Is SP considered a legal entity. ○ Concept Individual Entrepreneur

Novice businessmen sometimes face difficulties in choosing the legal form of business. And as a rule, they immediately face the need to compare both obvious pluses and undeniable ones. negative sides various forms organizations, and therefore with the need to determine their potential legal status when choosing a variety of forms of management.
And yet, let's try to figure out whether the IP is physical or entity?

Is the sole proprietorship a legal entity or an individual? Who cares

The legal status of an individual entrepreneur is a very sensitive issue, precisely because an individual entrepreneur still combines both the features of a legal entity and an individual.

The main moment here, are all applicable to an individual entrepreneur features legal entity or not.

In order to answer it 100%, you need to consider the provisions of Article 23 of the Civil Code of the Russian Federation, which contains a clear definition for citizens who conduct their business without forming a legal entity.

Based on the provisions of the above article, it becomes clear that the status of an individual entrepreneur is, first of all, a citizen who has the status of an entrepreneur without signs of the formation of a legal entity. Thus, the current version of the law clearly excludes individual entrepreneurs from the total number of legal entities.

However, at the same time, it is also not entirely correct to classify entrepreneurs as ordinary citizens - individuals, since they, based on their full participation in economic activity, are endowed in accordance with the Civil Code with both special rights and specific duties.

It would be much more correct to call individual entrepreneurs a special category of citizens who conduct their activities, but without forming a legal entity.

However, regarding the legal status of an individual entrepreneur, due to the ambiguity of the provision on an individual entrepreneur, the nature of his status is also twofold.

Whatever one may say, an individual entrepreneur takes part in economic activity, but does not form an economic entity.

Therefore, the whole range of rights from a legal point of view and obligations of a citizen who has the status of an individual entrepreneur as an individual or legal entity receives its distinctive features- namely, the most important right acquired by a citizen with the status of an individual entrepreneur - it is a legal right to carry out their business activities.

The legal status of an individual entrepreneur does not provide for any division of the property of an individual into participating or not participating in any activity.

An entrepreneur, in accordance with his status as a participant in economic activity, is obliged to pay the amounts of taxes and necessary payments in due time, within the terms established by law and in full. off-budget funds.

If the entrepreneur has employees, he must also make payments for them in budget system all levels and off-budget funds.

In addition, in some regions of Russia, individual entrepreneurs can use various measures state support on a par with other small business entities-legal entities.

It is quite natural that the dual legal status of an individual entrepreneur has both obvious advantages and undeniable disadvantages, so it is important to highlight the advantages and disadvantages of the legal status of an individual entrepreneur. (We recommend reading the article -: Required documents and actions)

Positive aspects of IP status

• Broader than other citizens, the rights and duties of individual entrepreneurs are the right to conduct independent business activities. The fastest registration and the lowest costs for it.
• According to the provisions of the Code of Administrative Offenses, the fines imposed for various violations on individual entrepreneurs are always much less than similar fines for legal entities.
• Opening a current account and the obligation to have a seal are not requirements for individual entrepreneurs, which reduces the cost of opening. (Read also -)
• The entrepreneur has the right to independently manage the profits received from doing business (legal entities are forced to wait for the distribution of their profits).
• Easier mode of acquisition, sale and use of property. The entrepreneur himself, as well as members of his family, have the right to freely own and dispose of all property owned by him, without any division into those used in entrepreneurial activity or not.
• Individual entrepreneur has a convenient opportunity to combine business with other types of relationships in society as an individual.

Negative aspects of IP status

• An individual entrepreneur is liable for his obligations and debts with all his property, therefore, the financial and property risks of citizens who are individual entrepreneurs are significantly higher than for the founders of an LLC.
• An individual entrepreneur is obliged to pay taxes for himself even if there is no profit from his activities yet, and also bears the burden of performing the functions of a tax and insurance agent for his employees.
• Difficulties in the work of an individual entrepreneur with the functions of both a legal entity and an individual.
• The preferences of many counterparties are in favor of legal entities, and not individual entrepreneurs.
• If an entrepreneur, for example, initiates a divorce proceeding, then all jointly acquired property will be divided between former spouses equally (if there is no marriage contract).
• Dual legal status IP has both pluses and minuses, which can both contribute to, and vice versa - hinder business development.
• The full individual responsibility of an individual entrepreneur with all his property, which confuses many inexperienced entrepreneurs, in fact, will not entail anything bad if you are going to conduct business responsibly, honestly fulfill all the obligations assigned and soberly correlate possible risks from one or another way of investing.

Pros of LLC and cons of IP - video

Now you have received the answer to the question - "Is an individual entrepreneur or a legal entity", it remains to weigh all the pros and cons of the form of organization and choose the form of activity that suits you best.

An individual entrepreneur (IP) can be considered the starting point of a business. According to statistics, more than 80% of people who have their own business or enterprise today went through the IP stage. This status is considered one of the simplest in terms of many factors, from registration to reporting. That is why he is chosen to start.

However, the one who planned to become a businessman has great amount questions. They are interested in the legal side, the features of the status of an individual entrepreneur, its differences from an individual and a company such as LLC.

Who is a sole trader?

The legislation says that IP - " individual, registered in the manner prescribed by law and carrying out entrepreneurial activities without forming a legal entity. If translated into an accessible language, then an individual entrepreneur is a special status of an ordinary adult and capable person, which gives the right to engage in permitted commercial activities.

The term has replaced the abbreviations PBOYUL (entrepreneur without forming a legal entity) and PE (private entrepreneur), which were previously in force. Today IP is the only name denoting this status.

Is the IP a legal entity?

No is not. In everyday life, it is widely believed that all structures engaged in business (or, in other words, permitted commercial activities) for the purpose of obtaining benefits are legal entities. Although logic dictates that a farmer who brought to the market a couple of buckets of apples collected in his own garden clearly falls out of this category. Like a shoemaker who repairs shoes with his own hands in a small kiosk, reminiscent of the size of a doghouse.

That is, we understand that not only a legal entity, but also an individual can legally engage in commerce. It is the individual entrepreneur (special status) that gives him the opportunity and authority to conduct business.

This phenomenon is widespread - sole proprietorship in the USA, autónomo in Spain, sole trader in Australia - all this foreign analogues Russian IP, allowing a person to conduct commercial activities for the purpose of obtaining benefits without creating a legal entity.

It is believed that IP has a number of advantages, due to which it enjoys high level popularity in business. Although it is worth noting separately that an individual entrepreneur is not a legal entity, therefore there are a number of functions of a “firm” that are not available to him.

Comparative table of individual entrepreneurs and legal entities

The first and main difference is that an individual entrepreneur is an individual, while a legal entity implies the use of completely different organizational and legal forms.

Advice: if you ask yourself at the start what is better, an individual entrepreneur or an LLC (as an example of the simplest legal entity), then understand one thing. To put the question in this way is to essentially compare sandals and winter boots. That is, both - shoes in which you can walk. However, these two species perform different functions and provide different possibilities. So it is in business. IP and LLC allow you to conduct commercial activities, but differ significantly in details. Therefore, before making a decision, carefully and carefully analyze which type of business entity is suitable for your purposes. At the same time, consider not only the current moment or the coming months, but also the distant future, as well as options for the development of your project.

Often on the Internet you can find information that IP is preferable, especially at the beginning, that it is easier. Let's try to understand the issue, based on our realities. Actually, we are more concerned about the wrong differences in the use of different normative documents, which regulate the activities of an individual entrepreneur or any legal entity (LLC, JSC), and those practical features that will affect our business.

So, let's compare individual entrepreneurs and LLCs (as the most common legal entity serving as an alternative) with all their pluses and minuses. At the same time, several common myths will be debunked along the way.

1. extremely simple, and opening an LLC is associated with a lot of difficulties.

There is some truth in every statement. However, the facts show that:

• registration period is the same (5 days);
• the set of documents required to open an LLC is only three pieces of paper more, and, rather, their templates are freely available;
• it is possible only if there is one participant, as well as when organizing an IP;
• the state duty for an LLC is more (no one argues), in addition, it will be necessary to contribute the authorized capital (there is a period of 4 months, as well as the ability to make it equivalent - materials, equipment, goods), which is not required in case of creating an IP;
• closing an IP is easier and much cheaper, but claims can be brought against its former owner, who has been “eleven” years old as a non-entrepreneur, which is impossible after the liquidation of a legal entity.

Separately, it is worth mentioning the need for an LLC to have a legal address, which is not needed by an individual entrepreneur. There are also a bunch of pitfalls here. You can get a legal address without much difficulty, it can even be a non-residential premises or a business center that rents office-storage rooms with an area of ​​6 squares. And IP has a strict binding to registration. That is, business in Tomsk for an Omsk citizen will be complicated by the need for mandatory registration, reporting and payment of taxes in his native Omsk.

Important: there are no restrictions in the legislation on registering an LLC with legal address at the place of residence (registration) of the founder, one of them or CEO. The tax authorities who refuse to do this act according to their own rules, which, in fact, violate the law.

1. The biggest “scarecrow” for individual entrepreneurs and a plus for LLC is property liability. In the first option - with all their property, in the second - only with what is contributed to the authorized capital.

And again, there is only a fraction of the truth here:

• Indeed, an individual entrepreneur is liable with all his property, even with what was received before the start of activity. However, there is a list (clause 1 of article 446 of the Code of Civil Procedure of the Russian Federation), which indicates the property of an individual entrepreneur, which is never collected for debts, for example, the only housing or land.
• For an LLC, which is liable only for part of its property, this is a kind of bonus. That is, the personal property of the founders is, as it were, protected. And this is considered a huge advantage of this format. Although if you delve deeper, it becomes clear that this is, to put it mildly, a fiction. If the LLC is declared bankrupt in court, then the principle of subsidiary liability will come into force, where the founders will have to pay off debts with their own property.

Important: that is, the biggest plus of LLC (such a security of personal, unbearably acquired) in case of troubles with the company is not at all so reinforced concrete. And the IP has an inviolable minimum that allows you to stay at least in your pants, albeit without socks.

1. Money, reporting and taxes - for individual entrepreneurs, the withdrawal of the former is easier, the latter is less, and there are more benefits. As a rule, most of the tax and financial benefits of individual entrepreneurs, when thoroughly studied, turn out to be either far-fetched or not so tempting. Similarly with reporting:
   • The content of employees for both organizational and legal forms is the same, and LLCs are almost identical.
   • In most tax regimes, the rates are also identical. Differences exist in the general system (OSNO - 20% for LLCs and 13% for individual entrepreneurs), as well as in the ability of individual entrepreneurs to apply PSN (patent system).
   • Insurance is considered the main disadvantage of IP. But these funds form a medical insurance and a future pension for the owner, that is, they are by no means a waste of money. And an LLC cannot do without payroll, even if its only employee (he is required) is the general director. And here, too, there will be deductions to all funds. Cherry on the cake - IP has the right to reduce the accrued tax amount by 100% of fixed payments, LLC - only by 50.
   • What is really attractive in terms of IP is the withdrawal of earnings. There are no restrictions - take as much as you need, the main thing is that it remains for mandatory payments, the rest is at the disposal of the owner. An LLC has a number of restrictions, its owner (s) cannot easily withdraw a couple of millions from their current account to buy a yacht. Everything has to be done right here.
   • Individual entrepreneurs have many times less document flow, simpler reporting, easier communication with the tax ... The statement is not entirely true because reporting on employees is the same for individual entrepreneurs and LLCs, as well as tax returns. The type and complexity of the latter depends on the applied system, and not on the legal form.

As a conclusion, savings on insurance premiums and taxes depend not so much on the format, but on certain conditions and the literacy of the accountant, as well as the ability to get funds at your own disposal.

Here it should also be taken into account that the tax liability for violations for individual entrepreneurs and LLCs in most cases is almost the same, which cannot be said about administrative and criminal ones. Much more lenient measures are applied to violators-individual entrepreneurs both in monetary terms and in punishments in accordance with the Criminal Code of the Russian Federation.

1. Prospects and opportunities for business development - in this matter, everyone agrees that an LLC is more profitable. This format has a bit more potential:
   • The first and main plus is that the LLC has a much wider list of activities. It is unlikely that his entrepreneur will be able to put in the details of the contract for the sale of alcohol, as well as the production of it and medicines. An individual entrepreneur cannot be engaged in banking and insurance activities, be a tour operator, holder of pawnshops and investment funds.
   • Another advantage of an LLC is that this format is more attractive for investors, that is, investors in a business project. Although the competent conduct of one's own business by an individual entrepreneur can be of interest to many, from the immediate environment of an individual to a bank, and all of them can give money.
   • VAT and nuances. This moment is maximally untwisted in the discussion “for” and “against” IP. Although both an individual entrepreneur and an LLC can be a VAT payer, it's all about the applied taxation system. That is, cooperation with big companies, who are "Endeesniks" (as they say in certain circles), can be difficult for those who do not allocate value added tax and are not registered as its payer.

Important: if you plan to develop your business by attracting investments or focus on working with large companies, then the success of these two areas will depend not so much on the chosen legal form, but on the taxation system. Moreover, it can be changed during operation.

For clarity, all the information is combined in a short table:

To give preference to an LLC or an individual entrepreneur - this question must be answered comprehensively and taking into account all the nuances. But the accustomed statements of Internet experts by no means give a general picture. Study the equipment before making a decision.

Frequently asked questions and a little more about what is rarely voiced:

• Question: Why do many recommend starting an independent swim in the business world with registering the status of an individual entrepreneur, although from a comparison of an individual entrepreneur and an LLC as business units, it can be seen that the advantages of each of them are not so great?
• Answer: IP can be closed at any time, it is easy to do, the procedure is much simpler than in the case of an LLC.
• Question: What is the main difference between IP and other organizational and legal forms?
• Answer: Only the status of an individual entrepreneur allows an individual to engage in commercial activities. All other organizational and legal forms that are involved in business processes involve the creation of a legal entity.
• Question: Why not bring the business environment into uniformity by removing, for example, individual entrepreneurs and leaving only legal entities?
• Answer: IP activities can be reduced to the simplest business processes. An individual entrepreneur can facilitate all stages as much as possible, from creation to liquidation. He has the right to choose the least complex taxation system, work without VAT, independently, without employees, and keep simplified accounting. In addition, only an individual entrepreneur can apply PSN, a special taxation system that provides for the acquisition of a patent.
• Question Q: Do I need a checking account?
• Answer: Legally, no. An individual entrepreneur has the right to conduct commercial activities without opening and using a bank account.

Advice: if by the nature of your activity you will need to provide services, sell goods to individuals, then it is worth considering that today a plastic card as a payment instrument is already much more popular than cash in your pocket. By opening a bank account, you can cover more potential customers by improving the service for them.

• Question: Do you need IP printing?
• Answer: At the legislative level, the obligation to print is not fixed. This moment is at the mercy of the businessman himself. Although it adds a kind of weight to the written documents.

And a little more about the details. AT professional environment(among tax specialists, financiers, lawyers) you can find such slang names as a physicist and ... no, not a lyricist, but a yurik. The first are individual entrepreneurs, the second are all legal entities. In addition, in almost every service, from tax to various funds, as a rule, there is a division into departments. In some, individual entrepreneurs are served, in others - legal entities.

Can a sole proprietorship be converted into a legal entity?

Actually, the law does not provide for an algorithm for the direct conversion of an IP into a legal entity. And in fact, this is not possible, because an individual entrepreneur is the status of an individual, although he is not a restrictor of the rights and freedoms of a citizen. That is, a sole trader a common person can become a founder or co-founder of any of the legal entities (LLC, JSC).

At the same time, the law does not oblige when registering a legal entity to indicate this status in any of the documents. The founders (individual citizens) here act exclusively as individuals. The rule does not apply to founders-legal entities.

Can an individual do business without registering an individual entrepreneur?

Yes and no. Everything rests on what a person understands by the term "business". If he, in his opinion, consists in selling the cucumber crop grown on his personal plot or in providing the services of a tutor, then this is one thing. If the plans are to open a permanent outlet or a shoe repair shop, then this is completely different.

In many cases, it can several times exceed the amount required for registering an individual entrepreneur and fixed payments to funds.

Although there are a number of exceptions where the IP is not needed or optional:

• For the sale of agricultural products of a plant nature grown in a household, summer cottages or in private households. For this, only a certificate from the administration is needed. garden partnership or an extract from the business book. Relevant for 2018, next year the rules of the game are planned to be changed.
• For those who make a profit from transactions no more than twice a year, and the amount of turnover on them (indicated in documents confirming payments) does not exceed 200 thousand rubles.
• For those who work under civil contracts and declare their income, it is not necessary to become an individual entrepreneur. The list of permitted agreements can include any agreements of a specified nature for the provision of services, contracts, purchase and sale, royalties, and a number of others. They (contracts) can be one-time or focused on a long period. The main thing in these cases is a report on their income and payment of taxes due as an individual.
• For those who are careful about dropshipping.
• Those who perform intermediary functions.

The last two points have a lot of similar points that nullify all the charms of business outside of forms and statuses:

• you need to look for partners, suppliers and buyers who will agree to a certain scheme, where the intermediary (dropshipper) does not participate as a unit in the chain of documents;
• since such systems do not involve the responsibility of an intermediary or dropshipper, you need to be absolutely sure of the quality of the product, the ability of suppliers or sellers to resolve conflict situations with clients;
• a person working under such schemes without an individual entrepreneur or legal entity is always dependent on his partners, their business methods, and also on how they will make calculations.

As a result, in most situations, agency or intermediary, due to all the costs of paying taxes, may turn out to be less than when using IP for the same transactions. Also, if you help someone with the housework, work as a nurse, sell your crafts or knitted hats via the Internet, then you absolutely do not need the IP status.

Summing up

• individual entrepreneur (IE) - a special status of an individual, giving him the opportunity to engage in commercial activities and not restricting other declared rights (for example, the same person can become a member of an LLC);
• they show reasonable interest in individual entrepreneurs both at the start of entrepreneurial activity and in the future, this status has a diversity in the possibilities for applying the taxation system, VAT allocation, simplified accounting and the like;
• the ease of closing an IP is a kind of bonus for those who are not confident in their business endeavors;
• IP has many advantages for mini-projects that are designed for small profits, turnovers and deadlines.

Registering an individual entrepreneur or LLC is your choice. The main thing is that the idea that was born and promises profit does not remain dead. Do it! It may not be a grandiose multi-million dollar project, but it will bring joy from small results and confidence in the future.

Any citizen has the right to engage in commercial activities without creating a legal entity, subject to the official registration of such a business. At the same time, individuals often have a question: Is an individual entrepreneur a legal entity or an individual? It is sometimes difficult to understand the topic, especially since the same Civil Code equalizes the requirements applicable to legal entities and individual entrepreneurs (paragraph 3 of article 23).

Is the IP an individual or a legal entity?

If to speak plain language, IP is an individual who is vested with the right to conduct legal activities, subject to registration of such a status. When creating an entrepreneurship, a citizen continues to be called by his own name, but gets the opportunity to open a business. For example, there was a man Petrov Vasily Ivanovich, he registered as an entrepreneur and Petrov Vasily Ivanovich became an IP. From that moment on, he can legally engage in entrepreneurship.

It would seem that there is nothing difficult in understanding an individual entrepreneur - is it an individual or a legal entity. Meanwhile, upon closer examination, confusion often arises, the basis for which is the reservation in paragraph 3 of Art. 23 GK. Literally, the text reads as follows: "unless otherwise follows from the law, other legal acts or the essence of the legal relationship." This means that an individual entrepreneur is controlled at the legislative level in the same way as a legal entity, if there is no special law that separately regulates the requirements for an entrepreneur.

From the foregoing, we can draw the main conclusion - any citizen, including foreign nationals, has the right to engage in commercial activities after official registration in the Unified Register. In the process of work, an individual entrepreneur is obliged to follow the regulatory requirements developed for entrepreneurs, and in the absence of such, the legislative provisions common to individual entrepreneurs and legal entities. Further, in order to clearly understand whether an individual entrepreneur is a legal entity and in what situations, we will look at the similarities and differences between an individual entrepreneur and a legal entity.

Differences between sole proprietorship and legal entity

Like an organization, an entrepreneur is required to register under Law No. 129-FZ of 08.08.01 in order to open a business, the list of directions of which is much narrower for individual entrepreneurs than for legal entities. For obligations arising as a result of economic activity, the entrepreneur bears full property liability (Article 24 of the Civil Code), except for those objects to which it is prohibited to apply a penalty according to the norms of the Code of Civil Procedure. This is the main difference between an individual entrepreneur and an enterprise: a legal entity is liable for obligations only in the amount of the authorized capital.

Another difference is that when you create a company, you must contribute to the charter. This is not required when starting a business. In addition, an individual entrepreneur can work without a current account, and the registration procedure is simplified and reduced to 3 working days - there is no need to develop constituent documentation, a passport, an application and a receipt for paying the fee are enough. However, these are all minor nuances, meanwhile, there is another significant advantage of entrepreneurship, it is the difference between an individual entrepreneur and a legal entity. It is about the management of income. To use the funds, the entrepreneur does not need to pay additional taxes and confirm the intended use. And the founder of the organization must withdraw money as receiving dividends with the mandatory payment of personal income tax on the amount.

Similarities between Sole Proprietorship and Legal Entity

When carrying out commercial activities, an entrepreneur, on a par with a legal entity, can hire personnel according to employment contracts and/or engage individuals from outside on the basis of civil law contracts. From the date of registration of a citizen as an individual entrepreneur, he has many obligations - to submit reports and pay taxes "for himself" and employees; for accounting, but to a lesser extent than for enterprises; optionally optimal system taxation; on registration personnel changes etc.

In a word, both legal entities and entrepreneurs must fulfill their obligations as employers, parties to contractual transactions and as participants in the system of tax relations with the state. But when it comes to responsibility, there are more differences than similarities. In addition to the already mentioned property liability, IP court cases are considered in arbitration, and the amount of penalties, as a rule, for entrepreneurs is “an order of magnitude” lower than for enterprises. In general, there are much more differences between entrepreneurship in the form of an individual entrepreneur and in the form of an organization than similarities. What to choose?

What is more profitable to register for a business - an individual entrepreneur or a legal entity

We have already found out the answer to the question: Is an entrepreneur an individual or a legal entity? The answer cannot be unambiguous, but according to its characteristics, an individual entrepreneur is more likely an individual. What status is most beneficial for starting a business? To make the right choice, you need to weigh many factors. First of all, specify the list of OKVED that you plan to implement. Next, consider whether you are ready to share powers with other founders and whether the requirement for full property liability for obligations is acceptable to you (Article 24 of the Civil Code).

Do not forget about the need to pay personal income tax on dividends when opening a company, as well as the obligation to register a current account. Is there a clear picture? If not, make a table with a list of shortcomings of the individual entrepreneur and legal entity, and then evaluate each feature point by point. In conclusion, I would like to note that only individual entrepreneurs are allowed to work on a patent, that is, PSN. For some types of activities, this tax regime helps to significantly save on the payment of fiscal payments without any reporting.

An individual entrepreneur is a legal entity or an individual? Answer unambiguously the question “Is an individual entrepreneur a legal entity or an individual?” difficult - at least for the understanding of a simple man in the street. If the answer to this question is unknown to you, but you need to deal with it, the article will help you.

Who is an individual entrepreneur, and why is it important to choose the right form of doing business

An individual entrepreneur is a person who, wishing to engage in entrepreneurial activity, registered with the tax office as an individual entrepreneur and received the appropriate right.

Understanding whether an individual or legal entity is an individual entrepreneur, it is necessary to understand the differences between individuals and legal entities.

A legal entity is an independent company that has the right to acquire rights and obligations on its own behalf. For example, when buying a product, it does not become the property of the founders of the legal entity, but the property of the company, i.e. the organization independently acquires the rights to property on its own behalf. Speaking of obligations, we can give a simple example - the obligation to pay taxes. Taxes should be paid by the organization, not its founders. Sole Proprietor Income Tax is paid by the Sole Proprietor.

We emphasize: the organization acquires rights and obligations not on behalf of the persons who established (organized) this legal entity. person, namely from his own.

An individual, in turn, has personal rights and obligations, bears independent responsibility - receives ownership of the assets he acquires, bears personal responsibility for paying taxes, etc.

Let's explain in simple words why it is necessary to distinguish the organizational and legal form. The fact is that a lot depends on the right choice - the procedure for registering as a legal entity or individual entrepreneur, the procedure for paying taxes, the ability to engage in one or another activity (for example, individual entrepreneurs cannot sell strong alcohol, but LLCs can), the procedure for reporting and accounting , and much more. Accordingly, when choosing a legal form, you proceed from the tasks of the future business and answer the question - is it possible with one form or another of doing business to succeed in the chosen direction of entrepreneurial activity.

Is an individual entrepreneur a legal entity

Is an individual entrepreneur a legal entity? The answer is unequivocal - no.

When considering this situation, it is necessary to pay attention to similar signs of IP and legal entities. persons:

• the obligation to conduct accounting, personnel records management (if there are employees), payment of taxes related to the conduct of entrepreneurial activities;
• the presence of mandatory registration in the tax office, the ability to have a seal;
• increased (in comparison with a natural person) responsibility for administrative offenses.

However, there are even more differences:

• An individual entrepreneur, unlike the founders of a legal entity, is liable for debts with all his property.
• one individual entrepreneur cannot be registered by 2 or more persons, but one organization can.
• An individual entrepreneur does not submit as many reports as an LLC, it maintains simplified accounting.
• Individual entrepreneurs have the right to choose a patent taxation regime, while LLC does not.

What do sole proprietors have in common with individuals

For ease of understanding, it can be argued: an individual entrepreneur is an individual who is registered with the tax office and can legally conduct business.

• like an individual, an individual entrepreneur pays taxes, but he has more of them, because. he also pays income tax.
• just like an individual, an individual entrepreneur is liable for debts with all acquired property, including a personal car, an apartment, a summer house, etc.
• An individual entrepreneur can file for bankruptcy just like an individual.
• An individual entrepreneur, like an individual, can be a citizen of Russia, a foreigner and a stateless person.
• An individual entrepreneur, like an individual, can defend his interests in court, but business-related issues are considered not by courts of general jurisdiction, but by arbitration courts.

conclusions

So, we figured out the question of whether an individual entrepreneur is a legal entity or an individual. By virtue of the law, an individual entrepreneur is an individual, however, endowed with a special status and the opportunity to carry out entrepreneurial activities. There are many pros and cons of doing business. You can read about them in our article: "What is more profitable and easier to open an individual entrepreneur or LLC". Some types of business can not be run by an individual entrepreneur in principle, and this is a significant limitation. However, if the business is small, then IP is an excellent alternative to legal entities.