Pros and cons of ooo and ip

Even if the time of hyperinflation comes in the country, ambitious people will not disappear from this. And even in the harshest market conditions, they will come up with ways to create, run and register their own business. And for sure in the future, as well as now, there will be a problem with such a difficult question, which is better - LLC or individual entrepreneur, the pros and cons of organizations.

and LLC?

In the world of big business, there are many organizations, the main specificity of which is entrepreneurial activity. But before turning into a large corporation, entrepreneurs start small - registering an individual entrepreneur or LLC.

This is an entity that is registered as a participant in entrepreneurial activity, while not forming a legal entity, but has all its powers.

LLC is a legal entity, It can act as a firm, company or corporation. All members of this company are responsible for the authorized capital.

Individual entrepreneurs and LLCs have their own advantages and disadvantages. They are mainly related to obligations and the level of responsibility, but before deciding where to start, it is worthwhile to familiarize yourself in detail with the pros and cons.

Pros and cons of individual entrepreneurs and LLC

The table evaluates individual entrepreneurs and LLCs according to the following criteria: registration procedure, taxation, reporting, accounting, use of profits, founder's risks, restriction of activities and the possibility of expansion.

Registration and liquidation

The pros and cons of an LLC and an individual entrepreneur can be seen already at the time of registration. The cost of the state duty for a limited liability company will be about 4000 rubles. With all this, you need to have a solid package of documents, create a bank account and wait a few months. Registration of an individual entrepreneur is much faster, easier and cheaper. Minimum documents, 800 rubles. state fees and several weeks of waiting.

The situation is exactly the same with the liquidation of an enterprise. To liquidate an individual entrepreneur, you must write an application to the appropriate authorities and provide a receipt for payment of the state duty (the amount will be about 200 rubles). A few weeks later, a notification will come that the individual entrepreneur has been excluded from the Unified Register. The situation with organizations is more complicated, sometimes the liquidation process can drag on for several months. One statement is not enough here. It is necessary to submit an ad in a special magazine, pay benefits to employees, pay off debts in full and provide liquidation and interim balances to the authorities.

Taxes and profits

In general, the income tax is the same, the pros and cons of an LLC and an individual entrepreneur begin with making a profit. The entrepreneur can freely dispose of all the proceeds. Save, invest or spend at your own discretion.

LLC participants cannot bypass the cashier and collect the proceeds. In fact, all the profit that the organization receives is spent on the internal needs of the enterprise, and payments are certified by protocols. Some entrepreneurs also start individual entrepreneurs with LLC in order to be able to withdraw funds.

Accounting and reports

All legal entities must maintain accounting records. You can't figure it out without special knowledge. If a person wants to independently conduct his accounting, he should register as an individual entrepreneur, since its participants are exempt from the obligation to maintain financial statements. In LLC, all documentation must be correctly drawn up. This applies not only to the accounting report, but also to the tax authorities.

What is the founder's risk?

Due to the unstable economic situation, enterprises cannot always stay afloat, sometimes they lose the ability to conduct business and are forcibly disbanded.

Most LLCs or individual entrepreneurs are now starting to develop thanks to loans or private investments. In the event that an enterprise forcibly suspends its activities, the founder is obliged to pay all existing debts. The pros and cons of an LLC and an individual entrepreneur are hidden here in material risks. An LLC risks only property that belongs to the firm. Often these are goods, equipment or furniture. Moreover, the LLC has an authorized capital, which covers almost all debts.

This trick won't work with a sole proprietor. According to the documentation, his property is not divided into "things for business" and "things for life", therefore, if something unexpected happens, the last shirt can be removed from the individual entrepreneur.

Evolution

Another pros and cons between an LLC and an individual entrepreneur are hidden in such a concept as development. LLC has the ability to expand. Hire more people, try yourself in a new market segment. The only condition is to regulate everything by law. In this regard, individual entrepreneurs are somewhat constrained. In some activities, only legal entities may participate. For example, an individual entrepreneur will not be able to obtain a license to trade in alcohol. If an individual entrepreneur has found a person who wants to conduct and participate in equity policy, he needs to re-register his business in an LLC. A companion for an individual entrepreneur will not have equal rights with him, if he is not also registered as an individual entrepreneur.

Opening of LLC

Starting your own business is always a risk, especially opening an LLC. The pros and cons of this procedure are as follows.

Pluses of LLC registration:

• Responsibility for obligations does not go beyond the authorized capital.
• An LLC participant can leave the company if he sells or transfers his share to someone.
• Such a legal entity can be bought or sold.
• Specialists can conduct flexible tax planning, which will increase profits.
• The interests of the LLC are represented by both the director and the person authorized by him.

Cons of LLC registration:

• The registration and liquidation procedure takes a long period of time.
• It is imperative to keep accounting and tax reports.
• The authorized capital must be at least 10,000 rubles.
• You need to have a seal.
• It is difficult to withdraw profit "off the checkout".
• If violations were noticed in the activities of the enterprise, then the penalties will be higher than for individual entrepreneurs.

However, despite the frightening disadvantages, an increasing number of individual entrepreneurs go to LLC. Someone opens organizations on their own, someone is looking for reliable partners, and someone acquires limited liability organizations.

Purchase of LLC

Often, limited liability companies are bought by those who value their own time and energy. The pros and cons of buying an LLC can be highlighted as follows. It is customary to include such moments as positive factors:

• You will not need to waste time on registering a company.
• The LLC is already known in the market, which will help to win the buyers' favor.
• There are employees, production has been established, which means that profit can be made from the first month.
• There is no need to spend unnecessary efforts on preparing the company for work, as there is everything you need.

The priorities for acquiring an LLC are obvious, but there are also negative aspects:

• If the company has shown itself from the worst side, it will take a lot of time, money and effort to return a good reputation.
• The problem with employees is quite common. As practice shows, they may be insufficiently competent or not accept new guidelines and simply leave. And to find a good replacement for them will take a lot of time.
• There may be a problem with the equipment, which will result in new investments.

Key differences

It does not matter whether an LLC or an individual entrepreneur, the pros and cons will always accompany any type of entrepreneurial activity. A private entrepreneur is responsible for debt obligations with his personal property, a limited liability organization - only with its authorized capital. This is the main difference between an LLC and an individual entrepreneur. Pros and cons can be found in registration and liquidation procedures, taxation, withdrawal of profits or record keeping. Every entrepreneur should understand that there is a difference between these enterprises. LLC and individual entrepreneur? Pros and cons can be searched for a long time, and most importantly - to find. But, stepping on the path of business, an entrepreneur must first determine his own goals and capabilities and only then choose who to become - an LLC or an individual entrepreneur.