Is it possible to be employed and an individual entrepreneur at the same time?

An individual entrepreneur has a dual status. While remaining an individual, he becomes a subject of entrepreneurial activity. However, a business does not always require the personal presence of its owner or, especially at first, requires additional financial investments from outside. Given this specificity, it is logical to look for answers to the question of whether an individual entrepreneur can work in another organization using a work book, receiving income as an employee.

Can an individual entrepreneur work in another place using a work book?

Any citizen (with the exception of state and municipal employees, deputies who carry out their activities on a permanent basis) has the right to register an individual entrepreneur while already working for hire. The same applies to those who provide services under a civil contract.

The employee who makes such a decision is absolutely not obliged to notify his employer about this. The personnel service is not provided with information about their receipt of a certificate of state registration. A work book is a document for making records of work as an employee. Individual entrepreneur data is entered into the state register.

In the same way, any individual entrepreneur can officially get a job. He comes to the interview as an individual. Entrepreneurial status does not matter to the employer.

The employment contract guarantees him access to all the benefits of such cooperation:

• he receives wages on time;
• along with others, is entitled to bonuses;
• he is granted leave at the expense of the employer;
• the employer pays the necessary insurance premiums from his income.

Naturally, an employed entrepreneur is obliged to fulfill the duties specified in the contract and behave in accordance with the labor regulations determined by local regulations.

How best to work - under an employment or civil law contract

There is only one advantage to working under a GPC agreement for individual entrepreneurs. He loses less money on taxes. For example, if an individual entrepreneur works on the simplified tax system, “income” is 6% on the simplified tax system versus 13% personal income tax.

Otherwise he:

• loses the right to a social package and guarantees provided for by labor legislation;
• pays insurance premiums alone - they are less than when combined with official employment, therefore the accrual of pension points and accumulation of insurance experience is slower;
• loses the right to compensation related to the performance of work activities - expenses for transport, cellular communications.

Another risk of such legal relations is that the tax authorities may recognize them as an unreasonable replacement for labor ones. If the Federal Tax Service proves this in court, it will additionally charge all unpaid VAT and personal income tax. An example of judicial practice is the Resolution of the FAS ZSO dated 10.18.2028 in case No. A70-13715/2017.

To prevent this from happening, the civil contract should not contain:

1. Job titles and identification of parties as employee and employer. In civil legal relations, the parties are the customer and the performer.
2. Regulations on compensation, tariff rates, salaries. Under the GPC agreement, it is not the work process that is paid for, but the final result.
3. Requirements for compliance with labor regulations. An individual entrepreneur under a GPC agreement can build his own schedule - work at night or early in the morning, rest on weekdays and work on weekends.
4. Responsibilities to ensure working conditions. The contractor under the GPC agreement independently equips the workplace and uses its own tools and materials.

It is always more profitable for an employee to work under an employment contract. He retains all social guarantees: vacations, sick leave and benefits. In addition, there is no risk of reclassification of working relationships and additional taxes.

In what cases is this combined?

Running a business and working as an employee can be successfully combined. There is a whole list of positions that allow you to earn good money and leave time and energy for developing your own business in order to replenish your budget with additional income.

However, current practice leads to certain conclusions: not every field of activity has conditions that allow working and developing an individual business. What aspects should you pay special attention to?

Situation 1.

Official citizens want to open their own business. First, they need to find out exactly whether it is possible to simultaneously work as an employee and be an individual entrepreneur at the same time. The main risk is the danger of going broke if the new business does not bring the planned profit. Such fears are justified, so it is better not to interrupt the employment relationship at first.

There are also restrictions when registering a new status. For this to happen, the citizen must meet the requirements established for opening an individual entrepreneur. He must:

• be of legal age;
• have Russian citizenship;
• meet the category of full legal capacity;
• document the absence of prohibitions on such activities.

Limitation of legal capacity is established by a court decision. This procedure can be performed on people with mental disorders or those diagnosed with drug, alcohol or gambling addictions.

Note! The parameters of a certain age and legal capacity are established because entrepreneurial activity is accompanied by a high degree of risk, and a beginning businessman must have a good understanding of the potential danger.

The requirements that must be met before registration do not contain a clause stating that only an unemployed person can become a businessman. The legislator designates this OJSC or LLC as a legal form of organization. Individual entrepreneur is interpreted as a special status of an individual. It makes it possible to engage in commercial activities legally.

With their new status, entrepreneurs also take on certain responsibilities. They have to:

• maintain reports and submit them to government agencies;
• pay mandatory contributions to the Pension Fund and the Federal Tax Service;
• independently bear responsibility for the obligations assumed.

By registering as an individual entrepreneur, a person remains an individual; he retains all the rights and obligations of an ordinary Russian citizen. He can still carry out work if he wishes.

Situation 2.

An individual entrepreneur wants to get a hired job. The legislation in force in 2021 does not prohibit combining business and work activities. So the answer to the question whether an individual entrepreneur can get a job officially is positive.

An individual entrepreneur is the same individual, and the Constitution of the Russian Federation protects his rights. In Art. 37 states in detail that every person has the freedom to dispose of his own labor as he sees fit. These postulates are enough for an individual with the status of an individual entrepreneur to enter into an employment contract with a third-party organization.

It is possible to combine your business and your main job, but it is quite problematic. Business, especially at the development stage, requires constant monitoring of what is happening. If a person runs his own business and at the same time has an employment relationship, then he needs to plan his time so that productivity at his main job does not suffer. Otherwise, difficulties may arise with your superiors.

Law on opening an individual entrepreneur

Becoming an individual entrepreneur is not a problem for anyone today. Thus, limitless opportunities open up for especially active citizens, full of ideas and energy. At the same time, such activities do not guarantee success. Therefore, people want to insure themselves so as not to lose everything. This becomes possible thanks to official employment as an employee.

Even experienced businessmen recommend that startupers do not leave their usual place of work at first and combine it with their new business. Then, in case of failure, it will be possible to return to the previous way of life without loss . Future entrepreneurs may be wondering whether it is possible to become an individual entrepreneur while continuing to work at their job and without quitting. The legislation on this has the following provisions.

1. In Art. 18 of the Civil Code of the Russian Federation states that any citizen has the right to engage in business if this area is not prohibited by law. He must be an adult and have civil rights.
2. Article 23 of the Civil Code of the Russian Federation states that the right to engage in entrepreneurial activity arises from the moment he registered as an individual entrepreneur.
3. In the law “On registration of individuals” and legal persons” there are no prohibitions on committing such actions.

All these legal acts show that an individual entrepreneur can work simultaneously under an employment contract. But, nevertheless, the rule has both exceptions and limitations.

What risks can you face?

Anyone officially working with a registered individual entrepreneur may experience a number of difficulties. The most important ones include the following:

1. It is difficult to combine two types of activities. His own business also requires a lot of time, even if the entrepreneur hires employees to carry it out. Therefore, when deciding to organize a business, you need to think carefully about how to organize everything so that you have some personal time left for your family or vacation.
2. The businessman does not have a social package. Receiving vacation or sick leave pay is only permissible at the place of official employment.
3. Being an employee of an organization or working at an enterprise, an ordinary employee is not responsible for the company’s losses. But the business owner is personally involved in all financial aspects; he is responsible for losses with his own property.

Organizing your own business attracts people with possible independence, freedom to make decisions, and enhanced development of their potential. However, this increases the risk of using unprofitable sources of financing. You need to be prepared for a decrease in purchasing power, currency fluctuations, and many other negative factors. If something seriously goes wrong, the business will be destroyed, and its owner will be left with an empty wallet.

Important! Combining an individual entrepreneur with their main job is most convenient for those who work on a shift or flexible schedule.

It is difficult to combine individual entrepreneurs and work under an employment contract for those involved in labor relations on a full-time basis. In this case, to facilitate the functioning of the business, it is logical to employ a person to keep records. For example, a remote accountant can help out.

A self-employed individual entrepreneur may face a negative reaction from a controlling employer. Such managers strive to ensure that their employees give their all to their main job, and they do not have any energy left for other activities. They will not welcome distracted business on the side, especially without notifying their superiors.

Entrepreneurs, compared to other forms of business, do not have ample opportunities to delegate authority. If at his official place of work he occupies an administrative position that requires a lot of effort to control, it is likely that managing his own business will fade into the background. This can lead to serious consequences.

If an individual business coincides with the responsibilities at work or the tasks performed are similar, at some points the situation will be characterized as an attempt to dishonestly conduct business, or even sabotage. Such conclusions can lead not only to loss of work, but also business reputation.

It is important to minimize risks, approach creating a business responsibly, focusing on common sense, carefully studying tax and pension policies in order to clearly understand in each specific case whether it is possible to both work and be an individual entrepreneur.

Registration procedure

An employee is employed at his main place of business according to the “classic” scenario:

• Drawing up and signing an employment contract, which reflects the nuances of the upcoming cooperation;
• Upon reviewing the list of job duties, the employee must sign this list;
• An order for employment is issued;
• Based on the order and agreement, an entry is made in the work book. It is kept by the HR employee until dismissal.

When applying for an additional job, you do not need to provide a work book; you must have with you:

• Passport of a citizen of the Russian Federation or other document confirming the identity of the applicant for the position;
• Education document;
• Certificate from main job indicating the type of activity.

The registration procedure is standard:

• Signing an employment contract, indicating information that the activity is carried out “part-time”.
• The employee is given a list of responsibilities, he signs a document stating that he is familiar with them;
• Drawing up an order for employment.

Since the work book is located at the main place of work, only the employee decides whether he needs a record of additional employment.

How to work: using one or two work books

You can get two jobs at the same time using one book.

A work book will be required when applying for a primary job. It may not be provided to enterprises where you work part-time. Sometimes the employer asks to confirm the employee’s experience and length of service, then you will need to take a copy of the work book, certified by signature and seal, from the main job.

The Labor Code of the Russian Federation does not prohibit an employee from working with two work books, but negative consequences are possible:

• The emergence of difficulties with the tax service;
• Fraud charges and penalties;
• Difficulties in applying for a pension and calculating the total length of service;
• Negative reaction from the employer.

The law does not stipulate that an employee must notify the main place of work about the presence of additional activities, but in order to avoid further problems it is better to do this.

Paying taxes

What happens when a person is officially employed, but at the same time takes up entrepreneurship? He receives a salary at his place of work, and the organization also pays all the necessary contributions to the funds for him. At the same time, the entrepreneur himself transfers fixed insurance and pension payments. There is some duplication, but it is impossible to change this situation.

There is only one option to reduce payments. By agreement with the employer, you can terminate the employment contract, and for the same scope of activity enter into an agreement with him as an individual entrepreneur.

Additional Information! This can be done if there are suitable areas among the available OKVEDs. You can also add them, the procedure will not require additional payment.

It may be beneficial for an employer to accept such an offer. After all, he not only pays salaries, but also pays almost 50% additionally in the form of taxes and contributions. You can draw up an agreement with an individual entrepreneur, increasing direct payments so much that he receives at least 30% more and has enough to pay 6% of the simplified tax system and remain in the black.

However, this option is legal only if certain conditions are met:

1. An entrepreneur receives money for performing a certain amount of work.
2. There is no job description.
3. There are no mandatory hours in the office.
4. Vacations and sick leave are not paid.
5. The individual entrepreneur does not bear financial responsibility and works with other contractors.

Specific conditions must be carefully discussed with the employer before terminating the employment contract. If, in fact, there is an employment agreement, it cannot be disguised by passing it off as other forms.

WHAT IS COMBINATION

Article 60.2 of the Labor Code of the Russian Federation defines part-time work as performing “during the established duration of the working day (shift), along with the work specified in the employment contract, additional work in another or the same profession (position) for additional pay.”

This means that during his working time the employee performs both his own duties and the duties of another person, that is, he works “for two”.

The law identifies several types of additional work:

1) combining positions (additional work in another position). For example, an accountant fulfills not only his duties in full, but also the duties of a personnel officer (combines two positions);

2) combination of professions (additional work in another profession). For example, a mechanic performs the duties of a mechanic, as well as the duties of a turner (combines professions);

3) increase in the volume of work (additional work for the same position or profession). For example, in the absence of one accountant, another may perform his work along with his own duties;

4) expansion of the service area (additional work in the same position or profession). Used if the work involves a clear division of the service area. For example, a janitor serves both his own plot and the neighboring yard;

5) performance of the duties of a temporarily absent employee without release from his own duties.

How to pay for part-time and other additional work

The additional payment can be established either as a fixed amount or as a percentage of the salary for a combined job or for the main job. Moreover, there are no restrictions on combined work for commercial organizations; you can pay at least 100% of the salary for the combined position. Another question is whether the employee will be able to work for two people for 8 hours. If this is realistic, it is probably worth reconsidering the workload on the employee for these positions.

Relations with the employer

The law does not limit the desire of an individual with individual entrepreneur status to get hired. In the same way, citizens who have their main place of work are not prohibited from becoming entrepreneurs.

It happens that superiors are absolutely indifferent to what their subordinates do outside the organization or enterprise.

It happens that it welcomes this scenario, hoping that for an employee who has income on the side, regular salary increases will not be fundamentally important.

There is a third option: the employer is categorically against it, because he sees in this the danger of careless performance of work duties due to heavy workload. If the situation does not change, he may do everything possible to encourage the person to quit.

Who should not combine work and individual entrepreneurs?

Not everyone who receives an official income from employment can become an individual entrepreneur. Russian legislation clearly defines the list of positions in which it is impossible to combine the status of an individual entrepreneur. This applies to:

• state civil and municipal employees, including through proxies;
• judges;
• notary employees;
• employees of the Ministry of Internal Affairs and other law enforcement agencies;
• military personnel;
• directors of state enterprises;
• deputies of all levels exercising these powers on an ongoing basis.

Such restrictions are based on political, economic and human risks. It is necessary to reduce as much as possible the potential opportunities for committing corrupt acts for those who are vested with serious powers of power.

To prevent conflicts of interest, they can combine their main activities exclusively with teaching or research.

Is it necessary to inform your employer about your status?

There is no need to notify your management about doing business during your free time. Theoretically, this does not affect the relationship with the employer. However, in practice sometimes it turns out differently. So it is necessary to decide what is the right thing to do in each specific case, based on prudence and expediency.

Thus, combining the open status of an individual entrepreneur and employment is quite legal. Sometimes this can bring additional benefits to the employer. Starting a business is not difficult, but you should study and weigh all the positive and negative aspects in advance. If you are afraid to part with your main job, but you also want to develop your own business, it is more convenient to start with the activity that is easiest to combine.

WHAT IS COLLABORATION

Article 282 of the Labor Code of the Russian Federation gives a clear definition of part-time work: this is “the performance by an employee of other regular paid work under the terms of an employment contract in his free time from his main job.”

That is, part-time work is work under another (separate, second) employment contract.

For example, a company employs an administrator who agreed to be on duty on the hotline after work. Since he will perform this work in additional time in relation to his main job, it will be a part-time job. To formalize a part-time job, you need to conclude another employment contract with the employee, in which you indicate that working “on the phone” is a part-time job.

An employee who enters into a contract for part-time work must have a main job (it does not matter whether it is with the same employer or with another). If the employer is the same, the combination is internal; if they are different, it is external.

Registration of a part-time job is a full-fledged admission procedure. Therefore, instructions on labor protection, familiarization with local regulations and a special assessment of working conditions (SOUT) card, registration of a personal card, and issuance of an admission order are mandatory. But it is not necessary to make an entry in the work book - only at the request of the employee.

Part-time work involves working after the main job and/or on weekends. The time sheet records the time a part-time worker works.

If the part-time worker is internal, then he will be recorded in two lines on the timesheet: as the main employee and as a part-time worker, as if they were two different people.

The number of employers with whom an employee can enter into employment contracts for part-time work is not limited. That is, a person can have a main job (where his work book is stored and filled out) and several part-time jobs. For example, work as a part-time accountant for 5 entrepreneurs at the same time. And at the same time have a main job.

You can terminate a contract with a part-time worker for all the reasons provided for by the Labor Code of the Russian Federation, and if the employment contract is concluded for an indefinite period, then also in connection with the hiring of another employee for this position for the main job (Article 288 of the Labor Code of the Russian Federation).