Self-employment: pros and cons in 2021

Self-employment of citizens in the Russian state is becoming a popular trend. Using their own knowledge and capabilities, people strive to find ways to subsist and generate income in monetary terms.

The state offers people falling into this category to apply for a patent for the self-employed.

At the moment, the country's leadership considers it urgent to bring out of the shadows the income received by residents of the Russian Federation who do not have official employment, but who nevertheless support themselves by working privately.

What is a patent for the self-employed?

A patent for self-employed citizens of the Russian Federation is a permit that gives a person the right to engage in labor activities without concluding an employment agreement with an employer and at the same time without registering his business as an individual entrepreneur.

Self-employment has not yet acquired legal status. In Federal Law No. 1032–1 of April 19, 1991, which establishes the concept of “employment of the population in the Russian Federation,” the expression “self-employment” is absent. However, in 2021, the President of Russia initiated several amendments to the current legislation regarding the legalization of the activities of certain categories of the population engaged in private labor activities.

From now on, if they have a patent, self-employed citizens, according to the law of the Russian Federation, are considered persons who provide for themselves financially independently.

Legal consequences of obtaining a patent

Obtaining a patent for independent professional activity has its advantages and disadvantages.

Among the advantages, tax officials cite the following:

simple procedure for assigning self-employed status;
exemption from taxes and insurance premiums for the holiday period;
there is no need to submit reports;
absence of claims from regulatory authorities (including penalties);
no need to use online cash registers;
opportunity to advertise in the media.

In the future, it is possible that such rights will be extended to the self-employed:

taking out a loan for business development;
conclusion of civil contracts for the provision of services to individuals;
inclusion of a period of self-employment in the length of service;
resolving disputes in court as a self-employed person;
participation in federal and regional programs to support small businesses.

However, all these benefits are not properly secured at the legislative level. And as a result, there is a lack of public confidence in the procedure for registering as self-employed.

The disadvantages include the following:

insufficient development of the taxation and administration mechanism;
temporary validity of the patent (from one to twelve months);
self-employed citizens remain unwanted clients of credit institutions, since their income is almost impossible to confirm;
it is difficult to prove the existence of work experience;
sick leave is not paid, etc.

Despite the fact that in 2021 the President of the Russian Federation proposed to legalize the activities of self-employed citizens, and legislators began to develop the regulatory framework, there is still no clear understanding of the procedure for acquiring a patent for the self-employed. At the moment the patent is not issued, but this is planned to be done in the future. In 2021, citizens can only register as self-employed, but only if they meet the conditions set by the Federal Tax Service. So, for now, representatives of only three industries can register.

Author: ozakone
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What privileges does a patent provide?

Both parties benefit: the state and citizens. For the state it will be reflected in the following:

the number of officially identified unemployed will be reduced;
the established patent system will become a productive resource for business and stimulate its growth.

Experts, having analyzed the situation, came to the conclusion that more than 11 million of the Russian population will choose to work legally under a self-employed patent from the “shadow” sector of private business.

Results

The full pros and cons of taxing the self-employed will appear in a few years. Then it will become obvious whether the “rules of the game” will be changed by the state or not, as well as when practice (judicial, administrative) will accumulate regarding the application of the norms of Federal Law No. 422 throughout Russia.

Sources:

Tax Code of the Russian Federation
Law “On conducting an experiment to establish a special tax regime “Tax on professional income” dated November 27, 2018 No. 422-FZ.

You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.

What benefits do they see for themselves, what do they perceive as privileges?

The interest of self-employed citizens, in particular Russians, in acquiring a patent is manifested based on the following factors:

it becomes possible to engage in work within the legal framework, observing preferential conditions that reflect low tax payments. It is taken into account when saving for retirement and for medical treatment;
Legal registration of self-employed status is similar to opening an individual entrepreneur. A citizen receives the right to enter into official contracts, defend his interests in court if financial disagreements arise, use advertising to promote his product in the service market, and much more.

The opinion of those who support this bill expresses that the state does not receive a large increase in tax collections. At the same time, the status of self-employed citizens who have received patents equates them to the category of persons engaged in official entrepreneurship. Motivation appears for further development and business growth. This can be considered a promising direction for the development of the country as a whole.

Pros of self-employment

Simple taxation. Registration and submission of reports - from a smartphone or tablet without collecting documents and standing in queues. If you don't earn money, you don't pay anything.

No checking account required. Accept money by bank card, cash or through electronic payment systems.

You can issue receipts in the application.

You can register self-employment separately from your main job.

Self-employed status is proof of real income. It makes it easier to get a loan or get a mortgage.

The law guarantees that self-employment conditions will not change until 2028.

List of available activities

If a citizen (individual) decides that it would be better for him to work for himself and do it officially, through obtaining a self-employment patent, he is faced with a choice. He can choose from several professions the one that suits him most.

Only persons whose activities are included in the list of professions approved for obtaining a document can obtain a patent. These may be the following types of citizen activities:

tutoring;
provision of services to individuals in the form of providing care for minor children, sick or elderly persons;
cleaning, cooking food in order to make money on the service.

The list will be expanded in the future. It is proposed to include the following series of activities:

provision of repair services for clothing and shoes;
translation of foreign texts;
photography services;
fishing and fish farming;
private transportation, delivery of people and goods to their destination;
copywriting (writing articles);
construction and arrangement of nurseries for pets, etc.

Self-employment law

Since January 1, 2021, Law No. 551845-7 has been in force in several regions of Russia. Its main task is to restore order and simplify the taxation process for those who work for themselves. Previously, such citizens had two options: to work “in the gray” or to become an individual entrepreneur. When working through an individual entrepreneur, it was necessary to pay 13% of personal income tax (according to a simplified scheme - 6% of income).

Self-employed people are subject to professional income tax. It is fixed:

4% - when settling with individuals.

6% - when settling with legal entities or individual entrepreneurs.

Who does the new regime help?

Individual entrepreneurs. This allows you to work calmly without the risk of receiving a fine for illegal business. Reduces the tax burden. Removes paperwork.

Clients – legal entities. To pay a self-employed person for work, you do not need to act as a tax agent (a person charged with transferring taxes to the budget). The result is less taxes and paperwork.

How is tax collected?

For reporting, you must indicate in the “My Tax” application the amount received for the product or service. Write a check. So, you will register income. Then you will receive a notification from the Federal Tax Service with the total tax amount for the last month. You don't need to count anything yourself. The tax office will do this for you. Taxes must be transferred by the 25th of the next month. You can pay with a bank card.

Where does the law work?

There is no official federal law on self-employment. The government is conducting an experiment to see how such taxation would work and what problems it would create.

Since 2021, only Moscow, the Moscow and Kaluga regions and the Republic of Tatarstan have participated in it. In 2021, the list of regions has expanded. Now 19 more regions have been added to the experiment:

Saint Petersburg

Voronezh region

Volgograd region

Leningrad region

Nizhny Novgorod Region

Novosibirsk region

Omsk region

Rostov region

Samara Region

Sakhalin region

Sverdlovsk region

Tyumen region

Chelyabinsk region

Krasnoyarsk region

Perm region

Nenets Autonomous Okrug

Khanty-Mansiysk Autonomous Okrug – Ugra

Yamalo-Nenets Autonomous Okrug

Republic of Bashkortostan

From July 1, 2021, the Ministry of Finance plans to extend such a tax to the entire country. The department's press center announced this on its website. The results are promised to be announced in 2028 - until then, tax conditions should not change.

Any citizen of Russia can apply for employment, regardless of registration. But it is possible to work under these tax conditions only in the territory of 23 constituent entities of the Russian Federation that are participating in the experiment. It is not yet entirely clear what to do for Internet freelancers or those who do not have a clear connection to their place of activity.

What do you need to get a patent?

Obtaining a patent has its own conditions. Citizens who wish to obtain a self-employment patent must meet certain requirements. There are criteria by which the readiness of citizens to acquire a patent is determined:

The chosen activity must be included in the list of professions for which a self-employment patent is allowed.
They should not be registered as individual entrepreneurs (IP). Accordingly, they cannot have their own trademark;
They must do their work independently. Hiring of hired workers is not allowed;
To obtain a patent for a self-employed citizen, you need to collect and provide a complete package of documentation. The tax service requires you to fill out a notification according to the sample.

Documents for registration of a patent

Any registration of activity or obtaining a category requires preliminary collection of documents. To obtain a self-employment patent, you also need to prepare the necessary papers and take the appropriate actions.

First of all, you need to contact the tax office. It must be located in the area of residence or stay of the citizen.
The tax office will need to fill out a notification (application) requesting a patent. It has a special shape. Filling is carried out according to the sample. Some items in the notice must be filled out by a tax officer.
A fee is paid for the patent and then it is supposed to be issued to the applicant. But, at the moment, patents are not being issued. A self-employed person is registered with the tax service.
Anyone who wants to have a submitted application must fill out two identical notifications. Give one of them to the tax authorities, keep the other one, putting a note on it that the acceptance document remains with the self-employed citizen.

Important! The patent is valid in the region where it was issued to the applicant. Currently, its coverage area is very limited. The issue of expanding the patent's territory is being discussed. In the future, we can expect that the situation will change and the territorial boundaries will be increased.

The application includes three sheets. All the citizen’s data is described in detail, including his personal passport data, TIN, telephone numbers and other information indicated in the document.

Important! A patent provides the right to only one type of work. If a citizen wants to patent some other activity, he has to acquire another patent. He can act in this way no more than three times.

The notification form may look like this:

the application can be sent by mail as a registered letter;
sending can be done by email;
citizens can use the Federal Tax Service website or the state portal. services.

The last two cases require enhanced qualified digital signature.

As already mentioned, in addition to the notification, the required package of documents is submitted to the tax authority.

The application to the tax authority must be accompanied by a package of documents, which must contain the following official papers:

passport or identity card of another format;
TIN;
a certificate confirming that the individual does not have the status of an individual entrepreneur. This document is required to be provided. In its absence, a citizen will not be able to obtain a self-employment patent.

How to obtain self-employed status?

In order to become self-employed, you need to register. There are three options on how to do this:

through the “My Tax” mobile application (available in or, you only need a passport);
through the personal account of a self-employed person (for registration and login you need an INN and a password, which is issued at the tax office; authorization using an account is also available);
through the mobile application of one of them (such banks have added a special section for the self-employed to their regular applications).

After registration, you will be able to transmit information about your income and pay tax on it through applications or the personal account of a self-employed person on the Federal Tax Service website.

Patent cost

The cost of a patent for the self-employed is still being talked about and its final level is being discussed. How much a patent will cost is still a controversial issue in the bill. Despite this, the payment scheme has already been sufficiently developed, and the procedure for further division into system payments has been worked out.

The estimated cost of a self-employment patent is estimated at around 20,000 rubles. 9 thousand rubles go to the Russian Federation Pension Fund, and only 1 thousand rubles go to the Compulsory Medical Insurance Fund. Another thousand rubles goes to the regional budget.

The basis of such a system is the acceptance of a single payment from the future entrepreneur and its further distribution. This makes organization easier. A person has to pay a one-time payment, and then the treasury undertakes to independently regulate the distribution of received funds among authorities. In terms of time, this takes ten days after purchasing a patent license.

Legally, the payment period for a patent of a self-employed citizen is ten days from the date of receipt. The time for registering it and preparing its patent by the responsible persons will take five working days.

A patent is valid for a certain period, after which it loses its validity. Automatic deregistration occurs. If desired, a citizen can have his patent renewed. To do this, he will need to submit a notice.

Remembering the benefits that a patent provides, it is necessary to remember that its acquisition serves to protect citizens from punishment that follows under the article “illegal entrepreneurship.”

The absence of a patent can result in penalties of up to two thousand rubles. Larger amounts may also be assessed. This may be due to tax charges and insurance premiums calculated for the entire period of activity without registration. The penalties accrued in this case will be 10% of income. This is at least 40 thousand rubles.

If a self-employed person who does not have a patent receives a large profit, various types of punishment may be applied to him, including a large fine of 300 thousand rubles. In addition to a fine, a citizen may be sentenced to perform community service for up to 480 hours or be sentenced to arrest for up to six months.

How it's done

Between individual entrepreneurs and self-employment, I chose the latter. It’s like choosing between “fill out an application using Form P21001” and “download the application.” I must admit, becoming self-employed turned out to be really easy. So easy that I did it two ways. For both, you will need to remember your TIN and passport details.

The first way is through Sberbank. I already had an account there and had an app on my phone. Following the instructions, I went to the “payments” tab, selected “my business” there, they told me that I didn’t have any business yet, and they offered to start one. Not a case, but a card. A special card where only money earned through self-employment will be credited. Any amount deposited into this account will automatically be issued a check and tax due. I ordered this card in literally two clicks. “Which branch you ordered from, pick it up from that branch” happened the very next day. Fast, convenient, with registration, SMS and annual service costing 750 ₽.

The second way is through the “My Tax” application (beware of fakes, check that the authors of the application include the Federal Tax Service of Russia). I also downloaded it, registered according to the instructions, it did not offer me to create any cards and for a long time did not allow me to link any account to it. But it promised a tax bonus of 10,000 rubles.

Both applications are similar, intuitive, easy to understand, the most difficult thing is to choose a field of activity. This is not like an OKVED code, like real entrepreneurs; if you make a mistake, you won’t get anything for it, it’s mainly needed for statistics.

In the end, I used the My Tax app. At Sberbank, I didn’t immediately figure out how checks were generated and where they were stored.

Over the year of the existence of this tax, a good hundred instructions have been written, the most comprehensive ones are on the tax office website, which is what I used.

Tax burden of self-employed citizens

Legalization of the business of citizens who have received the status of self-employed and burdening them with tax charges, on an equal basis with individual entrepreneurs and organizations (legal entities), is dictated by the sale of services, product of activity and profit.

The issue of the final cost of a patent for self-employed Russians is still being worked out, as is known. Only the approximate price at which you can buy a patent is mentioned. It is expected that no other paid permissions other than a patent will be sought.

Those who have received a self-employment patent can count on receiving a two-year tax holiday. This decision was put forward at the legislative level.

Entrepreneurs receive privileges:

Reducing tax burden. They only buy a patent and don't pay for anything else.
Exclusion of the obligation to make mandatory insurance payments. Payments to the Social Insurance Fund are made on a voluntary basis.

Comparison of cost items for individual entrepreneurs, self-employed persons and self-employed individual entrepreneurs

Cash register	yes, if the individual entrepreneur has employees and not only business clients, but also customers acting as individuals	no, a cash register is not needed even when receiving cash payments from individuals
Checking account	Yes	Yes	No
Document flow	yes, signing contracts, sending acts	at the request of clients, but according to the law, a receipt is enough	sending checks online or via SMS
Reporting	yes, filing a tax return	no, no reporting
Accountant or online service	not necessary, but most often yes	no, all data is entered into the “My Tax” application and calculated automatically