Freelancer or take part time? The consequences of working with customers and contractors without proper clearance
Situation:
I am not an individual entrepreneur, nor an LLC. Customers - legal entities and individual entrepreneurs do not work with me. Why? Consequences of work without state registration of entrepreneurial activity for the Contractor and the Customer. How do I work with a customer?
Consequences of work for the Customer with the contractor, a citizen of the Russian Federation, not registered
as an individual entrepreneur or LLC: When hiring a contractor / executor who is not registered as an individual entrepreneur (IP) or legal entity (usually LLC), the employer / customer will have to conclude a civil law contract with him (services, contracts, etc.) as with an individual.
For the customer, the full cost of the work of an individual contractor consists of the following amounts:
1) 13% of the contract amount will be withheld by the customer and transferred to the budget of the Russian Federation as personal income tax (PIT),
2) the remaining 87% (NB! Contractors) of the contract amount will be issued, transferred to the individual contractor / contractor,
3) the customer will transfer 27.10% in excess of the contract amount as insurance premiums, -
Total:
- 127.1% of the contract amount, - this is the total cost for the customer of the work of the individual contractor;
- at the same time, the contractor will receive 87% of the contract amount.
That is, in order to officially pay the agreed amount to the individual contractor, the customer will have to pay approx. 50%
Whereas it is enough for the contractor-individual entrepreneur or legal entity to transfer the amount under the contract.
The consequences of the work of a contractor-citizen of the Russian Federation, not registered as an
individual entrepreneur or LLC, - with the Customer: Independent, at your own risk, activities aimed at the systematic ( highlighted by us , a key concept) profit from the use of property, sale of goods, performance of work or the provision of services , - may be (Clause 1, Article 2 of the Civil Code of the Russian Federation) regarded as entrepreneurial activity. Subject to state registration in accordance with the Federal Law of 08.08.2001 N 129-ФЗ.
That is, if the contractor systematically "makes a profit" from work, services, but is not registered as an individual entrepreneur or LLC, then this is a violation of the law.
How to find out if your activity is entrepreneurial?
The Ministry of Finance of Russia (letter of 05/13/2013 N 03-04-05 / 4-421) indicated the following signs of entrepreneurial activity in the activities of a citizen:
- production or acquisition of property for the purpose of subsequent profit from its use or sale;
- economic accounting of transactions related to the implementation of transactions;
- the interconnectedness of all transactions made by a citizen in a certain period of time;
- Strong relationships with sellers, buyers, and other counterparties.
Responsibility for entrepreneurial activity without registration:
Administrative liability - a fine of 500 r. up to 2 000 rub. (Article 14. Administrative Code of the Russian Federation).
Criminal liability (part 1 of article 171 of the Criminal Code of the Russian Federation) for illegal entrepreneurship: carrying out entrepreneurial activities without registration or without a license in cases where such a license is required if this act has caused a major (more than 1.5 million rubles - approx. Article 169 of the Criminal Code of the Russian Federation) damage to citizens, organizations or the state or involves the extraction of income in a large amount - a fine of up to 300,000 rubles or in the amount of the convict’s salary or other income for a period of up to two years, or by compulsory labor for a term of up to four hundred eighty hours, or by arrest for a term of up to six months.
The same act (part 2 of article 171 of the Criminal Code of the Russian Federation):
a) committed by an organized group;
b) associated with the extraction of income in a particularly large amount (6.0 million rubles. - Note to article 169 of the Criminal Code of the Russian Federation), -
shall be punishable by a fine in the amount of one hundred thousand to five hundred thousand rubles or in the amount of the convict's wages or other income for a period of one year to three years, or by forced labor for a term of up to five years, or imprisonment for a term of up to five years with a fine of up to eighty thousand rubles, or in the amount of the wage or other income of the convicted person for a period of up to six months or without it.
How to work with a customer?
The most obvious solution if you work alone is to register as an individual entrepreneur. This entails the obligation to calculate taxes, insurance premiums, record keeping, and reporting. At the same time, you get large customers.
How to register an IP or LLC? What documents do the Customer need, what should I write in them? How to choose a tax system? How to choose a bank? Where and what taxes to pay?
So that there are no problems taking into account, and you do not waste time solving issues that are not in your competence, we recommend that you contact specialists. Or to us - to the company - "Accounting Center" , specializing in the maintenance of smart companies. Or you can choose a specialist yourself by choosing among freelancers on specialized exchanges (for example - NUZHENBUKH.RF )
I am not an individual entrepreneur, nor an LLC. Customers - legal entities and individual entrepreneurs do not work with me. Why? Consequences of work without state registration of entrepreneurial activity for the Contractor and the Customer. How do I work with a customer?
Consequences of work for the Customer with the contractor, a citizen of the Russian Federation, not registered
as an individual entrepreneur or LLC: When hiring a contractor / executor who is not registered as an individual entrepreneur (IP) or legal entity (usually LLC), the employer / customer will have to conclude a civil law contract with him (services, contracts, etc.) as with an individual.
For the customer, the full cost of the work of an individual contractor consists of the following amounts:
1) 13% of the contract amount will be withheld by the customer and transferred to the budget of the Russian Federation as personal income tax (PIT),
2) the remaining 87% (NB! Contractors) of the contract amount will be issued, transferred to the individual contractor / contractor,
3) the customer will transfer 27.10% in excess of the contract amount as insurance premiums, -
Total:
- 127.1% of the contract amount, - this is the total cost for the customer of the work of the individual contractor;
- at the same time, the contractor will receive 87% of the contract amount.
That is, in order to officially pay the agreed amount to the individual contractor, the customer will have to pay approx. 50%
Whereas it is enough for the contractor-individual entrepreneur or legal entity to transfer the amount under the contract.
The consequences of the work of a contractor-citizen of the Russian Federation, not registered as an
individual entrepreneur or LLC, - with the Customer: Independent, at your own risk, activities aimed at the systematic ( highlighted by us , a key concept) profit from the use of property, sale of goods, performance of work or the provision of services , - may be (Clause 1, Article 2 of the Civil Code of the Russian Federation) regarded as entrepreneurial activity. Subject to state registration in accordance with the Federal Law of 08.08.2001 N 129-ФЗ.
That is, if the contractor systematically "makes a profit" from work, services, but is not registered as an individual entrepreneur or LLC, then this is a violation of the law.
How to find out if your activity is entrepreneurial?
The Ministry of Finance of Russia (letter of 05/13/2013 N 03-04-05 / 4-421) indicated the following signs of entrepreneurial activity in the activities of a citizen:
- production or acquisition of property for the purpose of subsequent profit from its use or sale;
- economic accounting of transactions related to the implementation of transactions;
- the interconnectedness of all transactions made by a citizen in a certain period of time;
- Strong relationships with sellers, buyers, and other counterparties.
Responsibility for entrepreneurial activity without registration:
Administrative liability - a fine of 500 r. up to 2 000 rub. (Article 14. Administrative Code of the Russian Federation).
Criminal liability (part 1 of article 171 of the Criminal Code of the Russian Federation) for illegal entrepreneurship: carrying out entrepreneurial activities without registration or without a license in cases where such a license is required if this act has caused a major (more than 1.5 million rubles - approx. Article 169 of the Criminal Code of the Russian Federation) damage to citizens, organizations or the state or involves the extraction of income in a large amount - a fine of up to 300,000 rubles or in the amount of the convict’s salary or other income for a period of up to two years, or by compulsory labor for a term of up to four hundred eighty hours, or by arrest for a term of up to six months.
The same act (part 2 of article 171 of the Criminal Code of the Russian Federation):
a) committed by an organized group;
b) associated with the extraction of income in a particularly large amount (6.0 million rubles. - Note to article 169 of the Criminal Code of the Russian Federation), -
shall be punishable by a fine in the amount of one hundred thousand to five hundred thousand rubles or in the amount of the convict's wages or other income for a period of one year to three years, or by forced labor for a term of up to five years, or imprisonment for a term of up to five years with a fine of up to eighty thousand rubles, or in the amount of the wage or other income of the convicted person for a period of up to six months or without it.
How to work with a customer?
The most obvious solution if you work alone is to register as an individual entrepreneur. This entails the obligation to calculate taxes, insurance premiums, record keeping, and reporting. At the same time, you get large customers.
How to register an IP or LLC? What documents do the Customer need, what should I write in them? How to choose a tax system? How to choose a bank? Where and what taxes to pay?
So that there are no problems taking into account, and you do not waste time solving issues that are not in your competence, we recommend that you contact specialists. Or to us - to the company - "Accounting Center" , specializing in the maintenance of smart companies. Or you can choose a specialist yourself by choosing among freelancers on specialized exchanges (for example - NUZHENBUKH.RF )