An activity that regularly makes a profit is considered entrepreneurial. If you engage in such activities without registering an individual entrepreneur and not paying taxes, sooner or later you will have to bear responsibility to the state.
Responsibility is provided for in Article 14.1 of the Administrative Code. The fine for trading without registration ranges from 500 rubles to 2,000 rubles, and if the activity was subject to licensing or a special permit was required - from 2,000 to 2,500 rubles with confiscation of tools and production products.
Article 116 of the Tax Code provides for another fine for unregistered entrepreneurial activity - 10% of proven income, but not less than 40 thousand rubles.
Besides, tax office can charge taxes and penalties on the amount of income that can be proved.
Another reason that for many becomes a decisive factor is the blocking of bank accounts. Many unregistered entrepreneurs accept money from customers to an individual's card account in a bank. Since 2017, banks have been actively blocking accounts for suspicious transactions on the basis of Law 115-FZ "On countering the legalization (laundering) of proceeds from crime and the financing of terrorism."
By registering as an individual entrepreneur, you can legally accept money from clients to your current account and not be afraid of fines from the tax office.
IP registration
The procedure is quite simple, unlike the registration of an LLC.
In order to register as an individual entrepreneur, you need to send a package of documents to the tax office:
- Application form P21001.
- Receipt of payment of state duty (800 rubles). Since 2019, when submitting registration documents to in electronic format duty will not need to be paid.
- Passport copy.
- Application for the use of the simplified taxation system (if it is planned to apply this regime).
A package of documents can be taken to the tax office in person, sent through a representative, sent by mail or sent electronically. You can send documents in electronic form directly through the website of the Federal Tax Service, but for this you first need to issue electronic signature(approximately 1,000 rubles).
The tax office will register you as an individual entrepreneur within 3 working days after receiving the documents. If there are grounds for refusal or errors in the application, you will be denied registration, and you will have to resubmit the documents. You will have three months to resubmit the documents without paying the state fee again. If you do not meet this deadline or make a mistake again, you will have to pay a fee.
Where can an individual do business?
Anywhere in Russia, regardless of where it is registered.
An individual entrepreneur is always registered at the place of registration and is registered with the local tax office, to which the address of his registration belongs. He will have to pay taxes and submit reports to this inspection, regardless of where he conducts his business.
For example, if you are registered in St. Petersburg, and your business is in Kazan and Perm, you will pay and report to the St. Petersburg IFTS.
The exception is business on UTII and PSN. These are special taxation regimes, which we will discuss below. If an individual entrepreneur applies these special regimes, he must pay and report to the tax office at the place of business (with some exceptions).
What taxes does a sole proprietor pay?
It all depends on what system of taxation the individual entrepreneur has chosen.
For small businesses in Russia, there are 3 preferential taxation regimes that allow individual entrepreneurs to reduce the tax burden and reporting volume.
USN - simplified taxation system
The most popular mode among individual entrepreneurs very simple and profitable.
By choosing this mode, you will pay taxes according to one of the options:
- 6% of all income received;
- 15% from the difference between income and expenses;
and at the same time you will be exempt from personal income tax, property tax (which you use in entrepreneurial activity) and VAT.
The object of taxation - "Income" or "Income minus expenses" you choose yourself and indicate this in the application. It will be possible to change the object only from the beginning of the next calendar year.
Reporting on the simplified tax system is only one declaration per year.
To start applying the simplified tax system from the first day of work, you need to send a notification to the IFTS along with registration documents or within 30 days after registration. Do not meet this deadline - you can switch to the simplified tax system only from the beginning of the next calendar year.
We described in detail what a simplified taxation system is, on what conditions it can be applied by individual entrepreneurs, how to pay tax and report, in this article.
UTII - single tax on imputed income
It also provides for the exemption of individual entrepreneurs from personal income tax, property tax and VAT.
It can only be used for certain types of activities and only in those regions where this regime has been introduced by local authorities. To find out if UTII is valid in your region, contact the local IFTS.
By choosing this mode, you will pay taxes not on actual income, but on estimated income. For each type of activity, the Tax Code prescribes a basic profitability, on the basis of which the tax is calculated, taking into account coefficients and physical indicators. How much you actually earn from this activity - more or less - the tax office will not be interested.
UTII reports must be submitted every quarter.
An individual entrepreneur can transfer a business to UTII at any time. To do this, you need to send an application to the tax office that refers to the address of the business (or to the IFTS at the place of residence for some types of activities).
OSNO - general taxation system
If you do not switch to any of the listed special regimes, you will automatically be enrolled in the OSNO - the general taxation system. This means that you will be required to pay personal income tax on business income, property tax and VAT.
All this involves a lot of work on accounting and reporting, so before deciding to work for OSNO, make sure that you cannot use one of the special modes, or that OSNO is more profitable for you.
Other IP taxes
All other taxes (transport, land, water, etc.) you will have to pay only if there is an appropriate object of taxation. It does not depend on the applicable tax regime.
IP insurance premiums
In addition to taxes, all individual entrepreneurs are required to pay insurance premiums into two types of insurance: pension and medical.
Contributions consist of two parts: fixed and additional.
Fixed insurance premiums
This is a fixed amount that each registered entrepreneur must pay to the IFTS during the year.
In 2018, this is 32,385 rubles, of which 26,545 rubles are for pension insurance and 5,840 for medical insurance. The amount is indexed every year.
This amount does not depend on the income of the entrepreneur, or on the applicable taxation regime, or on whether the entrepreneur conducts business at all or simply has the status of an individual entrepreneur. From January 1 to December 31 of the reporting year, a fixed amount must be paid, in parts or in full.
You can reduce the fixed payment only in one case - if the entrepreneur was in the status of an individual entrepreneur for an incomplete year, that is, he either registered an individual entrepreneur in the current year, or vice versa, deregistered. Then fixed insurance premiums are calculated in proportion to the time that the businessman was in the status of an individual entrepreneur.
The tax code provides for only a few cases when an individual entrepreneur may not pay fixed contributions if not active. This is caring for a child under one and a half years old or a disabled person, military service, departure to another country with a diplomat spouse or to a remote area with a military spouse.
Additional insurance premiums
This part of the contribution is dependent on income. If an individual entrepreneur earned more than 300 thousand rubles in a year, he must additionally transfer 1% of the excess amount to the budget. For this, 6 months are given after the end of the reporting year.
Reducing tax on insurance premiums
Due to insurance premiums, you can reduce tax payments: simplified tax system, UTII, ESHN or personal income tax. Entrepreneurs who earn up to 500 thousand rubles can thus not pay tax at all, because. it will be covered by insurance premiums.
The procedure for reducing taxes on contributions depends on the applicable taxation regime and on whether the entrepreneur has employees.
How to withdraw profit
Entrepreneurs, unlike organizations, have a great advantage. They can freely withdraw profits at any time and in any amount. All the money that is on the account of the individual entrepreneur or at the cash desk belongs to him, he does not have to coordinate their withdrawal from the account with anyone and pay additional taxes on the withdrawn amounts.
But be careful, because according to the law 115-FZ "On counteracting the legalization (laundering) of proceeds from crime and the financing of terrorism", a bank can block a current account if the operation seems suspicious to them, this is now very common. Do not withdraw large amounts without urgent need, give clarifications to banks in time, and, if possible, pay for purchases with a corporate card.
IP liquidation
This procedure is as simple as registration. You just need to pay off tax debts, submit missing reports, pay the state duty and fill out an application to close the IP.
If there are employees, you must first dismiss them and deregister in the funds.
What else do entrepreneurs need to know?
- According to the law, individual entrepreneurs have the right not to keep accounting records, provided that they keep tax records.
- Individual entrepreneurs are exempted from the obligation to observe cash discipline.
- In order to accept payments from customers, some entrepreneurs may need an online checkout. For more information about who needs a cash desk, who can do without it, and what other methods of settlements with customers can be used, read the article "How to accept money from customers".
- For non-compliance with the terms of payments to the budget, submission of reports and other violations, individual entrepreneurs face fines. We have collected the most common violations in the article "Top 10 IP violations and the amount of fines for them".
- In addition to tax reporting, entrepreneurs sometimes have to submit statistical reports if they fall into the annual sample of Rosstat.
Accounting, taxes and reports will help you online accounting "My business". Feel free to open an IP and register in our service. With us, you will do everything right.
IP activity types
Characteristics of the types of IP activities
What a Sole Proprietor Can Do , determined entirely by law. Individual entrepreneurs as individuals have civil rights, therefore, must fulfill the duties of a citizen, which are necessary in the implementation of all types of activities, with the exception of those prohibited by law. Separate types of activities, the list of which is taken into account in the legislation, can be allowed only with the application of a special license.
The main available activities are divided into 4 classes:
requiring a license;
requiring permission and/or approval;
prohibited for IP.
Common types of activities
Such activities are available to an individual immediately after registering as an individual entrepreneur, and they do not require any additional permits or licenses or approvals.
The full list of what an individual entrepreneur can do is very large, so there will not even be attempts to compile it, since this is limited only by the imagination of an individual entrepreneur. But all such activities should not be associated with a threat of harm to the health or life of workers or society. Most types of such activities do not require any specialized education from an individual entrepreneur.
As a rule, these are services in the public, economic and jurisdictional spheres, for example, consulting, translation, secretarial services, housing assistance services, translation services, household services, various creative activities. Also included are:
services for the provision of real estate under lease agreements;
services for the provision of rental items for both personal and general use, as well as household appliances;
marketing services;
printing services, publishing services;
individual activity in the field of education and pedagogy;
wholesale trade, excluding prohibited products, such as alcohol, tobacco, etc.;
road transportation by cars weighing up to 3.5 tons;
Activities with a license
The implementation of these types labor activity available only with a certain permission, that is, a special license.
License - a certain type of permission to carry out what an individual entrepreneur can do, that is, for a specific type of activity, provided that the necessary requirements and conditions for licensing are met, issued by the licensing authority to individual entrepreneurs and legal entities.
The licensing authority is executive power, which deals with the issuance of licenses for certain types of labor activity.
The licensed types of labor activity include the fields of pharmacology, tourism, detective work, air and sea transportation, rail transportation of passengers and goods, and much more.
Types of work prohibited for individual entrepreneurs
Of all the things that an individual entrepreneur can do, the exceptions are closed types of activities. Most often, such activities are the design and assembly of dual-use or military products, the circulation of toxic substances or prohibited chemicals, the circulation of narcotic drugs, etc. Since last year, the list of such activities has been supplemented with an item on the production and sale of alcohol-containing products.
List of prohibited IP activities
Such types of labor activity should include those for which permits and approvals are required, as well as those for which a license is not provided for any reason.
Even before registering an individual entrepreneur, he must clearly determine what type of economic labor activity he is going to carry out. Current registration applications require a list of numbers and types of activities that the individual entrepreneur will directly carry out in the future.
In this article, you will find out which IP activities entitled to exercise; how to correctly specify IP activities when registering, so as not to be refused; what are the mandatory requirements for certain types IP activities; what tax regimes are suitable for certain types of IP activities.
Before registering an individual entrepreneur, you need to find out what activities an entrepreneur can engage in.
What types of economic activity is the IP entitled to carry out?
An individual entrepreneur has the right to engage in almost any business, with the exception of those activities that can only be carried out by organizations.
- private security activities (an individual entrepreneur in the role of a bodyguard is not allowed under our laws);
- activities related to weapons and military equipment(IP will not be able to supply weapons and repair military equipment);
- production and trade in alcohol;
- production of medicines;
- activities related to trafficking in drugs and psychotropic substances;
as well as other specific activities (nuclear energy; insurance; clearing activities; activities related to the protection of state secrets; space activities; production aviation technology etc.).
All of these activities are not available for IP. Organizations in various organizational and legal forms (LLC, PJSC, etc.) have the right to engage in them, provided that the organization meets the requirements established by law.
Types of IP activities for which a license is required
For certain types of activities, an individual entrepreneur must obtain a special permit - a license. Otherwise, entrepreneurship will be illegal, and individual entrepreneurs may be held liable, up to criminal.
An IP license must be obtained for occupation, medical, educational activities, and other activities.
We considered the issue of licensing business activities in detail.
In what cases should an individual entrepreneur notify about the start of entrepreneurial activity?
With regard to the following types of activities, individual entrepreneurs are required to notify the authorized body of the start of entrepreneurial activity. The notification must be made after the registration of the IP, but before the start of the relevant type of activity. Otherwise, the entrepreneur may be fined.
These activities include:
hotel services; repair and tailoring of footwear, clothes; photo studio services, and baths; retail and wholesale, etc. In all these cases, Rospotrebnadzor must be notified of the commencement of activities. In some cases, it is necessary to notify Rostransnadzor (at the beginning of travel agency activities), Rostrud (in the production of personal protective equipment) and other authorized bodies. More about the procedure for notification of the commencement of activities, types of activities and authorized bodies you can read .
What tax regimes are suitable for certain types of IP activities?
Since 2013, when this regime became voluntary, entrepreneurs have the right to apply the general taxation system (OSNO) in relation to any type of their activity. However, for many entrepreneurs, OSNO is not suitable. Too much reporting, complex accounting of income and expenses, relatively high tax burden. Therefore, entrepreneurs choose a special regime - the simplified tax system, UTII or the patent system (there is also a special regime - a single agricultural tax for farmers).
As for the STS (simplified taxation system), it can be applied by any individual entrepreneur who meets the conditions for applying this regime. That is, any activity can be transferred to the simplified tax system if the individual entrepreneur meets the conditions for applying the simplified tax system. Small businesses with low annual incomes and a small number of employees fit these conditions. Learn more about these conditions.
With regard to UTII ( single tax imputed income), the situation is different. Only certain types of activities can be transferred to UTII. UTII can be applied to household services, retail, catering services, road transport, parking services and other activities. But UTII can only be applied in those territories where local authorities have introduced this regime. You can read more about this.
There are also restrictions on the types of activities in relation to.
Thus, entrepreneurs have a fairly wide margin of appreciation when choosing a taxation regime, provided that the type of activity falls under the relevant regime. Read more about the different taxation regimes, their pros and cons. Please note that until 2021, a number of activities are valid. Read more about the holidays in the article on the link provided and watch the next video.
How to correctly indicate the types of activities of an individual entrepreneur during registration?
To register an individual entrepreneur, you need to submit an application in the prescribed form, pay a state fee and attach Required documents. B should indicate the types of activities that the IP plans to engage in. At least one type of activity must be indicated, the maximum number is not limited.
Unfortunately, with all the simplicity of the IP registration procedure, mistakes are made that result in refusal of registration. Let's celebrate them.
Mistake 1: the types of activities of individual entrepreneurs are indicated according to the wrong OKVED.
In Russia, there are 2 OKVED - OK 029-2001 and OK 029-2007. For all their similarity, these OKVED have different goals and different classifications. For registration, apply OKVED OK 029-2001. Types of activity and codes should be specified according to this classifier. Indication of IP activity codes according to OK 029-2007 may lead to refusal of registration.
In some cases, the types of activities were indicated partially by both classifiers, which also led to a refusal to register.
Error 2: the type of activity of the IP is not specified correctly.
Such an unfortunate mistake can be made through carelessness. When filling out, a digit may be incorrectly indicated or an extra digit may be written or a digit may not be indicated. In all these cases, the registration authority may decide to refuse, since it does not have the authority to correct the inaccuracies.
You can read more about the IP registration procedure.
An individual entrepreneur is an ordinary citizen who has received the right to do business. The law divides all businessmen into and provides them with different rights and obligations. What types of activities can an individual entrepreneur engage in, and what restrictions should you be aware of?
How the tax office learns about the types of activities of individual entrepreneurs
For example, if OKVED code 95.21 is entered in form P21001, then the tax authorities will know that the individual entrepreneur will repair electronic household appliances. When registering, the number of OKVED codes is not limited, and it is not necessary to carry out activities using all declared codes. One of the activities for which it is supposed to receive the maximum income should be chosen as the main one.
All specified tax inspection will check for relevance, correct spelling and accessibility for individuals. If prohibited activities for individual entrepreneurs are found in this list, registration will be denied. Given this, you need to know in advance what an individual entrepreneur can do, and what types of activities he is allowed to do.
There is no single law or act that lists all permitted or prohibited activities for individual entrepreneurs, so we have prepared our selection.
What an individual entrepreneur cannot do: prohibitions and restrictions
Activities that require a license
Most business areas that require a license are listed in Law No. 99-FZ of 05/04/2011, here are just a few of them:
- Production of medicines;
- Employment of Russians abroad;
- Transportation of goods and passengers by sea, air, rail transport;
- Television and radio broadcasting;
- Communication services,
- Carrying out gambling in bookmakers and sweepstakes;
- Management companies for apartment buildings;
- Activities in the field of weapons, military equipment, industrial explosives;
- Private security activities;
- Geodetic, cartographic, surveying works.
In addition to Law No. 99-FZ, there are a number of special laws for certain licensed areas:
- Production and sale of alcohol - No. 171-FZ of 11/22/1995;
- Space activities - No. 5663-1 of 08/20/1993;
- Bidding — No. 325-FZ dated November 21, 2011;
- Use of atomic energy - No. 170-FZ of November 21, 1995;
- Activities of credit institutions - No. 395-1 dated 02.12.1990;
- Clearing activities - No. 7-FZ dated February 7, 2011;
- Insurance activity - No. 4015-1 dated 11/27/1992.
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