How to choose a form of entrepreneurship?

Today we are going to talk about the most common forms of entrepreneurship, but the emphasis will be on the IE, since our service works with this category of entrepreneurs.


Forms of entrepreneurial activity (the most common):


📍 self-employment (NAP)


📍 individual entrepreneur (PE)


📍 limited liability company (LLC)


If you run your own business and do not plan to expand and scale it yet, start with self-employment, namely registering as a professional income tax payer.


Next comes the heavier artillery like sole proprietorships and LLCs.


A post will not suffice to describe each, so let's talk about them in a somewhat comparative characteristic.⤵


🔸 Only an individual can become a sole proprietorship / LLC can be founded by one person or a group of individuals and the same LLC


🔸Registering a sole proprietorship is easier and cheaper / with an LLC this process is more complicated and expensive


Independent entrepreneurs must pay insurance premiums (except one tax regime), if there is no activity / LLC does not pay anything


🔸The sole proprietorship is liable with all its property/ In an LLC, such liability is within the property of the company itself.


🔸IE can apply any taxation regime available in RF/ LLC has limitations


PE may not keep accounting records / in LLC it is a direct obligation


Individual sole proprietors are restricted to some kinds of business activities/ There are no restrictions in Ltd. as licensing gives opportunity to do any kind of business


🔸The amount of reporting of IE to regulatory bodies is lower than that of LLC


🔸In cases of liability the amount of fines is much lower than that of LLC.


🔸Increasing interest, attracting investment, brand recognition and entering broader markets will happen more actively and faster for LLCs/IEs more difficult to develop business through investment and lending.


What's the bottom line?


To decide what form of business to prefer, you must weigh all the pros and cons, to answer the questions: how and with whom you will do business / own business, whether there are assistants, contractors, employees, what will be the cost of performing the service / work / production of the product and in what amount, whether investments and credit are needed, as well as issues of personal nature (maternity leave, credit).


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