Individual entrepreneur - an individual or a legal entity? Is the IP a legal entity?

Nowadays, everyone knows the abbreviation IP - an individual entrepreneur. But not everyone imagines the legal status of this IP. Often asked: "IP - a physical or legal person?". Let's try to understand.

Who can do business?

By law, any commercial activity can be dealt with with confirmation of one's own legal status in accordance with legislative acts. As it is known, any kind of its kind directed at making a profit belongs to the entrepreneurial activity . In Russia, it can deal with legal and physical persons.

As you know, the forms of legal entities are state (and also municipal unitary) enterprises and commercial organizations. Another category to which this most commercial activity is permitted is individual entrepreneurs. In the Civil Code, it is written in black and white: "An individual entrepreneur (IP) carries out its activities without the formation of a legal entity (legal entity)." But why, in this case, the question is increasingly heard: "IP - a physical or legal person?". Is it really the case in our blatant legal illiteracy?

About problems and confusion

It turns out that everything is not so easy. The reason for such doubts is that the same CC, after determining the individual entrepreneur, almost immediately reports that the same provisions and rules that regulate the activities of legal entities apply to its activities. Often, the tax authorities also make demands on entrepreneurs that are similar to the requirements for commercial organizations. So there arises a confusion in which both the PIs themselves and the controlling bodies to whom they are accountable are confused in the numerous types and forms of reporting required from legal entities and entrepreneurs.

Defend their rights in the tax inspection by an individual entrepreneur is due to long complaints and proceedings. Some confusion reigns in the activities of banks related to IP. Not all banks clearly understand themselves: IP - physical or legal person? What guidelines apply to entrepreneurs? Because of this, the IP has to compile mountains of unnecessary reports, constantly defend its rights and try to change the bank to a more loyal one.

Compare IP and YL

Maybe, after all, IP is a legal entity? Let's see what exactly brings individual entrepreneurs to legal entities. Mainly, these are issues of financial discipline. Nowadays, the registration of IP implies the obligation to keep cash books with a clear indication of the income and expenditure of money resources similar to legal entities. They are charged with tax reporting. If a citizen registered as a PI receives income as an individual (for example, from the delivery or sale of housing), he will have to file two declarations - one as a private person, the other as an entrepreneurial entrepreneur with income from business.

The Tax Inspectorate also verifies the PIs as legal entities in the same way. The same applies to other monitoring bodies. The individual entrepreneur reports to the labor and fire inspectorates, the Committee for the Protection of Consumer Rights and other numerous instances.

About wage labor

An individual entrepreneur has the right to attract hired workers, make entries in work books. It is not important for working citizens whether the IP is a legal entity or not. The Civil Code of the Russian Federation declares for all workers equal rights in the sphere of labor legislation, regardless of the employer's organizational form. To comply with the rights of employees IP must enter into formal employment contracts, pay contributions to all extrabudgetary funds and pay taxes for their employees.

By the way, the IP has the right to choose the tax system that is most beneficial for it, which also ties it in with a legal entity.

Compare the individual entrepreneur and natural persons

And is there any difference between a PI and a legal entity? There is, and not one. There is also a lot in common with an individual entrepreneur with an individual. In particular, all IP revenues can be used at their own discretion and at any time, not reporting to anyone. As is known, in a commercial organization, incomes are paid only once a quarter in the form of dividends. In this important issue, the IP, without any doubt, enjoys much greater freedom compared to the YL.

From a legal point of view, the registration of an IP does not oblige it to maintain its accounting records and, without fail, to open an account with the bank for conducting its business. Such an entrepreneur can conduct a settlement in cash (of course, following all the rules of the law). Although in practice these days practically does not occur.

About fines and printing

Another important difference relates to the size of fines, which inevitably occur due to errors in the conduct and formalization of business documents. Penalties for such violations, whether free or involuntary, are very respectable. Penalties for legal entities are an order of magnitude greater than for individuals who are referred to in this issue by the IP.

Like any individual, an entrepreneur is not required to have a seal, unlike an organization. According to the law, it is enough for him to sign documents. But it should be noted that in practice, most partners of individual entrepreneurs distrust this form of registration of contracts. Sooner or later, most IPs get their own seal. Thus, this difference can be considered rather arbitrary.

Other nuances

Since recently, trade in liquor can only be carried out by legal entities, so many entrepreneurs had to register an LLC or other forms of legal entities urgently. Despite the right to have hired workers, the entrepreneur must personally conduct his own business and on all documents must have his own signature. Another person has the right to sign any documents for IP only by proxy. Thus, the position of director or general director in the staff of IP employees is an absolute fiction, as according to the law these persons have the right to sign responsible documents without a power of attorney.

The entrepreneur retains his status in the event of an official termination of activities. Thus, he must constantly pay contributions to the Pension Fund (the Pension Fund), regardless of the availability of income, while a legal person in the absence of activity and income has the right to dismiss all staff or to pay unpaid leave (and not to pay any contributions).

So still, IP - an individual or a legal entity?

From all of the above, it becomes clear that, for all the contradictory and controversial points of our legislation, an individual entrepreneur is still a natural person, not a YL, as emphasized by the Civil Code, but in his activity this person is obliged to adopt most of the normative acts and requirements regulating the activities of organizations, if Only there is no direct indication of exceptions to the rules for IP.