Small business entity (small enterprise)

In small business entity, besides, the average number of workers for the reporting period does not exceed the following limits (small enterprises):

• in the industry - 100 people;
• in construction - 100 people;
• on transport - 100 people;
• in agriculture - 60 people;
• in the scientific and technical sphere - 60 people;
• in wholesale trade - 50 people;
• in retail trade and consumer services of the population - 30 people;
• in other industries and at implementation of other types of activity - 50 people.

Small business entities are understood also as the individuals which are engaged in business activity without formation of legal entity".

Thus, follows from provisions of Article 3 of Law No. 88-FZ: in order that the organization was considered as small business entity, the following conditions should be satisfied:

• the organization should be only commercial;

• share of the Russian Federation, territorial subjects of the Russian Federation, the public and religious organizations, charitable and other foundations in authorized capital of the organization should not exceed 25%;

• the share in authorized capital belonging to one or several legal entities which are not small business entities also should not exceed 25%;

• the average number of workers for the reporting period, should not exceed admissible average number for the corresponding type of activity.

If the organization does not correspond at least to one of above-mentioned conditions, it cannot be recognized by small business entity.

Tax authorities paid attention more than once that non-profit organizations do not treat small enterprises under no circumstances (The letter of UFNS Russian Federation on the city of Moscow of May 3, 2006 No. 18-11/3/36722, the Letter of UMNS Russian Federation on the city of Moscow of March 9, 2004 No. 21-09/15153).

What enterprises consider commercial

According to point 1 of Article 50 of the Civil Code of the Russian Federation as the commercial organizations are recognized: "the organizations pursuing generation of profit as a main objective of the activity". The commercial organizations according to point 2 of Article 50 of the Civil Code of the Russian Federation can be created in a type:

• economic partnerships and societies;

• production cooperatives;

• state and municipal unitary enterprises.

The Civil Code of the Russian Federation provides a possibility of creation:

• economic partnerships (point 2 of Article 66 of the Civil Code of the Russian Federation) in shape:

a) complete partnership;

b) general partnership;

• business entities (point 3 of Article 66 of the Civil Code of the Russian Federation) in shape:

a) limited liability companies;

b) joint-stock company;

c) additional liability companies.

According to provision point 1 of Article 66 of the Civil Code of the Russian Federation the commercial organizations with the authorized (stacked) capital separated into shares (deposits) of founders (participants) are recognized as economic partnerships and societies. The property created at the expense of deposits of founders (participants) and also made and purchased by an economic partnership or society in the course of its activity belongs to it on the property right.

The money, securities, other things or property rights or other rights having a money value can be a deposit to property of an economic partnership or society.

The money value of a deposit of the participant of business entity is made under the agreement between founders (participants) of society, and in certain cases, provided by the law, is subject to independent expert check (point 6 of Article 66 of the Civil Code of the Russian Federation). Economic partnerships and also societies with the limited and accessorial liability have no right to issue stocks.

According to point 1 of Article 107 of the Civil Code of the Russian Federation voluntary consolidation of citizens on the basis of membership for joint productive or other business activities (production, processing, sale of the industrial, agricultural and other output, execution of works, trade, consumer services, rendering other services) based on their personal labor and other participation and consolidation by his members (participants) of property shares is recognized as production cooperative.

The property which is owned by production cooperative according to point 1 of Article 109 of the Civil Code of the Russian Federation is divided into shares of his members according to the charter of cooperative. The profit of cooperative is distirbuted between his members according to their labor participation if other order is not provided by the law and the charter of cooperative. According to point 3 of Article 109 of the Civil Code of the Russian Federation the cooperative has no right to issue stocks.

The commercial organization which is not given the property right to the property assigned to it the owner is recognized as the unitary enterprise. The property of the unitary enterprise is indivisible and cannot be distributed on deposits (shares, shares), including between employees of the enterprise" (point 1 of Article 113 of the Civil Code of the Russian Federation).

The property state or municipal unitary enterprise is respectively in the state-owned or municipal property and belongs to such enterprise on the right of economic management or operational management (point 2 of Article 113 of the Civil Code of the Russian Federation).

Who is considered workers in small enterprise

As it was mentioned above, Law No. 88-FZ for each type of activity provides the admissible average number of workers in reporting period. At the same time point 2 of Article 3 of this Law on support of a small entrepreneurship, it is provided that the average number of workers in this case is defined with all employees of small enterprise including working under civil contracts and in combination taking into account really worked time and also employees of representations, branches and other separate divisions of the specified legal entity.

Whether there are restrictions on revenue?

Let's note that the Law does not contain criteria of reference of subjects to small business on total revenue. In other words, the organization numbering 100 people having huge revenue in terms of the legislation will treat small enterprises and will have the right to apply for the state support.

What type of activity profile

If the small enterprise performs several types of activity (multi-profile), then it treats like those by criteria of that type of activity which share is the greatest in annual volume of turnover or the annual volume of profit (point 1 of Article 3 No. 88-FZ).

Individuals as small entrepreneurs

Except the organizations small business entities are understood also as the individuals which are engaged in business activity without formation of legal entity (Article 3 No. 88-FZ).

According to regulations of Article 2 of the Civil Code of the Russian Federation business activity is understood as the independent, performed on the risk activity directed to systematic profit earning from use of property, sales of goods, execution of works or rendering services by the persons registered in this quality in the order set by the legislation.

And in individuals in the civil legislation are recognized both citizens of the Russian Federation, and foreign citizens and also persons without citizenship.

The foreign citizen according to Article 2 of the Federal law of July 25, 2002 No. 115-FZ "About a legal status of foreign citizens in the Russian Federation" the individual, not being the citizen of the Russian Federation and having the evidence of existence of nationality (citizenship) of the foreign state is considered; and the person without citizenship the individual, not being the citizen of the Russian Federation and not having the evidence of existence of nationality (citizenship) of the foreign state is considered. The foreign citizen who is temporarily living in the Russian Federation the person who got permission to temporary residence, the foreign citizen who is constantly living in the Russian Federation - the person who received the residence permit is considered.

Point 1 of Article 23 of the Civil Code of the Russian Federation sets the right of citizens to be engaged in business activity without formation of legal entity from the moment of state registration as the individual entrepreneur. This right can be exercised from the moment of approach of full legal capacity of the citizen, i.e. according to Article 21 of the Civil Code of the Russian Federation on reaching 18 years.

So, before beginning business activity, the small business entity needs to be registered and obtain first of all the license for separate types of activity (if the selected type of activity is subject to licensing).

Formulations in the law

Law N209-FZ

Article 4. Categories of small and medium-sized businesses

1. The consumer cooperatives and the commercial organizations entered to the Unified State Register of Legal Entities (except for state and municipal unitary enterprises) and also the individuals entered to the Unified State Register of Private Entrepreneurs and performing business activity without formation of legal entity (further - individual entrepreneurs), the peasant farms corresponding to the following conditions treat small and medium-sized businesses:

1) for legal entities - total share of the Russian Federation, territorial subjects of the Russian Federation, municipal entities, the public and religious organizations (associations), charitable and other foundations in the authorized (stacked) capital (share fund) of the specified legal entities should not exceed twenty five percent (except for the total share which is a part of assets of joint-stock investment funds, structure of property of closed-end investment funds, structure of a common property of investment partnerships), and total share of participation of foreign legal entities, the total share belonging to one or several legal entities who are not small and medium-sized businesses should not exceed forty nine percent everyone. The specified restriction on the total share of participation of foreign legal entities, total share belonging to one or several legal entities who are not small and medium-sized businesses does not extend to business entities, economic partnership which activity consists in practical application (implementation) of results of intellectual activity (programs for electronic computers, databases, inventions, useful models, industrial samples, selection achievements, topology of integrated microcircuits, know-how (know-how), the exclusive rights to which belong to founders (participants) according to such business entities, economic partnership - to budget, autonomous scientific institutions or the educational organizations of the higher education which are budgetary institutions, autonomous organizations, on the legal entities which received a project participant status according to the Federal law of September 28, 2010 N 244-FZ "About the innovation center "Skolkovo" on legal entities, founders (participants) of which are the legal entities included in the list of the legal entities providing the state support of the innovation activity in forms, established N 127-FZ, Federal by the law from August 23, 1996, "About science and the state scientific and technical policy" approved by the Government of the Russian Federation. Legal entities are included in this list in the order set by the Government of the Russian Federation on condition of compliance to one of the following criteria: (in an edition. Federal law of 6/29/2015 N 156-FZ)

a) legal entities are open joint stock companies which not less than fifty percent of shares is owned by the Russian Federation, or business entities in which these open joint stock companies have the right directly and (or) to dispose indirectly more than fifty percent of votes, falling on voting shares (shares) making authorized capitals of such business entities or have an opportunity to appoint sole executive body and (or) more than a half of structure of collegiate executive body and also an opportunity to define election more than a half of structure of Board of Directors (supervisory board);

b) legal entities are the state corporations founded according to the Federal law of January 12, 1996 N 7-FZ "About non-profit organizations"; (item 1 in an edition. Federal law of 7/23/2013 N 238-FZ)

2) the average number of workers for the previous calendar year should not exceed the following extreme values of average number of workers for each category of small and medium-sized businesses:

a) from hundred one to two hundred fifty people inclusive for medium-sized enterprises;

b) to hundred people inclusive for small enterprises; among small enterprises the microenterprises - to fifteen people are selected;

3) proceeds from sales of goods (works, services) excluding tax on added value or the book value of assets (residual cost of fixed assets and intangible assets) for the previous calendar year should not exceed the extreme values set by the Government of the Russian Federation for each category of small and medium-sized businesses.

2. Became invalid. - Federal law of 6/29/2015 N 156-FZ.

3. The category of the subject of a small or average entrepreneurship is defined according to the most important condition set by points 2 and 3 of a part of 1 this article.

4. The category of the subject of a small or average entrepreneurship changes only if extreme values above or below the extreme values specified in points 2 and 3 of a part of 1 this article within three calendar years following one by one. (in an edition. Federal law of 6/29/2015 N 156-FZ)

5. The newly created organizations or again registered individual entrepreneurs and peasant farms within that year in which they are registered can be carried to small and medium-sized businesses if their indicators of average number of workers, proceeds from sales of goods (works, services) or the book value of assets (residual cost of fixed assets and intangible assets) for the period, passed from the date of their state registration, do not exceed the extreme values set in points 2 and 3 of a part of 1 this article.

6. The average number of employees of the microenterprise, small enterprise or medium-sized enterprise for calendar year is defined with all his workers, including the workers working under civil agreements or in combination taking into account really worked time, employees of representations, branches and other separate divisions of the specified the microenterprises, small enterprise or medium-sized enterprise.

7. Proceeds from sales of goods (works, services) for calendar year are defined in the order set by the Tax Code of the Russian Federation.

8. The book value of assets (residual cost of fixed assets and intangible assets) is defined in accordance with the legislation of the Russian Federation about accounting.