How do individuals differ from legal entities? What is the difference between these statuses?

27.03.2019

The legislation of the Russian Federation provides for a wide variety of types and forms of legal entities.

The choice of organizational and legal form of a legal entity depends primarily on the purpose of its creation. If this is profit-making, then one of the forms of commercial organizations is used. If there is no such goal (or it is not the main one), a non-profit organization is registered (which can also generate income, but only to achieve its main goals and in accordance with them).

The Civil Code of the Russian Federation (Civil Code of the Russian Federation) lists the following forms of commercial and non-profit organizations:

In this material we will outline the similarities and differences, as well as the advantages and disadvantages of the most common types of legal entities for doing business - limited liability companies and joint stock companies.

Individual

What is the difference between a legal entity and an individual? Let's look at the second category of subjects in more detail. A natural person is a citizen of the Russian Federation, a foreigner, and even a person who does not have citizenship, but is endowed with certain responsibilities and rights by virtue of his existence. He acts as a subject of legal relations and has legal capacity. Individuals may differ in age, financial status, place of residence, and nationality.

Authorized capital

The authorized capital of an LLC is divided into shares , expressed as a percentage or as a fraction. Such shares are property rights .

The authorized capital of a joint-stock company is divided into a certain number of shares , which certify the rights of shareholders in relation to the company. Shares are uncertificated securities . The rights to them are certified by entries on personal accounts with the registry holder (a separate organization that has a license to carry out activities related to maintaining the registry). Shares may differ in their type and conditions of issue and, accordingly, form different groups of shareholders endowed with different amounts of rights in relation to the company.

The minimum authorized capital for LLCs and non-public joint-stock companies is 10,000 rubles, for PJSC – 100,000 rubles.

Full version of the article on our website... https://www.gestion.ru/news/gestion/vidy-yuridicheskikh-lits-otlichiya-preimushchestva-nedostatki/

Entity

How to distinguish a legal entity from an individual? Legal a person is an enterprise - an organization that was created by a citizen and has undergone legal registration. Firms can be commercial and non-commercial, have certain property and take part in economic, business activities and dispose only of separate property that is on the balance sheet.

Legal entities can enter into contracts and make legal transactions, participate in court hearings as defendants or plaintiffs. They can also exercise their rights and fulfill these obligations.

What is self-employment

Self-employment is a simplified name for the NAP: professional income tax. This is a new tax regime effective from the beginning of 2021. Previously, he worked in four regions of Russia; since July 2020, the regions themselves decide whether to introduce it or not. Now NAP can be issued almost throughout the entire territory of Russia.

NAP is a simplified regime for those who earn money themselves and do not receive a salary from an employer. For those who sell goods, provide services and do not want to bother with reporting. Self-employed people pay only 4-6% tax without mandatory insurance contributions and paperwork inherent in the activities of individual entrepreneurs.

Self-employment can be combined with your main job: for example, you work in security in shifts and sell carved wooden plates as a self-employed person. You only have to pay taxes on income received specifically from the sale of plates. And at work you will continue to pay personal income tax.

Responsibilities and capabilities

The rights of individuals are determined by regulatory documents, according to which a person can own property, get a job, study, get married, etc. In legal acts for legal entities. individuals are prescribed freedom of action within certain limits, according to responsibilities and rights, and the terms of the contract are determined that do not contradict regulatory documents.

The responsibilities and capabilities of legal entities and individuals are closely interrelated. This is manifested in the fact that the opportunity of one is the responsibility of the other. In an effort to obtain more rights, which disrupts the business balance, relations between individuals and legal entities may be deformed.

Unsuccessful attempts to purchase cars from organizations, common in judicial practice

Automotive lawyer Dmitry Pesterev told Avtokod from his experience examples of car purchases from legal entities that may end unsuccessfully.

Buying a car from “gray” dealers

“The scourge of the present time is buying a car from “gray” dealers. Tatyana decided to save money. I found the cheapest offer for the car of my dreams on the Internet and went to Moscow to get it. Over the phone we confirmed the availability of the car of the required color and configuration.

Imagine Tatyana’s surprise when, having driven 250 km to the capital, the required car was no longer available. The “gray” dealers have worked out the scheme. You are coming. You are being mentally exhausted. Then you settle for a slightly different car at a slightly higher price. Tatyana was no exception, who instead of Renault Sandero Stepway purchased Renault Capture and went head over heels in credit.

But that's not so bad. The car turned out to be of the wrong configuration and without additional equipment. Its cost was inflated by 500 thousand rubles. The contract, of course, was terminated by the court, but how Tatyana will receive money from the nominal organization is still a problem.”

When purchasing a car from an organization, clearly understand that organizations are created to limit the liability of its owners. It is much more difficult to get money from them than from individuals.

Purchasing a pledged car

“Unregistered pledges are the second largest category of disputes. Pledges began to be registered on July 1, 2014. There is no way to check the collateral obligations until this date.

Sergey bought a refrigerated van in Vologda. He was completely satisfied with the technical condition. The seller provided all documents confirming the purchase of the van on lease. All payments have been completed.

Arriving home, Sergei applied to the traffic police to register the car, but he was refused. There were restrictions on the car by bailiffs. You can check them on the traffic police website or using the service. But Sergei did not do this.

The court refused to remove the encumbrances, since there were legal grounds - a pledge obligation. Now the van is just collecting dust in the yard. There is no refund from the seller. Bankruptcy proceedings have been initiated against him.

Before purchasing a car, carefully study the registers of all obligations, including collateral. If you have questions, it is better to refuse the controversial option.”

Also read: What to check before buying a used car

Legal capacity of individuals

The legal capacity of an individual refers to certain responsibilities and the implementation of goals and opportunities. Individuals and legal entities: what is the difference between them? Phys. a person has the right:

• have property;
• inherit and bequeath material assets;
• engage in business activities;
• create a legal entity persons and take an active part in them;
• perform any actions and transactions that do not contradict the law;
• choose a place of residence;
• have copyright on everything created by individuals. person personally (products of intellectual activity, works of art, science, etc.).

Affiliates and interdependent entities - differences

Even at a quick glance, it becomes obvious that there are discrepancies in the concepts under consideration, that is, it should be recognized that affiliates and interdependent persons are not the same thing. Since the concept of affiliation is used more widely, interdependence can be considered a special version of it, applied only in one specific area. Or, simply put, interdependent entities are affiliated entities for the purposes of the Tax Code of the Russian Federation.

Both concepts are very similar both in meaning and in describing situations of affiliation (interdependence). Discrepancies occur in the following points:

• the minimum participation of a legal entity or individual in the authorized capital of an organization for affiliation is 20%, and for interdependence - 25%;
• the criteria for recognizing interdependence based on kinship are broader than for affiliation, since they additionally contain guardianship relations;
• for the interdependence of individuals there is such a criterion as relationships of subordination, which is absent in affiliation;
• interdependence can be recognized voluntarily or by court decision, which is not accepted for affiliation.

And, of course, the scope of application of the concepts under consideration differs significantly.

Capacity

Let us next consider individuals and legal entities. The difference between them, first of all, is manifested in the fact that physical. a person can be of any nationality, choose a place of residence, become an entrepreneur of his own free will at any time, etc., provided that the person has legal capacity.

That is, he must be able to perform the duties specified by law and exercise his rights. You can become a legally capable individual only after reaching the age of majority. And after that you are allowed to interact with legal entities.

When can you not think about the limit?

The established limits on the amount of cash do not apply:

• when paying wages;
• for social charges, insurance payments;
• when issuing accountable funds;
• for personal expenses of the business owner, money for which is taken from the cash register.

The Central Bank Directive also provides additional types of settlements where you don’t have to worry about the cash limit:

• operations with the help of the Bank of Russia;
• customs payments, taxes and fees;
• loan payments.

IMPORTANT INFORMATION! The new edition of the Central Bank Directive contains an innovation that plays into the hands of banks, but is not entirely pleasant for entrepreneurs. You cannot take cash from the cash register for purposes not mentioned in the special list: you first need to deposit the proceeds in the bank, and then take the required amount from there. In this case, the bank will receive interest for both operations, the state will receive additional control over the movement of funds, and the entrepreneur will receive another complication. However, “Dura lex sed lex” (“The law is harsh, but it is the law”).

If the cash desk of an enterprise or individual entrepreneur received amounts not from their current account, but from other sources (revenue, loans, return of unused accountable funds, etc.), then take cash from this money for settlements not included in the list of the Central Bank, not allowed.

How do individuals differ from legal entities: the main differences

A legal entity can be formed by an individual. Education takes place according to the procedure established by law. Legal registration persons is carried out in special government bodies that also deal with liquidation. This is the second main difference, since an individual is not subject to destruction.

The status of “legal entity” can be registered by one or a group of people. After registration, a name appears that cannot be used by other legal entities. faces. Individuals have names that may belong to other citizens.

What are the dangers of buying a car from an individual after a legal entity?

So, here is an advertisement for the sale of that same Skoda:

And here is the report itself, from which we see the presence of problems - a twisted mileage and 2 calculations of repair work.

But this is not about these problems. In the “Ownership periods” section it is indicated that the car belonged to legal entities for more than 5 years.

And only a month and 18 days ago, namely on July 12, it began to belong to an individual. Please note that the listing date for sale is July 12th. Coincidence? We asked this question to an experienced lawyer.

Vladimir Krakhmalev, auto lawyer, manager

“It may happen that the company that sells the car goes bankrupt. Then the sale of her property is carried out through bankruptcy proceedings. How does this happen? The court appoints a special bankruptcy (financial) manager responsible for the entire implementation process. If the law is violated during the sale of property, creditors may challenge the transaction. In this case, the individual who purchased the car has every chance of being left without money and without a car.

It is possible that the individual who owns the specified Skoda car is a fake. But we need to find out at what stage of bankruptcy the car was sold to him. If the sale was handled by the bankruptcy trustee, then there should be no problems. If the sale took place without a bankruptcy trustee, the car may be seized from the person who currently owns it. It all depends on the situation. And it is important to understand at what price the car was sold. If it’s for pennies, then it’s immediately clear that the scheme is gray and there’s a catch somewhere.”

In other words, it is better to refuse such a car. There is a high risk of getting into trouble. Or, if you particularly wish, you can check with the seller the name of the legal entity that owned the car and check it against the database of the Unified State Register of Legal Entities. From the extract from the register you will find out whether any procedure has been introduced for this company or not.

Also read: How to check a car seller

Structure

What is the difference between a legal entity and an individual? Organizations, unlike individuals, are subject to certain requirements:

• process control;
• organizational unity;
• orderliness of connections.

All main points are included in the charter, which is subject to mandatory registration. A legal entity is created on the basis of combining the personal efforts and capital of the participants and their property.

Decisions are made at general meetings. The terms, direction of activity and share participation are drawn up on them. The organization has a constituent agreement, which stipulates the rights and obligations of participants, and the applicable penalties for failure to comply with the conditions.

A legal entity can be registered either by one person or by a group of people. If there is only one founder, he is the sole owner and manager of the enterprise.

Expenses for individual entrepreneurs and self-employed people

Individual entrepreneurs have more expenses. In addition to the costs of producing goods or paying salaries to employees, they pay:

• 13% of each employee’s salary - personal income tax is withheld from official income under an employment contract;
• 30% of insurance premiums for each employee;
• more than 40,000 per year for yourself as insurance premiums;
• for servicing the online cash register and current account.

For the self-employed, everything is simpler. There are no expenses: the My Tax app is free, you cannot hire employees, there are no mandatory contributions, and no checking account is needed. NAP payers spend money only if they produce goods—on consumables.

Separate ownership

What other difference is there? An individual differs from a legal entity in one more important point. This is a separate property. It may be under management, ownership or economic use. But it is used only for business and intended purposes. Individuals can dispose of their property not only for their own business, but also for other purposes.

How to accept payments on the website from individuals from other countries

To satisfy the needs of most potential clients from Europe, Canada and the USA, it is enough to accept cards and payments via PayPal in addition to the ability to pay to your account.

How to accept online card payments

To work with foreign customers, you will not have to open a separate account and go through currency control, because when using the Internet acquiring of a Russian bank, the money is written off in rubles at the rate of the Central Bank of the Russian Federation and is also received to you in rubles. Buyers can pay with cards issued in any country and linked to accounts in any currency.

How to Accept Online Payments with PayPal

Everything is quite simple here too. The service, referring to the legislation of the Russian Federation, automatically converts currency into rubles when withdrawing funds to an account in a Russian bank. Nothing additional is required.

You definitely need a corporate account with the service; a personal one will not work. Find out what you need to do and how to accept payments through PayPal.

Responsibility

How do individuals differ from legal entities? Legal individuals can only be brought to administrative and civil liability, and individuals – in addition to criminal and disciplinary liability. Phys. a person is always defined in the singular, and a legal entity can consist of a group of people.

Regarding physical a person may be subject to criminal proceedings. And liquidation is only the natural death of a person. Otherwise, this is violence, which is punishable by law. There is such an option as bankruptcy. Financial insolvency proceedings can be applied to an individual in the same way as to a legal entity.

Entities can enter into transactions with each other. But at the same time, a legal entity is responsible for its debt only with those real estate assets that are on the balance sheet of the enterprise. And an individual is liable for debts with all the property that he owns. An organization can be declared bankrupt or liquidated, but imprisoned like an individual. face is impossible.

As soon as registration has been completed, a legal entity acquires responsibilities and rights for which it must be responsible. And physical a person gives an account of his actions only after reaching the age of majority.

Bankruptcy procedure

Phys. and legal entities have the right to apply for bankruptcy. If an individual officially receives bankrupt status, then his personal property, owned real estate, will be sold to pay off debt on loan obligations.

In the case of legal companies, the property of the company will be seized, but not the personal assets of the owners. But to initiate the process, it is first necessary to prove the existence of material difficulties and the lack of profit through which the bills must be paid.

An individual is a status that appears for any person after birth. A legal entity is an artificial form that appears after official registration to conduct a certain type of business. Both forms have different capabilities, functioning and rights.

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Exceptions for individuals

There are also exceptions in the legislation regarding when it is possible to engage in commercial activities without state registration. At the age of 14 to 18, young people have the right to independently make transactions:

• household;
• aimed at acquiring gratuitous benefits that do not require state registration or notarization;
• dispose of funds that were provided to a minor for no purpose or for specific purposes;
• invest your own funds in credit institutions;
• dispose of donated money and other income at your own discretion;
• join cooperatives.

All responsibility for the legal execution of any transactions by minors lies with their parents, adoptive parents or guardians.

How is the cash limit regulated?

The state, represented by the Central Bank of Russia, has set a limit on cash payments. The regulatory act on the basis of which the law determines the procedure for settlements is Directive of the Central Bank of the Russian Federation dated October 7, 2013 No. 3073-U. This document replaced the previous Instruction No. 1843-U dated June 20, 2007, with some significant changes made to it.

But the maximum limit for settlements using cash has not changed - within the framework of one agreement between the parties to the settlement it is 100,000 rubles. (or the corresponding amount of currency, according to the current Central Bank exchange rate).

NOTE! The prohibition on exceeding this figure applies regardless of whether you pay or receive money. But if violations are detected, the party receiving the excess cash is considered responsible.

Features of investing

How do individuals differ from legal entities? Individual entrepreneurs, unlike legal entities, often do not have the opportunity to turn the results of their activities into income and reinvest money in the development of their own business.

In particular, we are talking about the fact that a person may not bother creating and registering a legal entity, but engage in simple business activities. For example, giving people rides in your car, giving lectures, etc. But a legal entity has more opportunities, since the activities of enterprises are aimed not only at generating income, but also at developing and expanding the business. Organizations (legal entities) can take out a larger loan amount than an individual. Moreover, the conditions for lending in banks are different for legal entities and individuals.

Interdependence is a concept that is significant for the Tax Code of the Russian Federation

In tax legislation, despite the presence of the term “affiliated persons” in the Tax Code of the Russian Federation (clause 2 of Article 269), the concept of interdependence is more widely used. A decoding of its essence and a list of situations in which persons find themselves interdependent are contained in Art. 20 and 105.1 of the Tax Code of the Russian Federation.

Interdependence arises when persons (legal or natural) have the opportunity, independently or through their dependents, to influence:

• terms of concluded transactions;
• the results of concluded transactions or the results of ongoing activities.

Influence can be exercised through:

• participation in the authorized capital;
• agreement concluded between persons;
• other possibilities.

The following should be considered interdependent:

• a legal entity and legal entities and individuals with a share of participation in its authorized capital exceeding 25%;
• 2 legal entities having in each of them more than a 25% share of participation of the same person;
• a legal entity and legal entities or individuals who have the ability to appoint its sole executive body or at least 50% of the composition of the collegial body (including through their interdependent persons);
• 2 legal entities whose collegial management body consists of more than 50% of the same people.
• a legal entity and its sole executive body, as well as 2 legal entities having the same sole executive body;
• a legal entity and legal entities or individuals who, along the chain (in each subsequent organization) have a participation share exceeding 50%;
• individuals with relationships based on subordination;
• individuals who have a spouse or close relatives (including by adoption), as well as those in a guardianship relationship.

In relation to an individual, the size of his share of participation in a legal entity is assessed based on the total participation of not only himself, but also individuals who are interdependent for him (spouses, close relatives, as well as those with whom the relationship arose under the terms of adoption or guardianship).

It is possible to recognize the following as interdependent persons:

• voluntarily declaring themselves as such;
• by court decision, including on grounds not listed in Art. 105.1 Tax Code of the Russian Federation.

The following are not considered dependent:

• transactions, the completion of which is due to the preferential position of its participant (participants) in the market;
• participation of the state or its subjects in Russian legal entities.

The presence of interdependence is taken into account in such issues of tax legislation as:

• transactions subject to control (Articles 40, 45, Chapter 14.2–14.5 of the Tax Code of the Russian Federation);
• taxation of personal income tax on income from financial benefits (Articles 212, 217 of the Tax Code of the Russian Federation);
• determining the amount of property tax deduction (Article 220 of the Tax Code of the Russian Federation);
• restoration of the depreciation bonus for the early (before the expiration of 5 years from commissioning) sale of fixed assets (clause 9 of Article 258, subclause 1 of clause 1 of Article 268 of the Tax Code of the Russian Federation);
• determining the amount of interest on debt obligations taken into account in expenses when calculating income tax (Article 269 of the Tax Code of the Russian Federation);
• application of tax benefits in relation to movable property registered after 2012 (clause 25 of Article 381 of the Tax Code of the Russian Federation);
• taxation of foreign legal entities operating on the territory of the Russian Federation (Articles 306, 308, 309.1 of the Tax Code of the Russian Federation).

Read more about the movable property exemption in the article “Taxation of movable property: changes in 2017.”

Accepting payments from foreign legal entities and individual entrepreneurs

To work with legal entities and individual entrepreneurs from other countries, you need a foreign currency account in a Russian bank. We talked about how to open it and receive payments without problems in a separate article.

In short, the work flow looks like this:

1. Conclude an agreement with the customer. Better in two languages: Russian and the language of the counterparty.
2. Sign the deed and issue an invoice for payment.
3. The money will go to a transit account, which is automatically opened along with a foreign currency account.
4. You will provide documents regarding the transaction (this is called exchange control). If the amount does not exceed 200,000 rubles, it is usually enough to fill out a form in your personal account, but some banks require an agreement, invoice and act in this case as well.