Building material for the Group of Companies
Medium business cannot successfully exist within a single legal entity. A group of subjects is always required, otherwise it is impossible to resolve individual issues of property, management and other security, as well as possessory control. But building a correct (read: legal, comprehensive and effective) structure is a laborious task and sometimes requires special knowledge, and most importantly, experience.
To bear the proud name of “group of companies”, the combination of several legal entities must allow:
maintain a familiar and suitable system for making managerial decisions;
do not destroy working relationships between people in the organization;
while maintaining the system of motivation and payment of remuneration;
ensure the interests of the owner (control, inheritance, official income);
resolve issues of property security;
get access to the mechanisms for regulating relations between co-owners, etc.
The first step along this path is the choice of organizational and legal forms, an assessment of their pluses and minuses.
The most popular forms of medium-sized businesses are: an individual entrepreneur and a limited liability company (LLC), to a lesser extent, joint-stock companies (JSC). The choice is small. We will expand it. Professional tools…
This form of business organization (let’s call it that) remains very popular because it allows you to:
reduce the income tax rate under the general taxation system from 20% (profit tax rate for organizations) to 15 (13)% (personal income tax) while maintaining VAT;
do not keep accounting records;
apply the patent system of taxation;
take advantage of tax holidays;
actually keep cash records (actually received income and actually incurred expenses);
as freely as possible in comparison with legal entities to use the received funds.
Attractive? Undoubtedly. But for this, the individual entrepreneur pays with the responsibility of all the property belonging to him for his obligations. At the same time, it does not matter how the ownership right is formalized: to an individual entrepreneur or to him, but as to an individual (that is, personal property too). Although today the owner of the company in case of bankruptcy on its debts can also answer with all his property. At the same time, individual entrepreneurs have significant indulgences in other types of liability. For example, tax evasion by individuals (Article 198 of the Criminal Code of the Russian Federation) in comparison with legal ones (Article 199 of the Criminal Code of the Russian Federation) refers to crimes of minor gravity, which affects both the severity of the punishment and the prescription for prosecution. Although the Investigative Committee of the Russian Federation has already taken the initiative to equalize the IP and legal entities here.
There are frequent cases when, having started a business as an individual entrepreneur, the business owner concentrates on himself both active operational activities and the function of the owner of assets. And this already indicates an extremely low level of property security of the business, since the presentation of any claims may jeopardize the existence of the business and the property complex. In addition, this prevents the acceptance of full-fledged partners in business – with a legally fixed scope of rights and obligations, shares in the business, and the procedure for distributing profits.
In our practice, there was a case when, through the cross-distribution of assets and economic functions between four partners who had the status of an individual entrepreneur, a balance in business was achieved, a kind of system of checks and balances.
After 15 years of its existence, such a business model that had developed at the stage of its inception began to falter: the partners wanted to determine their share in the jointly accumulated property, in receiving income from each of the areas of operating activity (without plans to terminate the joint business).
Thus, participation in the business of the owner in the status of an individual entrepreneur can be justified in the case of ownership of real estate or other valuable property with its subsequent use by operating entities. This gives control over the property complex (that is, one of the three degrees of possessory control is realized … but only one!). It also provides a source of official income for the owner.
In the case of intellectual property, an IP can be completely irreplaceable due to the peculiarities of the registration procedure in Rospatent or, for example, domain names in Rucenter. It will not be possible to take away such assets from an individual entrepreneur without his knowledge, but sometimes it is possible from an LLC.
But, IP \u003d owner + property – this is the most open participation in the business. In addition, with a low degree of confidentiality, do not forget that any IP is mortal. And as rightly noted by Bulgakov – “suddenly mortal.” This matters even more when it comes to individual entrepreneurs – outsiders, especially friends and not very close relatives.
In addition, the current legislation for 6 months after the death of an individual entrepreneur is powerless. There is no way to ensure a smooth transfer of business activities to another person.