Is it possible to give an individual entrepreneur a name other than his full name?

Is an individual entrepreneur a legal entity?

Any entrepreneur is often called a legal entity.
Well, it’s logical - since he works for himself, since he pays taxes for business activities, it means that he is no longer an individual, like all other mortals. Actually this is not true. Legal entities include, for example, companies with the LLC form of activity. That is, a limited liability company. But individual entrepreneurs (the same individual entrepreneurs) are already individuals.

Who needs to know this and why?

In general, everyone. Legal literacy in our time is a very useful thing. But first of all, of course, for those who want to open their own business. Because the differences between individuals and legal entities are global. Let's delve a little deeper into the topic and see what they are.

So, once again briefly.

An individual entrepreneur (individual entrepreneur), who is popularly called a private entrepreneur, from the point of view of the law, is an entrepreneur without forming a legal entity. That is, it is simply an individual, but with the right to engage in certain entrepreneurial activities. We wrote specific because some types of activities are available only to legal entities.

That is, anyone can become an individual entrepreneur. The main thing is that laws are followed and taxes are paid (again, depending on the situation).

Ivan Ivanovich decided to buy potatoes wholesale and sell them retail at the local market. Naturally more expensive than what you buy. To make a profit and live with a smile on your face. How can he do this? Register with the tax office as an individual entrepreneur. What will it give? This will give the right to sell potatoes (engage in business). Will this make him an entrepreneur? Yes. Will it become a legal entity? No. He will remain an individual, like his neighbor Victor, who works as a loader. But Victor does not have the right to sell potatoes on the market, but Ivan Ivanovich does. True, for this right and for the potatoes sold, he will pay a tax to the state.

Why can’t you engage in commercial activities if you are not an individual entrepreneur?

Because it's illegal. If you make a profit from your activities, please pay tax. How is this tracked by the tax authorities? Through declarations and checks that entrepreneurs submit and undergo. And so that it would be discouraging not to submit reports on your profits on time, commercial activities without the status of an individual entrepreneur (we are not talking about an LLC now) were made illegal. It's simple.

Moreover, when you receive a salary, you also make a profit. And pay taxes too. Not just yourself. It’s difficult for ourselves. Your employer does this for you. It's true for a reason. The tax money is for you, he deducts it from your salary. And individual entrepreneurs pay themselves, deducting from themselves.

An individual entrepreneur can also hire employees. So, our Ivan Ivanovich hired a loader Victor to sell more potatoes. Ivan Ivanovich pays him his salary. And for the fact that Victor receives his profit in the form of a salary, the state takes a tax from him. This tax is paid by Ivan Ivanovich, Victor’s employer. He subtracts the amount of tax from the employee’s salary and gives him the rest. And the rest is given to the state. Everything is within the law. Everyone is happy (almost).

Similarities and differences between individual entrepreneurs and legal entities

When running a small and medium-sized business, an entrepreneur is practically no different from a legal entity. However, the difference can be observed during registration - an individual entrepreneur does not require an authorized capital and the presence of constituent documents, but for a legal entity these are mandatory conditions.

There are often cases when the founder closed an LLC or additionally opened an individual entrepreneur in order to conduct business as an individual. The benefits of individual entrepreneurs over legal status are as follows:

• ease of registration - the procedure requires minimal investment (payment of state duty) and a standard package of documents (TIN, passport, application);
• favorable tax rates;
• lack of accounting records;
• penalties are much lower than those of a legal entity.

When wondering whether an individual entrepreneur is an individual or a legal entity, even a novice entrepreneur immediately understands that he is an individual and grasps the benefits.

Despite most of the advantages of being an individual entrepreneur, this status has one serious negative side. If a legal entity is obliged to have an authorized capital upon registration, and in the course of its activities it has rights and obligations separately from its founders, then during the liquidation of the LLC practically no one bears responsibility (depending on the severity of the violation).

An individual entrepreneur, being an individual, even with the status of an individual entrepreneur, bears full financial responsibility to counterparties and the law after the closure of the business. When answering the question, an individual entrepreneur is considered a legal entity or an individual; we should not forget about the responsibility of an entrepreneur as an individual.

Who are individuals?

The question arises. If an entrepreneur remains an individual, what does this mean for him from a legal point of view? After all, he is still different from an individual who does not have the right to entrepreneurial activity.

From the point of view of the law, an individual is a person with rights and responsibilities.

• He is identified by the state system by his full name.
• He is not required to undergo any registration other than registration when receiving a birth certificate and passport.

General for individual entrepreneurs and individuals without the right to entrepreneurial activity:

• The profit of the individual entrepreneur and the finances of the individual are completely at their disposal.
• Both individual entrepreneurs and ordinary individuals are not required to open current accounts and keep accounting records.
• Individual entrepreneurs and individuals are not required to have a seal.
• Both are responsible before the law for their violations themselves.
• The registration address of an individual is the business registration address of an individual with the right to entrepreneurial activity (IP).

At the same time, we repeat once again that an individual without registration as an individual entrepreneur cannot conduct commercial activities. This is precisely the main difference between an individual entrepreneur and an ordinary individual.

After all this, it remains to understand how an individual differs from a legal entity.

Parallels

Let's try to schematically show the difference between an individual entrepreneur and a legal entity.

1. An entrepreneur registers alone using a simplified system with a minimum of documents and in a short time. But he is limited in his activities. Legal education - two or more people without restrictions in their business. You will need a lot of papers, a seal and funds in a bank account.
2. An individual bears personal responsibility for his actions, a legal entity bears joint responsibility and losses are limited to the size of the contribution.
3. In matters of taxes, there is a simplified system and fixed contributions to the State Pension Fund (regardless of whether there was activity). The state duty is eight hundred rubles. Legal - does not make payments to the pension service in the absence of income, but the tax amount is 4 thousand rubles.
4. An individual entrepreneur does not need start-up capital, but a legal entity will.
5. An individual does not need to keep accounts, a legal entity is required to do so, and under strict control
6. An individual entrepreneur uses his income at his own discretion, and a person with legal status uses distribution and at a certain time.
7. An entrepreneur can act under a power of attorney certified by a notary; a legal entity - a power of attorney from the manager is sufficient.
8. It is not possible for an individual entrepreneur to transfer, sell, or donate a business under any circumstances. Legal the person is not limited in this regard.

The difference between an entrepreneur and a legal entity. face - significant. But this in no way infringes on the rights of one of them. Also, the obligations stipulated by law are not relieved.

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Entity

Entity:

• This is an organization that is registered, has the right to do business and has certain property.
• Has its own separate name and registration address (the registration address cannot be the business registration address)
• Bears separate responsibility.
• Required to keep accounting records, submit reports to the Federal Tax Service, as well as other funds.
• Has the right to obtain certain business licenses that are not available to individual entrepreneurs.
• Must have a stamp and bank account.

What is important is that a legal entity operates in the form of a certain team, in which there are managers and subordinates (each has their own responsibilities and rights).

Upon registration, the organizers of a legal entity invest part of the authorized capital into the “common piggy bank” of the business.

Comparing individual entrepreneurs and legal entities

As can be seen from the brief table, the differences between an individual entrepreneur and a legal entity are significant. Especially in terms of responsibility. An individual entrepreneur is solely responsible. And if he owes money in court, and there is none, he will have to pay with everything he owns. After all, this is still an individual, just with the right to conduct commercial activities.

This is an obvious disadvantage of the IP (although it’s enough just not to violate it, so what). On the other hand, individual entrepreneurs have a simpler time in terms of possible fines. The same fine for a legal entity will be 10-15 times higher than for an individual entrepreneur. But an individual entrepreneur cannot engage in certain types of activities that could bring more profit... There are many differences. But if you are just starting out, do not plan to earn large sums in the near future, your business is simple like our Ivan Ivanovich with potatoes, then we recommend registering as an individual entrepreneur.

○ Comparison of individual entrepreneurs and ordinary individuals.

In fact, an individual and an individual entrepreneur have many common characteristics. However, conducting certain types of business activities without registration is not allowed. Let us tell you what the similarities and differences are between an individual entrepreneur and an individual.

✔ General signs.

Common features include the following facts:

1. Legally, an individual entrepreneur and an individual are equal.
2. This is a specific person with a full name and identification number.
3. The place of permanent registration is the same.
4. An individual entrepreneur can act as a citizen when concluding transactions.
5. Individuals and individual entrepreneurs have the right to conduct business transactions, enter into transactions, draw up the necessary documents and perform legally significant actions.
6. In case of debt formation, individuals and individual entrepreneurs are liable with property in their ownership.

From the point of view of legislation, an individual entrepreneur is the status of an individual. However, there is still a difference between these concepts.

✔ Distinctive features.

The difference between an individual entrepreneur and an individual lies in the income tax system and the permissible scope of activity. For example, an individual who has the status of an individual entrepreneur cannot be an employee and at the same time conduct business activities. A person, being an individual entrepreneur, can be an employee, but as an individual.

Many types of commercial activities are not available to an individual who does not have individual entrepreneur status. So, for example, he cannot open a pavilion and sell any goods there or provide household services to the population.

Pros and cons of IP

Advantages of IP:

• Easy registration
• Complete management of your income
• Simple reporting
• Office, seal and current account are not required
• Fines are less than for a legal entity

Disadvantages of IP:

• Personal property liability
• Some activities are prohibited
• A biased attitude on the part of large companies that will refuse to work with you because they do not trust small individual entrepreneurs.
• You will still have to pay to the Pension Fund. Even if you don't do anything.

Advantages and disadvantages

The difference between an individual entrepreneur and a legal entity is that an entrepreneur does not need:

• undergo complex registration;
• write accounting reports;
• report on the use of income;
• have an independent estimate.

Also, “IP employees” enjoy simplified cash transactions, reduced tax rates and are simplified by the tax office. All this is a huge plus, but there are also significant disadvantages:

• the scope of entrepreneurial activity is narrow;
• Contributions to the Pension Fund are required in any business situation;
• not many entrepreneurs are ready to cooperate with individuals;
• inability to sell your activities to cover losses.

The sole responsibility of an individual entrepreneur, and with all his property, makes this business more risky.