We make a choice: LLC or PI?

Beginning entrepreneurs often think about what form of doing business is optimal for them: LLC or IP, because business success often depends on this. In this article, we will examine the main differences between these forms of doing business, identify shortcomings and advantages in order to help readers make the right choice. Let's start with the definition:

LLC is a limited liability company, a legal entity that can be formed by one or more founders. Founders can be both physical and legal persons.

IP - is an individual entrepreneur, that is, an individual engaged in entrepreneurial activities without the formation of a legal entity.

Now let's move on to the differences.

A responsibility:

IP is responsible for obligations even after the closure of all of its property, except that, but which can not be imposed penalty in accordance with Art. 446 of the Civil Procedure Code of the Russian Federation.

The members of the LLC are responsible for the size of their contribution to the authorized capital, the size of which is from 10,000 rubles. Obligations are canceled after the company is closed

Check in:

It's quite simple to register a PI: a minimal set of documents is enough. Registration is carried out at the place of residence, the state fee is 800 rubles. The founder is one person.

Since LLC is all a little more complicated: you need to prepare an impressive package of documents and pay a fee of $ 4000. Registration is conducted at the legal address of the head office. The founders can be up to 50: individuals and legal entities.

Income:

The IP can freely dispose of its proceeds, while the owner of the LLC has the opportunity to profit in the form of dividends, paying a tax of 9%

Taxation and business management:

IP for the conduct of activities does not necessarily have a settlement account and a seal. However, it is not necessary to forget about cash discipline . In addition, there are restrictions on types of activity for IP (for example, it is forbidden to produce and sell alcohol (except for beer) .As for the choice of taxation systems, the following options are possible: OSHO, USN, UTII, patent, ECCN.

LLC to operate without a settlement account and the press will not be able to. There are no restrictions on types of activity, tax regimes are the same as for IP with the exception of a patent.

Accounting and reporting:

For IP, maintaining accounting is not necessary, a book of income and expenditure is sufficient. Nevertheless, it is obligatory to compile and submit tax returns quarterly or annually (and for each tax regime they are different). In addition, if there are hired employees, then submission of reports to the Pension Fund and the Social Insurance Fund is provided.

LLC in any mode of taxation is required to maintain accounting records and submit accounting reports. Also, depending on the taxation regime, it is necessary to submit tax returns every quarter or yearly. Reporting to the Pension Fund and the Social Insurance Fund is mandatory.

Employees and insurance contributions:

An individual entrepreneur can work without employees. However, regardless of whether the activity is carried out or not, the IP must pay a fixed payment to the Pension Fund for itself. In 2013 the amount of payment is 35 664.66 rubles.

A limited liability company is registered as an insured since its inception. The CEO is an employee. Nevertheless, there is no obligation to pay fixed annual fees. If there is no activity, you do not need to pay anything.

Penalties:

Since the PI is an individual, the fines are substantially less than that of LLCs. IP in extrajudicial procedure can be fined up to 5000 rubles., While the amount of the fine for an LLC may be 50,000 rubles. And more.

Investments:

The IP is less attractive for investors because it is rather difficult to set up an investment plan, the investor can not become a member of the founders, in addition, the IP causes less confidence in partners and counterparties.

An investor can become a member of the founders, for this part of the share in the authorized capital is drawn up for him.

Thus, we examined the main differences between LLC and IP, but this list is far from exhaustive. There is no ideal option, business and life are mutable, it is impossible to foresee everything. In the course of activities, it is always possible to change the taxation system or the organizational and legal form. It is worth noting that if it is planned to expand the business, create a recognizable brand and work with large buyers and suppliers, it is worthwhile to think about creating an LLC.

Good luck in business and thank you for reading this article.