Can an individual entrepreneur be the director of his own enterprise or is it necessary to hire someone from outside to fill this position? The question is relevant and requires detail.
Today, individual entrepreneur is one of the most acceptable forms of organizing activities, which is popular among representatives of small and medium-sized businesses. An individual entrepreneur is not a legal entity, so the registration procedure is much simpler and faster than that of an LLC. Moreover, to conduct business, an individual entrepreneur does not need to open a current account and receive a stamp. The acquisition of these details occurs on the personal initiative of the businessman, and not as required by law.
The article provides detailed information about whether an individual entrepreneur can have a director, who can be appointed to this position and what is the procedure for implementing the procedure. In addition, you will be able to find out what the differences are between the position of manager in an LLC and an individual entrepreneur, as well as what document the head of the enterprise will need to represent the individual entrepreneur to other persons.
The general director of a company that has the status of a legal entity can be either one of its founders or an outsider hired from outside to perform management functions, and this can even be an individual entrepreneur. The director represents the executive body of the enterprise, the rights and obligations of which are specified in its charter. With regard to individual entrepreneurs, the situation is such that the latter cannot appoint himself to the position of director of his own enterprise. This limitation is justified by the fact that, according to the current legislation of the Russian Federation, a person who has registered himself as an individual entrepreneur is not engaged in labor activity as such.
What an individual entrepreneur has the right to and what not:
- An individual entrepreneur has the right to hire other persons, but not himself;
- An individual entrepreneur does not have the right to enter information about his appointment as the head of the enterprise into his work book;
- An individual entrepreneur does not have the right to assign and pay wages to himself.
Can an individual entrepreneur have a director?
Entrepreneurial activity is so diverse and varied that it requires enormous effort. Taking into account the serious scale, you have to think about delegating some of your business management responsibilities. A special employee may be called a manager, head of personnel, or commercial director.
It is permissible to assign him a wide range of responsibilities - at the discretion of the business owner. However, the entrepreneur-manager does not have the right to transfer part of his own functions to another person. An employee of any level is not authorized to:
- represent the interests of the employer in authorized bodies;
- express the will of the entrepreneur;
- perform the functions of an executive body.
Important! These rights can only be transferred by means of a power of attorney certified by a notary.
The director begins to perform his duties after the issuance of an order on his appointment. He acts in accordance with the approved job description.
What is a director's position and the concept of individual entrepreneur?
The director may be one of the managers
In most cases, a director is one of the managing employees of a legal entity. An individual entrepreneur, in turn, cannot be called a legal entity. Consequently, an individual entrepreneur has the opportunity to appoint himself as director of the organization.
An individual entrepreneur can also hire a staff of employees, among whom may be a director. This is possible in situations where an individual entrepreneur manages several stores or enterprises, each of which is necessarily managed by a full-time director.
If one of the appointed directors participates in the conclusion of the agreement on behalf of the individual entrepreneur himself, the text of the agreement can be formulated, for example, as follows: Individual entrepreneur Sidorov V.V. represented by director A.A. Volkov, performing duties on the basis of a power of attorney, etc.
The video will explain who an individual entrepreneur is:
How to hire a director
The appointment order must be signed by both parties. The employee receives a copy of the order. The start date of work in a new position is stated directly in the document or coincides with the date of its signing. The text of the document must contain the inscription: “Russian Federation”. It is also necessary to enter the full name with all details, indicate the date of completion and indicate the topic (for example, “On the appointment of a commercial director”).
The development of two applications helps to avoid further disagreements; they are handed over to the employee immediately. In the future, the newly appointed employee is guided by:
- job description;
- an employment contract - it should spell out all the duties with areas of responsibility, as well as familiarize them with the work schedule and functions performed.
Note! If an individual entrepreneur is included in the list of microenterprises, he can use an employment agreement in a standard form.
When performing certain functions, an employee will need a power of attorney - this should be taken care of in advance. You will also need to issue a card with sample signatures for the bank - this will help eliminate potential problems with payment. Let signed payment documents not cause comments or disputes.
Can an individual entrepreneur have a general director? No, this is contrary to the current legislation of Russia. It does not contain such a concept. It exists outside the legal field, only in everyday life. A hired manager may be called a personnel manager or in some area of business development. If we are talking about an LLC, the position of executive director is more suitable there.
Since the application of the concept of a general director in relation to individual entrepreneurs is impossible, it is permissible to introduce into the staffing table similar positions provided for in the qualification directory. The leader may have the following title:
- executive;
- sales services;
- commercial;
- towards;
- by personnel.
Important! Even if a hired employee is hired to perform the main functionality, the entrepreneur himself still bears full legal responsibility for everything that happens.
General Director or Manager?
The CEO is inherently a leadership position, determined by the agreed-upon work schedule of the staff. When an entrepreneur is hired, the organization enters into a civil agreement with him. Involving individual entrepreneurs in the form of sole executive employees is, first of all, advisable for the organization in matters of easing the tax burden.
The entrepreneur necessarily receives the agreed payment for the work performed, and individually carries out all calculations when interacting with extra-budgetary funds. The amounts of all payments are not determined by the amount of remuneration received and are in fact fixed, in accordance with the current regulations of the taxation system.
If the general director is an individual. a person or organization loses all “salary” taxes in full, so to speak. To avoid any difficulties, it is advisable, first of all, to register an organization with an elected person acting as general director. Only after this, management of the LLC can be transferred to an individual entrepreneur and the necessary adjustments can be made to the Unified State Register of Legal Entities. After reading the above information, no one will have any questions about whether an individual entrepreneur can appoint himself as a director.
Director in his individual entrepreneur
However, the entrepreneur himself does not have the right to hold the position of general director in the individual entrepreneur. Its legal status does not provide such an opportunity. An entrepreneur will not be able to hire himself, make an appropriate entry in his work book, or pay himself a salary.
Labor legislation regulates the actions of individual entrepreneurs only as an employer. He does not have employee status. Thus, he does not have the opportunity to conclude an agreement with himself, and we are talking about any position, including an ordinary one. This provision is enshrined in the Civil Code of the Russian Federation (postulates of Article 413). The Civil Code summarizes: all obligations are considered void when it turns out that the creditor and the debtor are the same person.
Russian legislation does not consider citizens engaged in entrepreneurship registered as individual entrepreneurs as those engaged in labor activities. Accordingly, they do not have the opportunity to appoint themselves as their leader. It is permissible for them to engage in the implementation of their social obligations only while remaining in the status of an individual.
Rights and obligations of an individual entrepreneur
It should be remembered that the legal system is structured as follows: the rights of the former are ensured by the responsibilities of the latter, and the rights of the latter are ensured by the responsibilities of the former. Therefore, failure to comply with one’s obligations leads to a violation of someone’s rights, which entails certain sanctions. Today, many experts in the field of business law point to the need to create a single regulatory legal act, which will include all the rights and obligations of individual entrepreneurs, which are currently contained in existing regulatory legal acts of different levels and departments. This will create a clearer understanding of them in the business environment, and will also make it possible to formulate a more thoughtful policy for supporting small businesses.
06 Feb 2021 marketur 145
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Another person as leader
The question of whether an individual entrepreneur can hire another person as director is interpreted unambiguously: such a possibility exists. It is easy to entrust the right to conduct business activities to a hired manager. He is even capable of managing the business single-handedly - it is enough to register this in a notarized power of attorney.
Another question is how successful such an idea is. It comes with many serious risks. If an unscrupulous trustee receives unlimited powers, there is a high probability that he will direct his efforts to solving his own problems rather than developing the business.
What are the possible risks?
Manager's responsibility as a prerequisite
From time to time, tax organizations consider the possibility of appointing an individual entrepreneur to the position of manager of an enterprise as an attempt to simply evade payment of their tax obligations. If employees of the Federal Tax Service have such a suspicion, they will be able to check all the legal aspects without much difficulty.
In such a situation, it will be necessary to explain during the trial the correspondence of the payment received by the managing employee to the actual volume of duties previously performed by him.
What is it for
Most often, a third-party manager is hired when one’s own workload is high, especially when one does not want to waste precious working time on independent visits to state, municipal authorities and various licensing and control structures. The hired employee takes on this functionality. He is also able to resolve issues with suppliers, monitor the work of departments or stores, and directly supervise staff.
In this case, there are more opportunities to work for the future. You will be able to focus on finding new partners, expanding your client base, and launching advertising campaigns. Often there is not enough free time for this segment, which is extremely important for development, because you have to constantly be distracted by solving current problems.
Most businessmen understand whether an individual entrepreneur can have a director. But many still doubt that it is really needed. The answer is negative, when it is physically easy for a business owner to manage, he has enough strength and time to do it. But in the case of large-scale production, it is more logical to think about the appearance of an assistant. The issue becomes extremely acute when an entrepreneur is absent for a long time - due to illness, parallel management of other companies, a difficult family situation, or under other serious circumstances. Is a chief accountant required on staff? It is optimal to outsource accounting to an outsourcing agency.
The business owner, an individual entrepreneur, bears sole responsibility for the activities he conducts. This also applies to financial and economic areas, including the need for accounting and reporting (and in the case when you need to get a mortgage loan). Thus, he does not need to enter into an employment contract with himself; the responsibilities of a manager already lie with him.
In accordance with his legal status, an individual entrepreneur is not entitled to the appointment of a general director, because he does not have the status of a legal entity. When registering an individual entrepreneur, an individual receives a basis for engaging in entrepreneurial activities. However, it remains an individual, so it cannot have any organs of a legal entity.
Responsibilities of an individual entrepreneur for a resume - information worth knowing
First of all, it is worth understanding that current legislation allows the founders of various enterprises to hire individual entrepreneurs to perform specific types of work. This can be both activities related to insurance, and the management of a company with the conclusion of an appropriate contract.
- concluding agreements and contracts on behalf of the company (respectively, their qualitative analysis);
- analysis of reports of subordinates and managers of structural divisions and the formation, based on the data obtained, of a set of actions aimed at increasing the level of efficiency of departments and divisions;
- the manager is obliged to interact with government bodies to timely resolve issues related to the activities of the units reporting to him;
- carrying out constructive and effective negotiations with company partners;
- the manager must develop a new system for monitoring the effective use of labor time or maintain the existing one, with the concomitant implementation of the necessary adjustments;
- control of timely implementation of approved documents;
- development and implementation of an effective system of training and motivation of personnel;
