Opening an individual entrepreneur to provide legal services: registration procedure, OKVED and documents

Tax schemes with individual entrepreneurs: recommendations and risks

15.11.19
The article was published in the newspaper “First Page” No. 10 (115), November 2021.

The use of individual entrepreneurs in tax planning has long been successfully used by many companies, but optimization schemes with individual entrepreneurs are quite transparent for the tax authorities, so certain actions are necessary that will “legalize” work with an individual entrepreneur as an executor.

Due to tightening control over the activities of individual entrepreneurs, many opportunities for tax optimization with their participation have become irrelevant, but this does not mean that the legal form of individual entrepreneurs no longer provides any opportunities for saving on taxes as part of interaction with friendly companies.

The use of individual entrepreneurs in tax planning has long been successfully used by many companies, but optimization schemes with individual entrepreneurs are quite transparent for the tax authorities, so certain actions are necessary that will “legalize” work with an individual entrepreneur as an executor.

Due to tightening control over the activities of individual entrepreneurs, many opportunities for tax optimization with their participation have become irrelevant, but this does not mean that the legal form of individual entrepreneurs no longer provides any opportunities for saving on taxes as part of interaction with friendly companies.

Licensed areas of activity

A license is an official permission from the state to engage in a business that requires the creation of special conditions. But even if an entrepreneur is able to fulfill all licensing requirements, in most cases he will still not be given a license.

The areas that an individual is not entitled to engage in are listed in the laws:

1. Production and circulation of strong alcohol - No. 171-FZ of November 22, 1995;
2. Activities in the field of space - No. 5663-1 dated 08/20/1993;
3. Organization of trading - No. 325-FZ dated November 21, 2011;
4. Activities in the field of atomic energy - No. 170-FZ dated November 21, 1995;
5. Activities of banks (credit organizations) – No. 395-1 dated 12/02/1990;
6. Clearing activities – No. 7-FZ dated 02/07/2011;
7. Insurance activity – No. 4015-1 dated November 27, 1992.

In addition, a special law “On licensing of certain types of activities” No. 99-FZ dated 05/04/2011 was adopted, which contains a list of 53 points. For example, this is the provision of communication services, television and radio broadcasting, entrepreneurial activities in the management of apartment buildings, the production of medicines, etc.

Moreover, Law No. 99-FZ also does not directly say that licensed types of activities are not permitted to individual entrepreneurs. But when an applicant applies for a license, he learns about the impossibility of engaging in this area after he has registered the business.

Unfortunately, from this entire list, only pharmaceutical, medical, educational, private detective activities, passenger road transportation, production of phonograms, computer programs, and databases are available to individual entrepreneurs.

IP outsourcer - former employee

The company's management, wanting to reduce the tax burden on the wages of its employees, dismisses full-time employees and subsequently enters into civil law agreements (CLA) with them as individual entrepreneurs.

If a company has a performer - an individual entrepreneur who provides services to more than just one company (and therefore is engaged in entrepreneurial activities), has an employment contract with another organization (or does not have one), he is not obliged to go to work at your company every day, to comply with the rules labor regulations, etc. But, in the vast majority of cases, it will be very problematic to explain why your storekeeper, salesman or turner, who worked on your staff, became an individual entrepreneur.

There are risks for the customer company:

1. Reclassification of such relations into labor relations. And not only on the initiative of the tax inspectorate, but also on the initiative of the employee:

• Determination of the Novosibirsk Regional Court dated December 20, 2011 in case No. 33-9543/2011: “The claim for recognition of the contract as a labor contract was satisfied, since labor relations have developed between the parties, providing for the provision of guarantees of social security, insurance payments, ensuring working conditions, compliance with internal labor routine."
• Ruling of the Sverdlovsk Regional Court dated February 14, 2012 in case No. 33-1804/2012: “The requirement to recognize the employment contract as concluded for an indefinite period and to make an entry in the work book was legally satisfied, since an employment relationship formalized by a work contract actually arose between the parties, The plaintiff worked with the defendant’s employees in the same team, placed advertisements on billboards, obeyed internal labor regulations, and reported on the work done at the end of the working day.”

2. The possibility of additional assessment by tax authorities of taxes and insurance premiums, based on the rates established for employees under an employment contract in connection with the pretense of a contract relationship with an individual entrepreneur.

• Resolution of the Federal Antimonopoly Service of the West Siberian District dated April 27, 2011 in case No. A27-6452/2010: “Conclusion by an entrepreneur, for the purpose of obtaining unjustified tax benefits, of contracts for the provision of services with previously dismissed individuals registered as individual entrepreneurs, but actually carrying out their labor duties , indicates the legality of additional assessment of insurance contributions for compulsory pension insurance and personal income tax.”

The Commission for the Legalization of the Tax Base and the Base for Insurance Contributions most closely monitors the activities of individual entrepreneurs in such situations (Letter of the Federal Tax Service dated July 25, 2017 No. ED-4-15 / [email protected] ). To ensure that when tax authorities check the relationship, the relationship is not recognized as an employment relationship, a number of conditions cannot be included in the texts of civil contracts with individual entrepreneurs: position in accordance with the staffing table, working and rest hours, salary, disciplinary liability, vacation, benefits, etc. Inspectorate of the Federal Tax Service courts of three instances was able to prove that:

• payment for services provided occurred regularly, on the same dates each month, the amount of payment did not change during the year or changed slightly, and did not depend on the result of the services;
• virtually all services were performed by individual entrepreneurs during company opening hours: daily, except Sunday, from 9:00 to 18:00, with a lunch break from 13:00 to 14:00;
• All workplaces of individual entrepreneurs are equipped by the employer at his own expense.

Employees use this property free of charge;

• the reporting of all individual entrepreneurs was submitted by a representative of the taxpayer;
• Some employees during interrogations showed that the initiator of their registration as an individual entrepreneur was the employer, some of them could not explain the type and essence of their business activity, none of them had other clients, did not search, employees who stopped cooperation with the company immediately closed their IP.

Ruling of the Supreme Court of the Russian Federation dated February 27, 2017 No. 302KG17-382 in case No. A58547/2016: “... the courts proceeded from the fact that the actual economic meaning of the activities of individual entrepreneurs attracted by the company, using a simplified taxation system (counterparties under contracts for paid services that were not a one-time, but a systematic nature), the latter carried out labor activities as employees, that is, in fact, labor relations developed between society and contractors; the company carried out activities aimed at obtaining unjustified tax benefits by evading the duty of a tax agent to calculate, withhold and transfer personal income tax amounts provided for in paragraph 6 of Article 226 of the Tax Code of the Russian Federation.”

In addition, there are risks for individual entrepreneurs due to the peculiarities of the civil process agreement under the Civil Code of the Russian Federation:

1) The employer’s ability to unilaterally cancel the contract at any time is provided for by civil law:

• Art. 717 of the Civil Code of the Russian Federation “Refusal of the customer to perform a work contract”: “Unless otherwise provided by the work contract, the customer may, at any time before delivery of the result of the work to him, refuse to fulfill the contract by paying the contractor part of the established price in proportion to the part of the work performed before receiving notice of refusal the customer from the execution of the contract...";
• Art. 782 of the Civil Code of the Russian Federation “Unilateral refusal to execute a contract for compensation.

2) The employer’s ability not to accept services provided/work performed in whole or in part and, accordingly, refuse to pay for them:

• Art. 720 of the Civil Code of the Russian Federation “Acceptance by the customer of work performed by the contractor”: “The customer is obliged, within the time frame and in the manner prescribed by the contract, with the participation of the contractor, to inspect and accept the work performed (its result), and if deviations from the contract are discovered that worsen the result of the work, or other shortcomings in the work, immediately report this to the contractor...”;
• Art. 723 of the Civil Code of the Russian Federation “Responsibility of the contractor for inadequate quality of work”: “In cases where the work was performed by the contractor with deviations from the contract that worsened the result of the work, or with other shortcomings that make it unsuitable for the use specified in the contract or in the absence of corresponding condition of unsuitability for normal use, the customer has the right, unless otherwise provided by law or contract, at his choice to demand from the contractor: free elimination of defects within a reasonable time; a proportionate reduction in the price set for the work; reimbursement of their expenses for eliminating shortcomings (Article 397 of the Civil Code of the Russian Federation) ... ".

3) An individual entrepreneur is not entitled to vacation. If the contract does not provide for a reduction in pay in the event of the employee’s absence, then payment must be made in the full established amount, regardless of the facts and illness, etc.

How to choose a type of activity

When registering an individual entrepreneur, it is necessary to select sectors of work in strict accordance with OKVED: All-Russian Classifier of Types of Economic Activities. ​​​​​​​ The document indicates the names of industries used in the Russian Federation: when registering an individual entrepreneur or legal entity, select the appropriate codes from the list.

The classifier was approved by Order of Rosstandart dated January 31, 2014 No. 14-st. Officially it is called OK 029-2014 (NACE Rev. 2). It is usually called OKVED or OKVED-2, since its second edition is now in effect. OKVED is divided into sections according to sectors of the national economy.

Individual entrepreneur - sole executive body

An individual entrepreneur combines the functions of a business owner and a person acting on behalf of an organization without a power of attorney - a sole executive body (director, manager, etc.). This feature makes it possible to withdraw earned money from the company without paying dividends. After all, everything that an entrepreneur earns after taxes is his personal property. The owner of the organization cannot do this - in order to receive money from the business in the form of dividends, you will first need to withhold personal income tax (clause 4 of Article 224 of the Tax Code of the Russian Federation).

Thus, a group of companies can use a friendly individual entrepreneur to legally receive funds directly from an individual. The cost of such an operation will be quite comparable to the cost of similar services on the market, but incomparably more secure. For example, if an entrepreneur applies the “simplified tax system” with the object of taxation – “income”, he will pay a single tax of 6% on the money received from a group of companies. After that, he will also incur expenses for paying for bank services for withdrawing cash (usually less than 2%, although today some banks have significantly increased rates when transferring funds to an individual entrepreneur from his current account to a card account).

The cost of the money withdrawal service in this case will be less than 8%. Tax risks in this case can only be associated with the basis for payment for the services of an individual entrepreneur. It is highly desirable that such an individual entrepreneur have, in addition to his own organization, other clients to whom he would provide similar or other services. That is, if such a payment has a business purpose (economically justified, for example: payment for management or intermediary services of an entrepreneur), then the risk for the group of companies will be minimal.

If the activity specified in the Patent itself is established by regional legislation

The eighth paragraph of Article 346.43 indicates the right of regions to establish, in addition to those specified in the Tax Code, other types of activities. But such types should be domestic services to the population. Additionally, the Ministry of Finance, when contacting the Tax Authorities for clarification, issues Letters confirming this position. In particular, the Letter dated December 28, 2012 with the number 03-11-11-398 confirms that additional activities established by the subjects of the Federation should be carried out by individual entrepreneurs on PSNO only in relation to individuals.

Important! When a Patent is issued by the tax inspectorate for a type of activity that, in addition to those specified in the Tax Code of the Russian Federation, is introduced by regional legislation, the entrepreneur does not have the right to provide services to organizations under it. This type of activity involves the provision of services to the public, that is, individuals.

Individual entrepreneur is one of the company’s suppliers

If the company has a goal - to legally withdraw some amount from the business to the final beneficiary, then a possible solution to the problem would be to include the entrepreneur in the company’s commodity chains.

This could be, for example, a simple chain of resellers in which the entrepreneur plays the role of a goods purchasing center or a distribution center, retaining part of the trade margin in the amount necessary to exit the business. The construction of such a chain is justified if an individual entrepreneur applies the same taxation system as other “links” of the trade chain. In this case, there will be no problems with VAT, in addition, an individual entrepreneur, even under the normal taxation system, bears a lower tax burden than a legal entity.

If an individual entrepreneur applies one of the special tax regimes when building commodity chains, the company faces a standard tax risk - transfer pricing. After all, this is the main tool for redistributing margins. During the inspection, it is possible to submit claims under Art. 40 of the Tax Code of the Russian Federation “Principles for determining the price of goods, work or services for tax purposes” with subsequent recalculation of taxes for all participants in the commodity chain at market prices. If the transaction is classified as controlled, the risks increase.

One of the most important points in these schemes is the ability of the individual entrepreneur to prove that he could complete the stated amount of work or supply the specified product. If circumstances are established that indicate the coordination of the actions of the individual entrepreneur and his counterparty for the purpose of claiming VAT for deduction and including expenses as part of the professional tax deductions of the individual entrepreneur, then additional taxes may be charged to the entrepreneur (the entrepreneur was found guilty of tax evasion, Resolution of the Autonomous District of North Kazakhstan dated May 12, 2015 No. F08-2263/2015 in case No. A32-11646/2013). The circumstances are as follows:

• lack of real possibility of supplying goods;
• lack of confirmation of delivery of goods;
• lack of participation of counterparties in the movement of goods;
• transit nature of payments, cash withdrawal;
• the participant of the counterparties is the individual entrepreneur himself.

Accounting services for individual entrepreneurs in Moscow: reasons to use outsourcing

It was already mentioned above that the assistance of third-party specialists is a more effective solution than hiring a full-time employee. Let's look at the reasons in more detail:

• Increasing the stability of business activity. Accounting services for individual entrepreneurs in Moscow from a third-party company will eliminate the risk of dependence on your own accountant for a businessman. An employee can quit, go on maternity leave or vacation, or get sick right before submitting a report - this will never happen with MIP;
• Significant reduction in overhead costs. A full-time employee not only needs to be paid a salary. You will need to provide him with a workplace, purchase office equipment and software, and pay for seminars. Accounting services for individual entrepreneurs in Moscow eliminate the need for such costs;
• Reducing the tax burden. The entrepreneur will not need to pay tax and social contributions for the employee. In contrast, third-party services are included in the “expense” line item in accounting and are not subject to taxes;
• Increasing the company's income level. Using accounting services for individual entrepreneurs in Moscow, a businessman becomes the owner of certain financial guarantees. There will definitely be no factual errors or typos in the reporting, and it will be submitted on time. This is a guarantee of no fines, sanctions, or blocking;
• Increasing the quality of accounting and bookkeeping at the enterprise. An individual entrepreneur is always aware of the current state of affairs in the company, which allows him to make the right decisions about his activities. Financial and personnel documentation is in perfect order, and if a shortage is discovered, he will be the first to know about it;
• Minimizing the risks of incorrect tax accounting. Another additional advantage is provided by the highly qualified specialists of the company.

Accounting services for individual entrepreneurs in Moscow in the company MIP is an opportunity to receive high-quality services in a timely manner. Take advantage of a free consultation to get complete information about the company's offers.

Individual entrepreneur - intermediary for deliveries to the company

If the “links of the chain” use different tax regimes, it is more expedient to build the relationship between the entrepreneur and the company on the basis of a commission agreement. Thus, an individual entrepreneur who uses the simplified system can play the role of a commission agent or a principal in the trade chain of companies paying VAT, depending on the tax regime of the third-party buyer. The most commonly used scheme is in which a legal entity works with the end consumer, since an individual entrepreneur simply cannot work with some customers due to strict internal security rules.

This scheme is too transparent for tax authorities - it is obvious that income is transferred to the individual entrepreneur, who practically plays no role in business operations. There is a risk here that the construction of such a commodity chain in court may be recognized as a sign of receiving an unjustified tax benefit, expressed in the transfer of income to the preferential tax regime applied by the entrepreneur. To defend against such claims, it is necessary to show the business purpose of including the individual entrepreneur in the trade chain. To reduce such risks, it is necessary that the entrepreneur himself actively participates in the purchase or sale of goods: selects counterparties, personally concludes contracts, makes any changes to the goods (transportation, packaging, retrofitting, etc.).

Conclusion

The use of individual entrepreneurs in the operation of a company can really help with tax planning. But it is necessary to remember the risks of this method of reducing tax liabilities.

Firstly, working with an entrepreneur in a relationship involving property or large sums of money requires a very high level of trust between the parties. Indeed, unlike a company, it is essentially impossible to establish administrative or property control on the part of other persons over the actions of an entrepreneur.

Secondly, we must remember that an entrepreneur is liable for his obligations with all his property, and not just that which is used to generate income (although the application of the concept of “subsidiary liability” has expanded in connection with changes to the Bankruptcy Law and Article 45 of the Tax Code RF, equalized the responsibility of the owner and manager for the company’s obligations). As a consequence, the conduct of controversial or frankly dubious transactions by an individual entrepreneur is extremely undesirable and should be excluded.

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Legal support → business guarantee

In general, legal services include a wide range of different types of actions - a specialist can provide both simple legal advice and solve hair-raising legal problems, for which he will need extensive experience and solid knowledge. Here, a lot depends on the form of the company, its scope of work, scale and other factors. As a rule, any business needs legal support - a lawyer will help in drawing up various types of constituent documents, assessing risks, organizing negotiations, resolving controversial situations, defending in court, etc.

Summary on choosing an individual entrepreneur's activity

1. If you are just planning to apply for business registration, first study the types of activities that are not available to individual entrepreneurs. Most often, an unpleasant surprise for individual entrepreneurs is a ban on the sale of strong alcohol. For unexplained reasons, this type of trading is only allowed to organizations.
2. Check out the list of licensed areas specified in Article 12 of Law No. 99-FZ of 05/04/2011. Make sure that the business you want to do is not on the list of prohibited individuals.
3. Having a criminal record will not allow a future entrepreneur to start in the fields of education, medicine, culture, leisure, sports and social services.
4. When choosing a taxation system, pay attention not only to the low tax burden, but also to the permitted areas. For example, an attempt to trade wholesale using the UTII and PSN regimes will end in fines and additional taxes.