The self–employed are a special category of taxpayers, individuals or individual entrepreneurs who have switched to a special tax regime with a reduced rate. It is also called the Professional Income Tax (PIT). Under current legislation, the tax rate for those who work with individuals is 4%, and for those who provide services to legal entities or individual entrepreneurs – 6%.
Every year the popularity of this tax regime is growing. In 2022, the number of self-employed reached 4 million people and has already exceeded the number of individual entrepreneurs.
The self-employed can provide an extensive list of jobs and services: from layout of websites and writing texts to legal advice and accounting. In cooperation with such experts, enterprises receive a number of advantages:
- exemption from payment of personal income tax, insurance premiums and pension contributions, which saves about 30% monthly from the standard salary of a full-time specialist;
- payment is made for the work done, and not for the time spent in the office, without the need to provide labor guarantees in the form of sick leave and vacations;
- the possibility of remote cooperation.
The benefits will be available only if there is a receipt confirming the payment made for the work under the contract. A bill from a self-employed person will also be needed for tax reporting to prove that the payment was made legally. If this rule is ignored, problems may arise for both the customer and the self-employed: the tax authority may suspect that illegal monetary transactions are carried out in the company, and the contractor hides income.
However, in case of violation of the legislation governing the application of a special tax regime, the customer of services may be held liable. And these mean fines, inspections and lawsuits.
|Five main rules that must be followed when agreeing a contract with a self-employed will help to build the rules for checking the self-employed and avoid risks.|
Rule No. 1: don't hire former employees as self-employed
The main restriction when working with the self–employed is the prohibition on substitution of labor relations for civil law ones. Therefore, the Law No. 422-FZ "About carrying out experiment on establishment of special tax regime "Tax on the professional income" prohibits ordering services from persons who have been employees of your company for the past two years.
If you keep lists of employees in Globas, its tools will help you to identify whether the self-employed applicant is your former employee.
Rule No. 2: check the partner's tax status
As long as the performer has the status of self-employed, he/she pays the tax on his own. However, if the status is abandoned, the customer company begins to be responsible for paying taxes and contributions.
The reasons for the loss of status may include voluntary de-registration of the self-employed, exceeding annual income of 2,4 million RUB or non-payment of tax.
It is important to understand that a change in the tax status can occur at any time: when the contract has already been signed or after the advance payment. Therefore, it is very important for customers to update this information at every stage of cooperation with a self-employed contractor.
Globas helps simplify routine tax status verification. There are two ways to check whether your potential contractor is a payer of Professional Income Tax:
- receiving information about self-employment directly when checking in the person's profile, with the ability to quickly update the status from the Federal Tax Service;
- ordering an extract "Self-employed status check" for a specific date in the "Extracts" section.
Rule No. 3: analyze the counterparty's participation in the courts of general jurisdiction, instead of arbitration ones, before concluding the contract
In case of a conflict with the self-employed, it is necessary to apply to the district courts of general jurisdiction, which implies a different approach to preparing for the case and other terms of dispute resolution than in the arbitration process.
Before entering into a contract, check whether the expert is already involved in litigation. Of course, there may be different categories of cases, and the nature of disputes may not be related to the professional qualities of the performer. But if there are many such courts, it is possible to draw unambiguous conclusions about the systemic non-fulfillment of certain obligations.
The real advantage of Globas when working with courts of general jurisdiction is the convenient search tool. Globas searches across all regions at once and offers convenient filters to narrow down search results: by type of court, case type, period and other parameters.
Rule No. 4: check for arrears, fines, penalties
Personal problems of the self-employed can affect the fulfillment of obligations. If a person does not fulfill the terms of the loan agreement, there is a court decision on debt collection and enforcement documents are transferred to bailiffs, the funds that the customer will pay for the work may be seized. That means, all the income of the self-employed will be used to repay the debt to the bank. As a result, the self-employed will not be able to purchase materials for the execution of the order, and you risk not getting the expected result of the work.
Timely check and identification of risk factors for individuals in Globas will help to learn about some problems in advance:
- overdue charges;
- judicial and extrajudicial bankruptcy;
- tax and legal debts, fines, penalties;
- active and archived enforcement proceedings.
Rule No. 5: enter into a contract
You can negotiate with the self-employed verbally, but only if you buy the finished product at sight. If your interaction with an expert requires his/her work, and the final result will be provided after any period of time, the conditions must be fixed in a written contract.
As a rule, several types of contracts are concluded with the self-employed:
- contract agreement;
- contract for the provision of paid services;
- the contract of the uniquely designed order.
Important! To avoid disputes with tax authorities, cooperate with the self-employed when it is necessary to perform specific work that is not included in the functionality of your employees. If you need an expert to perform duties for a long time, as well as if control of the work process itself is necessary, enter into an employment contract.
|You can check your counterparties of any legal form, as well as all persons associated with them for possible risks in the Information and Analytical System Globas.
All information for a comprehensive check of legal entities and individuals is available in the profile of the company, individual entrepreneur and person. If you are not yet a Globas subscriber, apply for trial access, and check if there are any unreliable persons among your counterparties with whom it is better to reconsider the terms of cooperation.
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In Russia, Government Decree No. 497 dated March 28, 2022 introduced a moratorium on initiating bankruptcy proceedings at the request of creditors. It will be valid for the next six months - from April 1, 2022 to October 1, 2022. The moratorium applies to citizens, individual entrepreneurs and all legal entities. An exception is made only for developers from the Unified Register of Distressed Objects and persons who refused to apply the moratorium. At the same time, debtors have the right to initiate voluntary bankruptcy, if they realize that they will not be able to fulfill their obligations.
Such a business support measure also has a downside - excessive use by debtors who are not going to fulfill their obligations, hiding behind a moratorium, which in the end may affect the state of bona fide creditor.
Therefore, in the current conditions, any agreements should be preceded by a thorough check of the counterparty and all the circumstances of the counterparty’s past and present:
- financial condition and tax burden;
- arbitration cases and cases in courts of general jurisdiction;
- claim load and payment arrears;
- status of pledge and leasing agreements;
- presence of terminated public procurement transactions
For the first time, business owners heard about a moratorium on bankruptcy in 2020. When Russian entrepreneurs began to lose income during the period of restriction of business activity.
Effective April 3, 2020, the Federal Law No. 127-FL “On Insolvency (Bankruptcy)” was supplemented with Article 9.1. Moratorium on initiating bankruptcy proceedings. The right to introduce a moratorium and determine the duration of its validity is assigned to the Government of the Russian Federation. The main goal of the moratorium is to ensure economic stability within the country. In 2020, the moratorium was introduced for six months: from April to October, and was later extended until January 2021.
Since April 1, 2022, the second moratorium on bankruptcy has been in effect in the Russian Federation, introduced by the Government Decree No. 497 dated March 28, 2022. Its goal is to help improve the financial situation of companies and adapt business owners to new economic conditions. The refusal of foreign contractors to cooperate, sanctions and the complicated geopolitical situation have put Russian entrepreneurs in a difficult position. No suppliers and buyers, new markets have not been explored, revenues are falling and debts are rising. The development of this scenario could inevitably lead to a wave of bankruptcies.
Comparison of two moratoruims
|Moratorium on bankruptcy||2020
Government Decree No. 428 dated April 3, 2020
Government Decree No. 497 dated April 1, 2022
|Conditions of application||
|Exceptions||Business entities the activities of which were not classified as affected sectors of the economy.||Developers, apartment buildings and other real estate included in the Unified Register of Distressed Objects.|
To start applying the moratorium on bankruptcy, you do not need to submit special applications or confirm the type of activity. The moratorium automatically applies to all economic entities in Russia, except for unscrupulous developers.
Rules coming into force during the moratorium
1. Claims of creditors are not considered by the court, but are returned back to the applicant. The return of the application does not preclude re-applying to the court. If the moratorium expires and the debtor is unable to restore solvency by that time, the creditor has the right to re-apply for bankruptcy.
2. Fines, penalties and interest for use of another's money are not charged (does not apply to interest on a loan).
3. The moratorium applies only to bankruptcy applications. One can collect a debt through lawsuits on general terms. However, if the delay under the contract falls during the period of the moratorium, it will not be possible to recover it.
4. If there are signs of insolvency, there is no obligation to apply to the court for voluntary bankruptcy.
5. Enforced recovery for enforcement proceedings is suspended. However this does not mean that courts and other authorities cease to issue writ of execution, and bailiffs to initiate enforcement proceedings on them. Enforced recovery will begin after the end of the moratorium. The rule does not apply to arrests, recovery of wages, alimony, severance payments and penalties due to harm to life and health though.
Waiver of moratorium on bankruptcy
In addition to the advantages of applying a moratorium, there are also significant limitations:
- the shareholders of the debtor cannot distribute profits among themselves, and the participants cannot receive dividends and income by shares;
- the debtor's obligations cannot be repaid by offset if this changes the order of creditors;
- a shareholder of the company cannot leave it and ask to pay the cost of the share in cash.
Therefore, as in the period of the first moratorium on bankruptcy, it can be waived. In this case, all restrictions are removed from the applicant and the bankruptcy procedure can be initiated as usual (independently or through creditors). The waiver is made through the Unified Federal Register of Legally Significant Information by publishing a corresponding message.
Globas analyzes all messages of business entities in public registers. If a company, individual entrepreneur or citizen declares a waiver to apply the moratorium on bankruptcy, a corresponding marker appears in Globas.
Pros and cons of a moratorium on bankruptcy
The moratorium on bankruptcy allows you to improve the financial position of the company and rebuild the business model for the new economic reality. However, the moratorium may have a negative impact on the creditors themselves, who expect to receive payment for a product or service in the near future. Late payment and the inability to recover money from the debtor can disrupt the financial stability of creditors, provoking a delayed increase in bankruptcy cases.
|In Globas you can check which of your counterparties are already going through bankruptcy proceedings, which partners are in an unstable financial situation and apply a moratorium, and which ones have waived this support measure.
All bankruptcy information is available in the profile of a company, individual entrepreneur or natural person. If you are not a Globas subscriber yet, fill out an application for trial access and check if there are any unreliable counterparties in your portfolio which are not going to fulfill their obligations.
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