What is better to open: LLC or individual entrepreneur? Pros and cons of individual entrepreneurs and LLCs. Difference between individual entrepreneur and LLC

What is better to open: LLC or individual entrepreneur? Having decided to throw off the shackles of office slavery and no longer work "for an uncle", developing your own business, you should know that it must be legitimate from a legal point of view. That is, you need to register with the Federal Tax Service. And for this, first of all, you should decide which of these two options is more suitable.

Definition

To understand what is the difference between an LLC and an individual entrepreneur, and which of these two forms of doing business is better, first you should look into the Civil Code of the Russian Federation and read their definitions.

An individual entrepreneur is an individual who was registered in the manner prescribed by law as an individual entrepreneur leading

LLC - a business company or association, founded by one or more persons, with the authorized capital divided into shares.

This means that by registering as a sole proprietor, you are confirming that the entire business is wholly owned by you. If it is planned that the management of the company or firm will be carried out by several persons, it is more profitable to register an LLC - this form ensures the protection of the interests of each of the founders.

Documents required for registration

The difference between an LLC and an individual entrepreneur is also in what documents are required to register a business. In order to start working as an individual entrepreneur, you need:

• registration application completed in the form 12001;
• application for the simplified tax system (if necessary);
• receipt of payment of state duty.

To register an LLC, you will need more documents:

• application for registration, drawn up in the form of 11001;
• protocol or decision on registration of LLC;
• charter in 2 copies;
• a receipt confirming payment of the state duty;
• application for the simplified tax system (if necessary).

In some cases, in order to register a new legal entity LLC, you will need to supplement the main package of documents with an agreement on establishment (if there are several founders), as well as papers relating to the legal address (a certified copy of the certificate of ownership or a letter of guarantee from the owner).

State duty

Trying to understand what is better to open an LLC or an individual entrepreneur, you, among other things, should pay attention to the fact that for the registration of different forms of business, the amount of the state duty will also be different.

In accordance with clause 1 of part 1 of article 333.33 of the Tax Code of the Russian Federation, the creation of an LLC is subject to a duty of 4 thousand rubles. The same document determines the required contribution for those who plan to work as an individual entrepreneur - in this case, the cost will be much lower, only 800 rubles.

A responsibility

Of course, the difference between an individual entrepreneur and an LLC is closely tied to liability for obligations. So, individual entrepreneurs are liable with all the property that belongs to them, with the exception of that to which collection cannot be applied by law (Article 24 of the Civil Code of the Russian Federation). But the members of the LLC bear only the risk of losses associated with the activities of the organization, within the framework of their shares in the authorized capital. At the same time, they do not answer with personal property.

Administrative responsibility

What is better to open: LLC or individual entrepreneur? In studying this issue, you should carefully consider issues related to administrative responsibility. If any offense was committed by an individual entrepreneur, then, in accordance with the laws of the Code of Administrative Offenses of the Russian Federation, they are liable as officials. At the same time, the measures imposed on LLCs in such cases (for example, fines) are much higher than those applied to officials. That is, individual entrepreneurs brought to administrative responsibility end up suffering much smaller losses.

Registration address

Individual entrepreneurs are registered at the place of residence, at the address of permanent residence, which is indicated in the passport. LLC - at the place where the sole executive body of the organization is located. In fact, in the second case, you will have to rent or buy a legal address, which will entail additional costs.

Features of taxation and withdrawal of funds from accounts

In terms of withdrawing money from a current account, doing business in the form of an individual entrepreneur is certainly a more convenient option. You can contact the bank at any time in order to receive funds in cash. In this case, your expenses will be limited to the amount of tax - 6 or 15% (if a simplified taxation scheme is used).

As for the LLC, withdrawing cash from accounts is quite problematic, and without an appropriate justification, it is completely impossible. One of the possible ways is to pay dividends to a member of the organization, which are additionally taxed at a rate of 9% (personal income tax). In addition, as for individual entrepreneurs, you will definitely need to pay a tax amount of 6 (if applicable for LLC) or 15% (for simplified taxation system).

Liquidation

Whatever one may say, this question should still be divided into two parts - official and unofficial. From a legal point of view, an LLC for liquidation requires about 3-4 months of time and up to 30-40 thousand rubles for various expenses. Liquidation of an individual entrepreneur requires much less financial costs (on average about 5,000 rubles) and time (up to 2 weeks). There are no problems at all with the unofficial closure of an individual entrepreneur, but in the case of an LLC, you will need additional expenses (depending on the appetites of the organization, the amount can reach 30-50 thousand rubles). It is worth mentioning right away that it will not work to transform an individual entrepreneur into an LLC later: you will have to create a new legal entity.

Attraction of investments

The difference between an individual entrepreneur and an LLC can also be traced in how easy it is to find investors for a business of one form or another. Practice shows that it is extremely difficult for an individual entrepreneur to do this, because he is absent and, in fact, he acts on his own. The situation is complicated by the fact that the entire business belongs to a citizen, and therefore the investment of funds cannot guarantee the investor anything.

In the case of an LLC, everything is much simpler. After all, at least a guarantee of the investor's interests can be his inclusion in the list of participants in the organization through the buyout of a share in the authorized capital.

Reputation and image

Here the IP again loses somewhat. Even despite the fact that with this form of business you are responsible with all your property, the status of an LLC in the eyes of partners and counterparties is valued much higher, and therefore many companies prefer to cooperate with such organizations.

Summing up

In order to simplify your choice, we will combine the pros and cons of an individual entrepreneur and an LLC into one table.

What is better to open: LLC or individual entrepreneur? In fact, everything depends specifically on the situation and on the scale of the future business. If you plan to work on a large scale, cooperate with a huge number of companies and organizations, open branches and expand, attract new investors, then, of course, it is more profitable to open a full-fledged legal entity.

However, it is worth remembering that with all the registration costs, if you change your mind at some point or something does not work out, you will remain in the red, and the closing process may take more than one month. The advantages of IP make it possible to do this much faster and without serious costs.