then the most preferable form of business for you will be an LLC.
Prestige and reputation
There is a misconception that other companies cooperate less willingly with individual entrepreneurs than with LLCs. Actually this is not true. In most cases, clients, customers, suppliers, etc. It makes absolutely no difference what form of business you use. The most important thing for them is the strict fulfillment of contractual obligations.
The only thing I would like to note is cooperation with organizations and individual entrepreneurs that apply the general tax regime. Since they are VAT payers, they try to do business with entrepreneurs on the OSN. But this more likely relates to the difference between taxation systems than to the differences between individual entrepreneurs and LLCs.
Procedure for closing an individual entrepreneur and liquidating an LLC
Closing an individual entrepreneur is much easier and faster than liquidating an LLC. To do this, you just need to pay a state fee of 160 rubles and submit an application to the Federal Tax Service to terminate the activity.
In turn, for LLC liquidation necessary:
- Make a decision on liquidation, create a liquidation commission and appoint its chairman.
- Submit to the Federal Tax Service decision and a liquidation application in form P15001.
- Publish a notice of liquidation in the journal “Bulletin of State Registration”.
- Notify creditors of liquidation.
- To prepare for possible field inspection from the Federal Tax Service.
- Submit an interim liquidation balance sheet (submitted no earlier than 2 months after publication in "Vestnik").
- Pay the state fee for liquidation of the LLC in the amount of 800 rubles.
- Submit the final set of documents (liquidation balance sheet, application in form P16001, receipt for payment of state duty, etc.).
As we can see, liquidating an LLC on your own is quite difficult and time consuming (at best, the closure procedure lasts at least 4 months). As an alternative, the organization (as opposed to an individual entrepreneur) can be sold or its founders can be changed, but for this it must have a good entrepreneurial history.
Liability and fines
When registering an LLC, you need to understand that a legal entity has much more responsibility than an individual entrepreneur (for example, for non-compliance with the rules for using a cash register, the fine for an individual entrepreneur is from 3,000 to 4,000 rubles, and for an LLC - from 30,000 to 40,000 rubles)
As you can see for yourself, penalties for administrative offenses for LLCs are several times higher than monetary sanctions for individual entrepreneurs. In addition, according to the Code of Administrative Offenses, not only the organization itself, but also its officials(manager, chief accountant).
Criminal liability for heads of organizations is also more serious than for individual entrepreneurs. This is due to the fact that a number of articles in the Criminal Code are dedicated specifically to legal entities.
As for tax liability, for individual entrepreneurs and LLCs it, in most cases, coincides (this happens due to the fact that in tax legislation, instead of indicating a specific organizational and legal form, the term is most often used "taxpayer").
Advantages and disadvantages of individual entrepreneurs and LLCs
The table below shows all the main differences between individual entrepreneurs and LLCs:
Table 1. Pros and cons of individual entrepreneurs and LLCs in 2019
| Business form | IP | OOO |
|---|---|---|
| Registration procedure | Simple (small package of documents + 800 rubles for state duty) | More complex (package of documents twice as large + 4,000 rubles for state duty) |
| Authorized capital | No need to contribute authorized capital | It is necessary to deposit at least 10,000 rubles within 4 months after registering the LLC |
| Legal address | Registration is carried out at the address of residence | Mandatory (rented or own premises, mass address or home address of the founder) |
| Number of owners | Sole owner (individual). To exit the business you will have to close your individual entrepreneur | There can be either one founder or several persons (up to 50). Withdrawal from the LLC does not stop the company's activities |
| Property liability | Responsible for obligations with all of his personal property (even after the closure of the individual entrepreneur). The only exception is property that cannot be recovered by law. | Responsible for obligations only within the scope of the organization’s property. However, founders, participants and managers may be held vicariously liable |
| Withdrawal of money from business | Can freely dispose of the money received (subject to timely payment of taxes and contributions). There are no additional taxes when withdrawing money | Everything that an organization earns is its property. Therefore, you can make a profit in only two ways: in the form of wages (personal income tax 13% + contributions 30%) or as dividends (personal income tax 13%) |
| Activities | You cannot engage in certain types of activities (production and trade of alcohol, insurance, banking and investment activities, pawnshops, tour operators, production of medicines, etc.) | No restrictions on types of activities |
| Tax systems | You can use all existing tax regimes (including PSN) | You can use all tax regimes except PSN |
| Taxes and payments | It is necessary to pay mandatory insurance premiums for individual entrepreneurs. All other taxes and payments depend on the availability of employees and the chosen tax system | There is no need to pay anything provided that there is no activity, there are no employees, and there is no property on the balance sheet. In other cases, the amount of taxes and payments depends on the chosen taxation system and the number of employees |
| Workers | It is possible to operate without employees. After hiring the first employee, starting from January 1, 2017, you no longer need to register with the Pension Fund of Russia as an employer. An application for registration must be submitted to the Social Insurance Fund no later than 30 calendar days after hiring the first employee. Otherwise, the responsibilities of individual entrepreneurs and LLCs as employers coincide | Registration as an employer occurs automatically, immediately after the creation of an LLC (since the organization always has at least one employee - the general director). Otherwise, the responsibilities of LLCs and individual entrepreneurs as employers coincide |
| Prestige and reputation | In most cases, they cooperate with individual entrepreneurs in the same way as with legal entities | There are situations in which organization is the only possible form of cooperation (for example, when participating in some government tenders) |
| Attracting investments | It is impossible to attract investments in their pure form. As a rule, you have to take out a loan, loan or lease | You can find investors, but in return for the invested funds you will need to allocate a share in the LLC |
| Reporting | No need to submit financial statements. All other reports depend on the availability of employees and the chosen tax system | It is necessary to submit financial statements (small LLCs have the right to submit in a simplified form). All other reports depend on the number of employees and the selected tax system |
| Cash discipline | You do not need to follow most cash discipline rules | It is necessary to comply with all the rules of cash discipline (small LLCs have the right not to set a cash balance limit) |
| Liability and fines | There are much fewer types of liability and fines than for legal entities | There are many more types of responsibility than an individual entrepreneur. Fines are significantly higher and are imposed not only on the organization itself, but also on its officials |
| Branches and representative offices | You can work throughout Russia; you do not need to register branches. However, as a rule, you have to report at your place of residence | To work in another region, as a rule, you have to open a separate division and register with the local Federal Tax Service |
| Selling a business | IP cannot be sold or transferred to another person | The LLC can be sold or the founders can be changed |
| Closing and liquidation | Closing an individual entrepreneur is much easier, cheaper and faster than liquidating an LLC | Liquidation of an LLC is a rather complex and expensive process. In the best case, the closure procedure lasts at least 4 months |
Often people, when deciding to open their own business, believe that their own business is the only opportunity to achieve financial solvency and build a life in accordance with personal goals.
However, some of them, when deciding which business is best to open, act spontaneously, without in-depth study of the subject of the future type of activity. Even despite some luck initial stage, it is necessary to remember that this phenomenon passes quite quickly.
Conditions for the strength and stability of the planned business
When considering the question in which area it is better to open a business, you must remember to create, first of all, good foundation. Let us dwell in more detail on the basic principles of its formation.
So, the first condition is the fact that any business that the future entrepreneur is going to do must be liked. In this case, he is his own master, and no one has the right to force him to work.
The second point is its deep study and constant improvement of the acquired knowledge.
The third point is that you don’t need to get carried away with large financial investments at the initial stage. Your own business must be developed step by step using the profits received. If it is absent, you need to decide for yourself once again which better business open, or maybe abandon this idea altogether.
Among the main industries in which you can quite successfully develop your own business are trade, services and manufacturing.
Trade
Trade is now quite widely represented in the services market. We can say that this is one of the most numerous sectors of the national economy in terms of the number of economic entities.
Depending on what type of business you plan to open, you can draw appropriate conclusions about the size of the initial costs.
So, for example, if a future entrepreneur is a fairly successful sales representative of a large company and can sell snow even in winter, then in this case you can think about opening your own business in this area. However, it must be remembered that this area may require slightly more funds than, for example, production.
When considering the question “which business is better to open for little money?”, you can find quite economical options. These types of business include network marketing. Especially if an entrepreneur wants to carry out activities without leaving home. Of course, you need to remember that network marketing requires some effort, dedication and willingness to learn. However, the most important point in this type of business is the correct choice of the company whose products the entrepreneur will distribute.
Network marketing: nuances of carrying out activities
You can focus on this type of activity when deciding the question “which is better to open a business from scratch?” Indeed, such a business does not require huge costs at the initial stage. However, there are some features of the activity, thanks to which you can consistently receive a good income.
Firstly, is a product characterized by unique properties and has proven itself in the relevant market. The best option is the choice of goods that have an affordable price for the bulk of the population and can quite successfully replace a more expensive analogue.
Secondly, a so-called compensation plan must be developed. In this case, when deciding the question “which business is better?” it is necessary to put profitability first and avoid various matrices with a complex structure and other schemes that may limit the amount of earnings.
Third, the required amount of the founding fund. Its size speaks of the founders’ confidence in success and their focus on fruitful work.
Fourth, working with potential clients. Their search is carried out among friends or family members. However, the most progressive technique is online marketing.
Which small business is better to open to provide services?
The service sector is a bonanza for this sector of the economy. It requires minimal financial investment. Among such services to the population are the following:
- cleaning clothes;
- repair of shoes, equipment, as well as apartments and plumbing;
- delivery of products;
- cleaning entrances, corridors and apartments;
- mediation in the field of real estate.
Such enterprises can carry out work on cleaning premises and territories, delivering hot lunches, decorating premises for a holiday, printing documentation and creating websites.
Manufacturing sector
Until recently, production was associated with large factories and factories. Modern production of products can be carried out without large investments and in the presence of premises of minimal size. At the same time, at the initial stage you can save significantly by not buying equipment, but by renting it. Therefore, when deciding in which area it is better to open a business, this option is the most suitable.
However, before starting any business, it is necessary to carefully calculate its profitability, required amount employees, as well as study the legal framework of this industry.
Among the main concerns in production activities are the supply of raw materials and the sale of finished products. The following types of products are manufactured in modern small-scale industries:
- components, parts and semi-finished products, according to orders from other partner companies;
- accessories for furniture and clothing;
- furniture;
- hats, clothing and shoes;
- equipment for sports grounds;
- bakery products.
This list can be continued, but the main thing is that before starting an activity, all possible information should be studied and everything should be thought out, down to the smallest detail.
Organizing a business in a small town
A small town is characterized by fierce competition, insufficient clientele and relatively meager income.
Therefore, when deciding which business is best to open, several conditions must be met:
- Make sure that the planned business does not require a significant number of highly qualified personnel. For example, you can set up a software development company in a small town, but it will be very difficult to find good programmers.
- Make sure that the future business does not have a narrow focus. An example is shops selling exclusive tea. So, if they are successful in big cities, they are unlikely to be successful in small cities.
- Make sure that the chosen type of activity will not raise questions for the entrepreneur; it should be understandable and interesting.
Advantages of starting a business in a small town
Among the certain disadvantages of starting your own business in a small town, there are also some advantages.
So, when deciding which business is best to open in a small town, you can take into account such a positive point as the uselessness of large start-up capital. This becomes possible thanks to low prices for renting premises. Also, employee salaries will be slightly lower compared to salaries in a large city.
Outsourcing activities: an excellent business option
Outsourcing activities, which involve fulfilling orders from large partners from various cities, can be a fairly profitable business. Especially if we are talking about a small locality, and most expenses will be kept to a minimum.
Basic business ideas for Moscow
When deciding which small business is best to open in Moscow, you still need to turn to the trade sector. Indeed, you can sell anything. To optimize such activities, the most convenient option is a store.
It is best to choose clothing, food and other necessary goods as objects of trade. If the financial capabilities are sufficient, then the best solution is to open a small department store where you can present a wide range of different goods.
However a win-win option There will be a cafe or restaurant opening. There is very high competition in this service sector, but with a properly drawn up program of action and making the right decisions, such a business can be considered quite profitable.
Due to the fact that Moscow is a metropolis, where there is a constant shortage of organic food, organizing a farm would be a great idea.
Most retail firms are registered as limited liability companies (LLC). They can be created by both citizens and companies. The founders of the company - or owners - are called participants. They agree among themselves on what conditions and for what purposes the company will be created, and sign the memorandum of association. The number of participants in a limited liability company should not exceed 50 people.
The founders are required to create the so-called authorized capital. Its size cannot be less than 10,000 rubles. This requirement is enshrined in Art. 14 of the Federal Law of February 8, 1998 No. 14-FZ “On Limited Liability Companies”. The authorized capital is formed from the contributions of the founders, and they can be either monetary or in the form of property.
The main right of the founders of the company is to participate in the management of the company’s affairs and distribution of profits. Any founder can, at his own discretion, withdraw from the membership by selling his share.
Termination of a company's activities requires publication in the media of a notice of the company's liquidation.
Advantages of LLC
A company registered as a limited liability company has a number of advantages over a private entrepreneur, and they are approximately as follows:
- if the company goes bankrupt, the founders lose only their share in the property of the LLC;
- if one of the founders personally owes money to someone, the company is not liable for these debts;
- responsibility for the activities of the company lies with its director, who is appointed by the founders;
- a limited liability company can be transformed into a company of another type without ceasing its activities;
- Several founders of a company have more financial capabilities than one entrepreneur.
Disadvantages of LLC
If you are going to organize a limited liability company, you should also remember the disadvantages of this form of activity.
Firstly, the procedure for registering an LLC is more complicated, and registration costs are higher than for an entrepreneur without forming a legal entity (PBOYUL). And the procedure for terminating a company’s activities is longer and more troublesome than the latter. To do this, it is necessary to create a liquidation commission, publish a message in the media about the liquidation of the company, and, in addition to the application and receipt for payment of state duty, you need to submit a liquidation balance sheet to the tax office.
Secondly, a limited liability company has a more complex business management system compared to a private entrepreneur. It implies mandatory meetings of the founders to appoint a director of the company, to distribute profits, etc.
And finally, a founder who decides to leave the business can sell his share to any outsider if the remaining founders abandon it.
Joint stock companies
Firms created as joint stock companies (JSCs) differ from limited liability companies in a more complex management system. Typically, joint stock companies arise after the reorganization of an LLC.
To create an authorized capital, a joint stock company needs to issue shares and register them with Federal service on financial markets. In addition, such an organization is required to maintain a register of shareholders. The value of the shares must be secured by the value of the company's property and funds.
All important decisions for the company (appointment of a director or board of directors, determination of the amount of dividends and their payment based on the results of the company’s work, reorganization of the company, etc.) are made at the general meeting of shareholders.
The activities of the company are managed by an executive body: sole (director) or collegial (board of directors). Keep in mind: the founders of the company are not responsible for the actions of the director they appointed.
A joint stock company is required to create a reserve fund. It is necessary to pay off non-productive losses and losses of the company, as well as to buy back shares of the company if there are not enough other means for this.
By law, a joint-stock company must create an audit commission, whose responsibilities include monitoring and verifying the financial and economic activities of the company. Such a check must be carried out at least once a year.
The process of liquidating a joint stock company is similar to the liquidation of a limited liability company.
Advantages of JSC
The advantage of a joint stock company can be considered the limited liability of founders and shareholders. If the firm goes bankrupt, shareholders will lose money only to the extent of the value of the shares they own.
In addition, making decisions in a joint stock company is easier than in a limited liability company. The fact is that the circle of shareholders is wider than the number of LLC participants and equality of votes at the general meeting is unlikely.
100,000 rubles - required minimum amount to create a joint stock company.
Features of CJSC and OJSC
A closed joint-stock company (CJSC), like a limited liability company, can be created by both citizens and firms.
The number of shareholders of a closed joint stock company should not exceed 50 people. If there are more of them, then within one year the company must be re-registered as an open joint-stock company. Otherwise, it will be closed in accordance with legal requirements.
The shares of such a company are distributed among the founders or other limited circle of citizens. Its authorized capital - and, therefore, the amount of shares issued upon registration - should not be less than 10,000 rubles (Article 26 of the Federal Law of December 26, 1995 No. 208-FZ “On Joint-Stock Companies”).
If the owner of shares in a closed joint stock company wants to sell them, he must inform the other shareholders about this. If they do not want to purchase his share, he has the right to sell the shares to any citizen or company. This is prescribed by Art. 7 of the Federal Law of December 26, 1995 No. 208-FZ.
In a closed joint stock company, it is easier to control the situation with the distribution of shares among shareholders, since their circle is limited. This is one of the main advantages of the company.
In addition, a closed joint stock company is often used as the main holding company.
The authorized capital of an open joint-stock company (OJSC) must not be less than 100,000 rubles. This requirement also applies to the amount of shares issued upon registration) (Article 26 of the Federal Law of December 26, 1995 No. 208-FZ “On Joint-Stock Companies”). Unlike a closed joint stock company, shares of an open joint stock company can be sold to an unlimited number of citizens. This is both an advantage and a disadvantage of this organizational form. On the one hand, any owner of shares can sell them without asking the permission of other shareholders. Moreover, since these securities distributed among a wide range of shareholders, then at a general meeting it is easier to make decisions necessary for the company. On the other hand, it is difficult to control where and who owns the shares. This may lead to the fact that any of the founders, buying them through third parties and secretly from other shareholders, can acquire a controlling stake.
These links lead to articles that are relevant for almost any new businessman, including those who are not yet confident in their abilities and are considering, among other things, the option of a gradual transition from entrepreneurship (self-employment) to business itself, managing a company.
However, if you want to immediately open a company that will employ hired employees, everything is somewhat more complicated. And to answer the question “which company is better to create?” it is required, firstly, to fully and accurately determine one’s own resources and capabilities, and, secondly, understand the specifics of creating a company.
What you need to know when opening a company
To clearly separate the creation of your own company from self-employment, here is a table. And after that we will draw some important conclusions.
| Own company | Entrepreneurship |
|---|---|
| Your job is to organize other people | Your job is to do the part yourself necessary work(production, provision of services) and attracting other people for this (outsourcing) |
| Opening is almost always associated with a fairly significant number of formalities (accounting, personnel issues, etc.) | Minimum formalities |
| Almost always unprofitable at the initial stage, rather long payback period | Can make money from day one. The payback period is short. |
| All difficulties are outweighed by the potentially higher returns and the opportunity to earn passive income. | Constant monitoring and effort is required to maintain income and its growth. |
From here it is obvious that creating a company makes sense if:
- you have the competencies of a manager, leader (or you are ready to develop them);
- you have or the bank agrees to give you a loan to start a business;
- you are ready to work at a loss or at zero for a year or more in order to build a system that will generate money on its own.
All these arguments were given here for a reason.
What type of business to choose?
Obviously, the requirements listed above apply primarily to you, the founder of the business.
However, there are no less requirements for a specific area of business and economic conditions in this particular place where you are going to develop the company.
So, if you are opening a company:
- You need to make sure that the market is “deep” enough and that the cash flow in the chosen area is capable of supporting not only you personally, but also a group of your employees. The requirements for turnover and profitability are relatively high.
- There are specialists with the qualifications you need on the labor market.
- You choose a fairly stable direction (remembering that the company’s payback is a long process). Also, seasonal classes are not suitable for more or less serious business.
What is the most profitable business - 3 areas worth paying attention to + 5 tips on how to determine the profitability of a business.
Nobody wants to invest money in a business that is obviously a failure.
Therefore, find what is the most profitable business and realizing it is the main goal of any entrepreneur.
It is impossible to say for sure which business will be profitable and which will not.
This is influenced by many factors, ranging from the place where it is conducted and ending with the correct organization of affairs.
Know that with proper calculations and the desire to work hard, even the most banal idea can take off.
Today we will not talk about large businesses in the form of oil refining, machine production and pharmacology, because these industries require colossal investments and connections at the state level.
Therefore, let's discuss ideas for a profitable business that anyone can implement.
What determines the profitability of a business?
Reflecting on the question of what is the most profitable business, it must be said that a lot depends on the person.
If an entrepreneur works carelessly, then the implementation of even the most promising idea can end in real failure.
We all know that when starting a business, you need to conduct a thorough analysis of the chosen area and understand the financial component.
Only after such actions can the profitability of the business be assessed.
To determine the profitability of a business, pay attention to the following conditions:
This is income that will not depend on your participation.
If you have it, you can expand or even open a new business.
Constantly increasing income
Everything is simple here: if your income is growing, then you are on the right track, because your clients or customers are happy, and their number is growing.
| Criterion | Benefit Description |
|---|---|
| Payback | It is important to calculate over what period you will return the invested funds. The faster this happens, the faster you can begin to further develop your business. |
| Demand | The more people buy your product or service, the higher your income. The higher the income, the more profitable the business. |
| Competitors | Having little or no competition gives you the opportunity to provide consumers with something new. |
| Profitability | The rate of revenue growth must exceed sales. |
| Business expenses | They should be kept to a minimum, but should not affect the quality of goods or services. |
How to organize a profitable business?
The benefits of business are different for everyone.
Some people are quite happy with a profit of several thousand, while others need a million, while others want their company to be known throughout the country.
And yet, regardless of the goals of the entrepreneur, everyone needs to know how to properly organize the opening of their own business:
Come up with some ideas
Think about what you want to do and what you can offer to the population.
Let there be several options.
Prioritize the area in which you are strong.
If you understand cars, but do not understand law, then opening a notary office is not for you.
But if you're willing to spend Extra time for training, or you can pay for the services of specialists who will help you open a business in an industry unfamiliar to you, then go for it.
Calculate the costs of implementing each idea you have in mind
For each idea you have, make calculations with opening costs, as well as approximate income, to find out the payback period.
Remember that you are choosing the most profitable business for yourself.
Consider not only the financial component, but also your own preferences, as well as your knowledge, which you can apply if you choose this or that idea.
Then determine for yourself the top 2-3 ideas.
Analyze the selected ideas
Here, consider factors such as locality, demand, competition, and the strengths and weaknesses of each idea.
Choose one idea
Based on the results of the calculations and analysis, you will be able to choose the most profitable business for yourself.
The most profitable business is sales
There are many areas of activity, and it's time to start exploring what what is the most profitable business in each of them.Trade is an eternal business.
People will always buy something.
Especially it concerns:
- food;
- clothes;
- cosmetics and;
- hand-made;
- building materials.
Of course, the competition in the trading field is quite tough, but you can still break through if you choose the right niche.
Moreover, in the Internet era, you can engage in online sales.
You don't need to invest a lot of money for this.
But in any case, you need to find proven and reliable suppliers who will deliver quality goods on time.
If you have a small start-up capital, take a closer look at the vending business.
This could include vending machines with coffee, water, drinks and food.
This is a great way to have passive income.
Special attention should be paid to opening a pharmacy.
It is in demand always and everywhere, no matter where you live.
High demand and quick payback speak for themselves - this is a profitable business.
The most profitable business in the field of beauty and health
Now there is just a real “boom” for everything related to beauty and health.
Even in times of crisis, people, especially girls, want to look good.
And on this desire you can build a profitable business.
These include:
- hairdressers;
- beauty salons (beauty bars) of different classes;
- beauty salons;
- SPA centers;
- fitness clubs;
- massage rooms;
- medical laboratories;
- private medical offices and.
Of course, you shouldn’t open another beauty salon or hairdresser if there are already five in your area.
The exception is the option when you can offer your clients something new and will actively promote yourself.
The last two options will be especially beneficial, since many people refuse to visit public hospitals in order to save time.
Therefore, if you have medical knowledge, and there are not many competitors in your locality, then you can build a profitable business.
The most profitable business in the service sector
If you have certain knowledge and education in a certain field, and at the same time want to work for yourself, then providing services will be the most profitable business for you.Firstly, at first you don’t need to hire a lot of people on staff, and secondly, you will know the nuances of running a business.
But you must understand that only when high quality services provided can ensure an influx of customers.
So, whose services are currently in demand is shown in the table:
Also profitable business options in the service sector are:
cleaning service
This is especially true in large cities, where there are many business centers and offices, the owners of which are ready to entrust the maintenance of cleanliness and order to specialists.
repair work in various industries
This includes the repair of clothing, shoes, plumbing, electronic and household appliances, as well as, of course, construction and installation robots.
tutoring
It will be especially popular among schoolchildren and students.
In addition, you can teach at home or via Skype.
Previously, such a business was in demand only in large cities, but increasingly people in small towns need such services.
catering
This is the provision of services related to the organization of various events: weddings, banquets, business meetings.
Of course, they will only be relevant in big cities, because that’s where potential clients live.
The video below presents current business ideas that will certainly bring profit:
The most profitable business on the Internet
“To be successful, business must be in your heart, and your heart must be in business.”
Thomas John Watson
In the era of the Internet, it is no longer a secret for many that you can earn decent money on the virtual network.
Moreover, you can run such a business right from home, and besides, the locality in which you will be located will not matter.
What to do on the Internet with benefits:
Creating a website or blog
Sources of profit will be affiliate programs and contextual advertising.
This business is directly related to sales, only you don’t have to spend money on opening a store.
And it’s not even necessary to create a website with an online store.
Selling information/knowledge and providing online consultations
This includes online tutoring, copywriting, selling photographs and providing consulting services of various types.
In order to understand what is the most profitable business, you need to analyze several ideas and find something that will bring you pleasure.
Remember that only when proper organization business, as well as a thorough analysis, you can understand which business will bring profit and benefit.
But know that there is no definite answer, because every business is unique.
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