Business Startup Tips - LLC vs S Corp: Which is better for you? Legal Issues for Entrepreneurs


Limited liability company or individual entrepreneur: what to choose

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IP register easier and cheaper. The difference is already visible when comparing the size of the state duty for registration: for SP - 800 rubles, for LLC - 4000 rubles. The package of documents for individual entrepreneurs is much smaller, which means that it is easier and cheaper to prepare them.


Legal address


The PI is registered at the place of residence, that is, if you are from Barnaul, and you plan to work in Moscow, then how will you be registered in Barnaul and you will report in the same city.


The registration of the LLC takes place at the legal address of the head office - a lease agreement or a letter of guarantee is required for this.


Account and print


Individual entrepreneurs have the right to work without a settlement account and seal. For LLC these are required attributes. So, additional costs.


In addition, the SP has the right to dispose of money (including money on the current account) at its discretion. An LLC can withdraw funds from a current account only for any purpose or pay dividends (13% tax) and, as a result, be more costly.


Reporting 


The PI is easier to report to the tax authorities and funds, as initially a smaller number of documents are provided.


A responsibility


Here everything is ambiguous. Penalties for the PI, of course, less, because the PI is equal to the official. Fines for an LLC are significantly higher, plus in some cases a fine will be issued to both the organization and the official. In fact, in this case, the organization may pay twice for a single offense.


However, the SP is responsible for its obligations with all its property (home, car, cottage, TV). Ltd. is only authorized capital and property of the organization.


Activity


There are some limitations in the types of activities for individual entrepreneurs. So, PI can not produce and sell alcohol.


Liquidation


Of course, a business is created to work and make a profit, but the path to retreat must be prepared.


SP cannot be sold, LLC - you can, you can change the director, the founders. The individual entrepreneur is easier to close: he has reported to the tax and funds, paid the state duty, prepared a statement, and after five days the entrepreneur was closed. Since LLC is more complicated, and if there were turnover on the account, then cameral checks from the tax side.


The tax systems of the simplified taxation system (upreshchenka), UTII are the same for individual entrepreneurs and limited liability companies. On OSNO IP - personal income tax, LLC - income tax. In addition, LLC maintains accounting and delivers a balance sheet and a profit and loss statement. In work with the staff of PI and LLC are equal.



Video: Business Startup Tips - LLC vs S Corp: Which is better to minimize tax?

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