HOW TO BECOME PRIVATE ENTREPRENEUR
You decided to be engaged in your own business and to become the private entrepreneur? In this article we will tell about all subtleties of registration, pluses and minuses of such form of conducting business activity, and also we will help with the choice of the tax system.
For young business it is the most reasonable to be registered as the physical person entrepreneur (PPE). It is the most available form of conducting business activity. It is simple in the organization, maintaining business and tax accounting, the reporting, and in the ability to use hired labour.
But before starting registration PPE, let's weigh all legal pros and cons.
Risk or benefit?
Undoubtedly, such form of conducting business activity has pluses: lack of the authorized fund, an opportunity to receive from clients cash without limit, without cash register under certain conditions (in case of general tax system); possibility to use a simplified tax system; work without opening bank account and seal; individual decision making, without thinking about opinion of founders. PPE suits those entrepreneurs who want to do business independently with minimum documentation.
But it is worth paying attention that PPE can be registered only in the place of the registration according to the passport. And what else is important - the entrepreneur bears responsibility according to liabilities by all the personal property (besides property that cannot be seized and sold), and liquidation of PPE doesn't exempt the citizen from such liability.
Recovery of property can be turned on everything what the entrepreneur owns. The list of exceptions, contains in the annex to the Law of Ukraine "About executive production" of 21.04.1999 No. 606-XIV, also an exception are different types of the public assistance.
The state registration of the PPE takes no more than 24 hours from the moment of submission the documents, but before to start it, it is necessary to determine a kind of activity in which you plan to be engaged.
In the legislation there is an accurate list of types of activity which is forbidden business owners, it is specified in article 4 of the Law of Ukraine "About an entrepreneurship" of 07.02.1991 No. 698-XII.
Also, the legislation is limited the number of persons who are forbidden to combine theirs activities with the business. It is certain categories of public servants (including military personnel who are on active duty), employees of the prosecution authorities, the SSU, Internal Affairs of Ukraine, the courts and other government agencies, and also persons which are forbidden to perform certain types of activity by the judgment.
And the last restriction – age. The person aged from 16 up to 18 years can't register PPE without notarized consent from parents (adoptive parents, guardianship authorities).
If you decide to become PPE it is important to understand accurately the scale of resources with which you can operate in your own business: personal skills, finance, equipment, tools, room, parcel of land, etc. It is necessary to understand accurately, you will independently work, or hired employees will be required.
After all of you considered it is possible to pass to a registration PPE and the choice tax system.
You have to remember also that the PPE, unlike legal entities, can't choose the name of the business – it shall hereinafter be referred to as on the surname: for example, PPE Petrov A. A.
The order of registration is quite simple and regulated by the law No. 755-IV "About the state registration of legal entities, private entrepreneur and the public forming" which provides an order of the state registration of legal entities and private entrepreneur and public forming. According to the new edition of the document operating since January 1, 2016 it is possible to address not only to the state registrar with the local authorities, but also to notaries over all country. At the same time it is important not to forget that registration of PPE is all the same tied to the place of a registration the physical person.
Also documents can be submitted for registration:
- by mail, previously having certified the personal signature at the notary;
- through the electronic portal, having arranged the digital signature;
- through the authorized person, in the presence of the notarized power of attorney.
Registration was strongly simplified, for its implementation it is required to you:
- The statement of the established form;
- The passport (a notarized consent of parents, for persons from 16 to 18 years; the notarized power of attorney for the authorized person).
Foreigners and stateless persons should be submitted in lieu of a passport: the passport document of a foreigner or a stateless identity card or a certificate for permanent or temporary residence. According to Art. 15 of the Law № 755 documents should be presented in the Ukrainian language.
The application shall include the following information: last name, first name, registration number of the taxpayer registration card (ID code), place of residence (registration), activities, contact details for communication. Passport data indicate only the citizens who refuse to assign an identification code.
Select tax system
The registration the payer of the single tax and VAT are also simplified. You can submit an application to the state registrar together with the documents for the registration PPE.
Private entrepreneur can operate on a common tax system or simplified system (single tax). But if your turnover for the year will exceed 1 mln UAH and you are on the common tax system, you have to become a VAT payer.
Taxes shall be paid out of net income, which is determined by the difference between revenue and costs. The expenses must be confirmed by relevant documents and they must be directly related to income received by the private entrepreneur.
At the first stage it is important to determine the most favorable tax system for your activity. Novice entrepreneurs often choose the simplified system, ie, single tax. Its indisputable advantage is the ease of accounting and reporting, which allows to minimize the risk of penalties and errors in the administration of taxes.
Registration of business activity takes place in the shortest possible time, to the documents given to 24 hours (except weekends and holidays), and the administrative fee for the state registration is not available. Automatically runs the capture on the account in bodies of statistics, the State Fiscal Service as a tax payer and a single social contribution.
As we mentioned above, the seal and opening a bank account is not a prerequisite for entrepreneurial activity of a natural person, but we still recommend that you get your own stamp and bank account. First add solidity to the counterparty (to the same print resolution is not required), and the second will provide an opportunity to work with the clearing settlement.