Business relationships almost always involve the conclusion of contracts. People working in a variety of fields deal with such documents every day. As a rule, a contract begins with a list of the parties involved in it. And this is where difficulties may arise for an entrepreneur. The header states who the company is represented by and on what basis. On what basis does the individual entrepreneur act, since he does not have a charter?
IP status
The status of an individual entrepreneur is the right given to a citizen (or a foreigner, or a stateless person, in general, an individual) by the state to legally engage in business activities, make a profit, at his own peril and risk, and, most importantly, to pay taxes on this (in fact, the status is for this and there is).
The status of an individual entrepreneur is recorded in the Certificate issued to him upon registration in the Unified State Register of Individual Entrepreneurs (USRIP). In fact, he is given a certain number under which he is in this register.
Features of IP
An individual entrepreneur is a citizen who is engaged in entrepreneurial activities without forming a legal entity. Article 23 of the Civil Code of the Russian Federation says that an individual acquires the right to represent his own interests in the market from the moment of state registration as an individual entrepreneur. When registering with the Unified State Register of Individual Entrepreneurs, a citizen receives an extract from the register, on the basis of which the individual entrepreneur subsequently acts. Unlike organizations, in transactions an individual entrepreneur acts on his own behalf and is independently responsible for his activities, including liability for personal property.
On what basis does the IP operate?
An individual entrepreneur acts on the basis of the status given to him by the state. The basis for assigning this status will be the document on the basis of which it acts. This is a Certificate of state registration as an individual entrepreneur. But - only those issued before January 1, 2017. From this date, the Certificate is not issued, according to Order of the Federal Tax Service of Russia dated September 12, 2016 N ММВ-7-14 / [email protected] Instead, a Record Sheet in the Unified State Register of Individual Entrepreneurs is issued, which is the basis for the activities of the individual entrepreneur.
If it is lost, you can obtain from the territorial inspection a Notification of registration as an individual entrepreneur:
What is the status of individual entrepreneurs in 2020?
The legal status of an individual entrepreneur is determined by the Civil Code on the basis of Article 23 of the Civil Code of the Russian Federation. It says that any citizen is allowed to engage in entrepreneurial activity within the framework of the law, but must:
- register as an individual entrepreneur with the tax authorities;
- pay taxes on income received.
The activities of an individual entrepreneur are independent, carried out at their own risk and aimed at making a profit.
Under civil law, individual entrepreneurs are treated as legal entities. Its legal status is reflected in the certificate of registration with the Federal Tax Service and the Unified State Register of Individual Entrepreneurs (USRIP) with the assignment of a OGRNIP number.
In 2021, to confirm the status of an individual entrepreneur, a Record Sheet from the Unified State Register of Individual Entrepreneurs will be issued in the form P60009. It contains the registration details of the businessman.
Constituent documents of an individual entrepreneur
As such, individual entrepreneurs do not have constituent documents, since only legal entities have them. There are a number of documents that are mistakenly considered constituent documents, although they can be called registration or corporate:
OGRNIP
As already mentioned, the Certificate of assignment of OGRNIP (state registration as an individual entrepreneur) is not issued from January 1, 2021. OGRNIP can be found from the Record Sheet, or from the Unified State Register of Individual Entrepreneurs.
Technically, OGRNIP is a unique (at least it should be) 15-digit number containing the subject code, tax number, serial number and checksum.
TIN
The TIN can also be found from the Record Sheet, or from the Certificate, if the individual received the TIN before registration. This is a 13-digit number, similar in logic to OGRNIP.
Extract from the Unified State Register of Individual Entrepreneurs
At the moment, the practice is that only an extract from the Unified State Register of Individual Entrepreneurs is sufficient as a basis for confirming the activities of an individual entrepreneur. Or the Record Sheet, which is essentially the same thing.
In the same way, it is not a constituent document, but rather a legal document, like all those listed above.
Constituent documents of individual entrepreneurs
Each individual entrepreneur who complies with the law goes through the process of registration with the tax authorities. He registers as a tax payer and entrepreneur, and in confirmation he receives a number of documents, which in the future will be a guarantor of the legitimacy of his activities.
First of all, this is:
- TIN;
- Certificate of state registration and OGRNIP until 01/01/2017;
- A record sheet confirming the fact of entry into the Unified State Register of Individual Entrepreneurs after 01/01/2017;
- Extract from the Unified State Register of Individual Entrepreneurs.
In the legislation itself there is no such thing as “constituent documents of an individual entrepreneur.” The wording arose by analogy with other forms of enterprises (LLC and other legal entities).
In fact, the folder with the documents on which the individual entrepreneur operates is much thinner, and it is easier to understand it than in the situation with an LLC.
Unlike an LLC, an individual entrepreneur does not need a Charter, so it is not included in the list of its constituent documents.
TIN
Each Russian citizen (whether engaged in entrepreneurial activity or not) who pays taxes is assigned an Individual Tax Number. If some citizens who do not have an official job can still do without a TIN, then for an individual entrepreneur the assignment of a tax number is mandatory.
A TIN is assigned to each citizen once in his life. If at the time of registration of an individual entrepreneur the entrepreneur already had a tax number, it remains unchanged.
First of all, it is necessary for the tax service to monitor taxpayers. But this number is part of the individual entrepreneur’s details, so they are sometimes asked to include it in contracts and other documents.
TIN is 12 digits. The first two of them are the region code, the third and fourth are the code of the specific inspection that issued the certificate.
OGRNIP
The All-Russian State Registration Number of an Individual Entrepreneur is the main confirmation that the individual entrepreneur is officially registered and can carry out his activities. Each individual entrepreneur is entered into the state register, where OGRNIP is his personal number.
USRIP
This abbreviation stands for Unified State Register of Individual Entrepreneurs.
The individual entrepreneur receives an extract from this register, which indicates:
- Series, passport number, when and by whom it was issued;
- Place of residence;
- Business activity codes (OKVED).
Such a statement may be required, for example, by a bank when opening a current account. In this case, the requirement may contain the maximum permissible “age” of the extract. Usually it is allowed to provide an extract from the Unified State Register of Individual Entrepreneurs no older than one month.
If any changes occur in the activities of an individual entrepreneur, he is obliged to report this in order to make changes to the register data.
Certificate of state registration of individual entrepreneurs is a document confirming the entry of data about the entrepreneur into the Unified State Register of Individual Entrepreneurs.
From 01/01/2017, the above Certificate is no longer issued. Basis - Order of the Federal Tax Service No. ММВ-7-14 / [email protected] dated September 12, 2016. Now the document confirming the status of an individual entrepreneur is the Unified State Register of Individual Entrepreneurs (USRIP) Sheet in form No. P60009. It contains: full name of the individual entrepreneur, date of issue, name of the tax office, date of entry in the Unified State Register of Individual Entrepreneurs, OGRNIP number.
OGRNIP – main registration number of the individual entrepreneur.
Other IP documents
In addition to the above, the folder of personal documents of an individual entrepreneur contains:
- Certificate of registration with the Pension Fund of Russia;
- Confirmation of submission of information on activities to Rosstat;
- Operating licenses (if required);
- Current account number and bank details (if you have an account);
- Confirmation of registration with the Social Insurance Fund (if the individual entrepreneur has hired employees).
Drawing up an agreement with an individual entrepreneur
Here we come to the issue of correct execution of the contract. There are several opinions, we will try to highlight them:
- Indicate “Individual Full Name, acting on the basis of state registration dated [date], OGRNIP number ________________.” Here, in our opinion, the basis for the activities of an individual entrepreneur and its difference from a simple individual are most correctly reflected.
- Indicate “Individual Full Name, acting on his own behalf.” In any case, at the end of the contract its full details will be given. Disadvantages - a number of counterparties may refuse to accept this form. But to avoid overloading the contract, this is possible.
- You can simply “IP Full Name, OGRN ____________”. The text is even less overloaded, but all the distinctive features are there, although some counterparties may again object. But they can also require a checkpoint for individual entrepreneurs.
Individual entrepreneur status
It would seem that after this there is no need to find out about an individual entrepreneur - is it a legal or natural person. But in fact, an individual entrepreneur has several different statuses:
- an ordinary individual (for example, an individual entrepreneur pays transport tax as a citizen, and not as a business entity);
- a person who is engaged in independent entrepreneurial activity;
- an official, similar to a manager in an LLC;
- is equivalent to the status of a legal entity, although formally it is not one.
The latest status of individual entrepreneurs raises another question - how can an individual entrepreneur be a legal entity if we have just found out that this is not the case?
But this is exactly what follows from norm 12.31.1 of the Code of Administrative Offenses of the Russian Federation: “For administrative offenses provided for in this article, persons engaged in business activities without forming a legal entity bear administrative responsibility as legal entities .”
Indeed, in some administrative legal relations, individual entrepreneurs are equated to a legal entity, but in most cases the law is more lenient towards individuals.
The same approach is used by banks when concluding an agreement for settlement and cash services. Even the departments for working with corporate clients are called departments for servicing legal entities. Although they work with both organizations and individual entrepreneurs.
When IP status matters
But why such difficulties in determining the status of an individual entrepreneur? Why not just consider him an individual and that's it?
Because an ordinary person, without the status of an individual entrepreneur, does not bear special responsibility for violating the laws that regulate business activities. And a person who has registered with the Federal Tax Service and become an entrepreneur is responsible for submitting reports, paying taxes and insurance premiums, paying salaries to employees, observing consumer rights, fulfilling obligations to contractors, etc.
That is why the responsibility of an individual entrepreneur is higher than that of an ordinary individual. This is stated in Article 2.4 of the Code of Administrative Offenses of the Russian Federation: “Persons carrying out entrepreneurial activities without forming a legal entity are liable as officials , unless otherwise established by this Code.”
This is clearly visible if you look at the size of fines for various administrative offenses. For example, for deceiving consumers (measuring, weighing or shortchanging when selling goods (work, services), the following fines are established:
- for citizens – from 3 to 5 thousand rubles;
- for officials - from 10 to 30 thousand rubles;
- for legal entities – from 20 to 50 thousand rubles.
In this case, the entrepreneur is recognized as an official, so he is subject to a fine of 10 to 30 thousand rubles. And in the amount of 3 to 5 thousand rubles they can punish a person who sells the products of his household plot, for the sale of which it is not necessary to register an individual entrepreneur.
But the Code of Administrative Responsibility may establish, as an exception, special fines - only for individual entrepreneurs. There is such a special sanction, for example, in Article 14.4 of the Code of Administrative Offenses of the Russian Federation - for the sale of goods, performance of work or provision of services to the population of inadequate quality:
- for citizens – from 1 to 2 thousand rubles;
- for officials - from 3 to 10 thousand rubles;
- for persons carrying out entrepreneurial activities without forming a legal entity - from 10 to 20 thousand rubles;
- for legal entities - from 20 to 30 thousand rubles.
In this case, the individual entrepreneur is not recognized as either an ordinary individual or an official. Its liability is closer to that of a legal entity.
In most cases, administrative sanctions are characterized by a different approach to organizations and individual entrepreneurs. Legal entities are punished with larger sums, which are tens of times higher than fines for entrepreneurs.
For example, if the rules for placing outdoor advertising are violated, an entrepreneur risks an amount of 3 to 5 thousand rubles. If an advertisement is placed by a legal entity without approval, then it will be charged from 500 thousand to 1 million rubles. In addition to this, the head of the organization is fined.
But if you look at the fines for missing deadlines for submitting reports or transferring taxes, then here ordinary individuals, individual entrepreneurs and organizations are called the same - taxpayer. And they are also fined the same way, for the same amounts, with some exceptions.
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How to specify in a contract the grounds for an entrepreneur’s activities
In connection with the change in the usual grounds for the activities of individual entrepreneurs, the question arose of how to correctly formulate on the basis of which the current individual entrepreneur is one of the parties to the agreement. The answer to this question follows from the list of supporting documents given above, and therefore several options are possible.
So, how can you indicate the basis on which an individual entrepreneur operates in a contract:
- Write that “...an individual entrepreneur acting on the basis of a certificate of state registration of an individual as an individual entrepreneur dated DD.MM.YYYY No. XXXXX, issued (the name of the body and the date of issue are indicated).” However, such an entry is applicable only to individual entrepreneurs registered before 01/01/2017.
- Indicate the details of the sheet for making an entry in the Unified State Register of Individual Entrepreneurs. This formulation is available for individual entrepreneurs that were registered both before 01/01/2017 and after that.
- Use the wording “individual entrepreneur, full name (OGRNIP, INN).” All individualizing features are present in it, there are no cumbersome phrases.
- Include a clause with the following wording: “Individual entrepreneur acting on the basis of a registration record as an individual entrepreneur dated DD.MM.YYYY with state registration number XXXXX.”
Appointment of a director for an individual entrepreneur
There are situations in which a person, having registered an individual entrepreneur, cannot or does not want to do business himself. Then a private entrepreneur has the right to conclude an employment contract with any person, appointing him to the position of director. Again, a problem arises in indicating on what basis the director of the individual entrepreneur acts.
In this situation, the powers of the director are determined in accordance with the power of attorney, and its date and number are indicated in the agreement.
An individual entrepreneur can enter into civil contracts, including with his relatives.
It is not prohibited for an individual entrepreneur to appoint himself as a director. But again the dilemma: on what basis does the individual entrepreneur act when concluding an agreement? In such a situation, there is no power of attorney, and the contract indicates the number of the appointment order and OGRNIP.
Having the status of an individual entrepreneur, a citizen can be appointed as the head of a collective farm. When concluding contracts with such farms, on what basis do individual entrepreneurs act?
The preamble should indicate that the individual entrepreneur is the head of the farm and acts on the basis of making an entry in the Unified State Register of Individual Entrepreneurs. Next, write down the OGRNIP number.
Also see “How to find out OGRNIP by TIN”.
