In the Russian Federation, any citizen who has retired has the right to conduct business. If a pensioner suddenly opens an individual entrepreneur, he will not be entitled to the benefits provided by law. Citizens who have retired and carry out individual entrepreneurs are required to pay established taxes and contributions to the Social Insurance Funds.
Are there any benefits provided?
Not everyone knows that a pensioner in our country can engage in private entrepreneurship. Opening an individual entrepreneur by disabled people and people receiving pensions is encouraged.
The reason for the positive attitude towards such activities is not rooted in the fact that the state seeks to support low-income citizens: immediately after opening a private business, the entrepreneur registers with the tax office and pays taxes. Payment of taxes is required even if the business does not make a profit.
No benefits are provided for pensioners and disabled people. They are not present either at the opening of the business or during its development. A pensioner must conduct business on the same basis as other entrepreneurs, making deductions under the same conditions.
There are also positive aspects: the payment of pensions does not stop when opening an individual entrepreneur. The pensioner will not only not lose his accruals, they will increase in accordance with the law on working pensioners. Since he will continue to pay insurance premiums, the insurance portion of his pension will increase in accordance with the law.
When compared with the situation of non-working pensioners, this does not give the entrepreneur a financial advantage. An additional accrual is provided for them when the pension amount falls below the subsistence level established for the region. If an individual entrepreneur is registered in the name of a pensioner, he will lose this subsidy.
Find out in this article what the cost of living for a pensioner in Russia is for 2016-2017.
Is there a recalculation of pensions for entrepreneurs?
The procedure for recalculating a pension after opening an individual entrepreneur is carried out if, upon entering the pension system, the person does not stop engaging in commerce. When recalculating, insurance premiums transferred to the citizen’s personal account will be taken into account.
Important! To recalculate the pension, they contact the Office of the Pension Fund of the Russian Federation one year after the date of assignment of the state benefit.
The businessman goes to the Pension Fund with a passport, insurance certificate and fills out an application for recalculation of his pension. Subsequent recalculations of the insurance pension are carried out after one year from the date of the previous calculation.
Pensions for citizens engaged in business are recalculated subject to continued work activity. Based on the results of work, insurance payments are calculated and made. It is enough for a person to work 1 day during the year. Insurance payments will not affect your basic retirement benefit. It changes only on the basis of a decision made by government authorities. The time spent working as an individual entrepreneur is certified by a document confirming the payment of contributions received from the regional branch of the Pension Fund of the Russian Federation. If an individual entrepreneur has dependent disabled family members, the basic part of the pension will increase. To make a new calculation, a business representative must present to the Pension Fund papers about disabled relatives who are supported by him.
The pension benefit of a citizen engaged in business is recalculated and adjusted. This type of recalculation is carried out without the consent of the pensioner. The territorial division of the Pension Fund adjusts the amount of payments if there is a good reason - a discrepancy in the information on paid insurance premiums provided by the individual entrepreneur and the data received from the individual account about the amount on it. In this case, the amount of benefits from the state may fluctuate both upward and downward.
Registration of individual entrepreneurship by a pensioner
The procedure for registering an individual entrepreneur as a pensioner is quite complicated and requires collecting a package of documents. If you fill out the forms yourself, inaccuracies may occur, which will result in the return of documents.
You can avoid mistakes if you contact a consulting firm whose specialists have the necessary experience and information about currently accepted state standards. They guarantee that the paperwork will take place without unnecessary hassle and will not cause additional complications associated with financial expenses.
Here's what you need to do if you decide to register yourself:
- look at the OKVED directory;
- select the type of activity;
- correctly plan your activities, determine its direction in order to avoid unnecessary expenses when changing this plan in the future;
- fill out application form No. P21001, which you can;
- start collecting a package of documents (TIN, copies of passport, receipt of payment of state duty).
After you collect all the documents and deliver them to the tax office, the documentation package will be reviewed within five days. The registration procedure is standard, but from 2021 there are changes for entrepreneurs who have not registered. They will be able to legalize their paid activities and take advantage of “tax holidays”. These conditions are available only to individual entrepreneurs working under the simplified tax system and PSN.
Tax deduction
The only benefit that, one way or another, a pensioner has the right to use for commercial purposes can be considered a tax deduction.
Its essence is that a person has the right to a refund of personal income tax in the amount of 13% (but not more than 2 million rubles) paid upon the sale of residential real estate or land. This benefit is available to working retirees and persons who worked for 3 years prior to the sale of property or retirement. The main condition for receiving it is that the citizen has a source of income subject to income tax.
The right to a tax deduction is issued at the local tax authority upon presentation of the following documents:
- statement;
- pension certificate or certificate from the Pension Fund of Russia;
- real estate purchase and sale agreement;
- certificate in form 2-NDFL;
- declaration 3-NDFL;
- document confirming receipt of money.
The application is considered for 3 months, after which the amount of the tax deduction is returned to the applicant within 30 days. Funds are transferred in two ways:
- cash to the current account;
- transfer to pay off other tax debts.
Responsibilities of an individual entrepreneur
Having accepted responsibility and becoming an entrepreneur, you are obliged to obey the laws of our country. It is necessary to study administrative and state codes, monopoly and legislative acts. The main responsibility is the timely payment of taxes to the local, regional and state budgets.
Opening procedure
Registration of individual entrepreneurs is simple and fast. A citizen should prepare the following documents:
- Original and copy of passport.
- TIN.
- Payment order for payment of state duty in the amount of 800 rubles.
- Application for registration as an individual entrepreneur, form No. 21001.
The application contains the following information: full name, TIN number, date and place of birth, citizenship, registration address, passport information, type of activity indicating the OKVED code.
The OKVED directory is a classifier of types of activities; according to the selected code, the state will know what the citizen is doing. You can find and select a code on the Internet or by contacting a tax specialist.
The application form and receipt for payment of the state duty can be obtained from the Federal Tax Service or downloaded from the official portal of the tax service. Thus, a pensioner can open an individual entrepreneur on his own. To do this, the application for registration is filled out in block letters, without errors. If corrections are made, the form must be filled out again. Accounting and law firms also provide assistance in filling out documents.
The verification period is 5 working days. After the specified time, you should contact a Federal Tax Service specialist. If the application is approved, an entry will be made regarding the registration of the individual entrepreneur in the Unified State Register of Entrepreneurs.
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Types of taxes to be paid
- Tax to the Pension Fund. The fixed pension tax for individual entrepreneurs consists of funded and insurance parts. You must pay in two receipts once a year or quarterly, as you choose.
- Payments to the Compulsory Medical Insurance Fund. Individual entrepreneurs pay fixed amounts to the Federal Department of Health Insurance. Payment takes place only through Sberbank cash desks using receipts. If the individual entrepreneur has a bank account, payments can be made from it. No interest is paid in this case.
Regardless of the chosen business activity, a pensioner must pay taxes on the same basis as other entrepreneurs. You shouldn’t wait for problems to arise; it’s better to study all the necessary laws in advance, since fines often hit the budget hard.
Individual entrepreneur pension: how it is calculated and what it depends on
Individual entrepreneurs bear a large burden of responsibility for their future, since they are both employers and employees for themselves. To form their future pension, they are required to pay insurance contributions to the Pension Fund.
Since 2015, the pension of individual entrepreneurs has been formed by analogy with the pension of those who work for hire. Three years ago, the Pension Fund warned everyone that the old-age labor pension was now being transformed into an insurance pension and a funded pension. A fixed payment is established for the insurance pension. And when calculating it, the following are taken into account:
- experience
- entrepreneur's annual income
- age for applying for a pension
- the amount of insurance premiums paid by individual entrepreneurs
- non-insurance periods: military service on conscription, maternity leave, caring for a citizen who has reached 80 years of age, a disabled person of group I, a disabled child, etc.
The basis of the pension that the individual entrepreneur plans to receive is formed from the sum of the annual pension coefficients for his entire work activity, including non-insurance periods, which is multiplied by the value of the pension point, and a fixed payment is also taken into account:
Insurance pension = IPC × SIPC + FV, where:
- IPC (individual pension coefficient) is the sum of all pension points accrued on the date of assignment of the insurance pension;
- SIPC (individual pension coefficient value) - the value of the pension point on the date of assignment of the insurance pension. It is indexed annually by the state and from January 1, 2021 it amounts to 81.49 rubles.
- FV – fixed payment. As of January 1, 2021, it is 4,982.90 rubles, also indexed every year.
Thus, if you substitute all the available data into the above formula, then you need to calculate the pension as follows:
SP = IPK × 81.49 + 4,982.90
For each year of later application for a pension after the right to it arises, the insurance pension increases by the corresponding premium coefficients, as specified on the Pension Fund website.
From January 1, 2021, insurance pensions will increase by 7.03%. The size of the fixed payment to the old-age insurance pension after indexation will be 5,334.19 rubles, and the cost of the pension point will be 87.24 rubles.
The cost of the pension coefficient and fixed payment will increase:
- in 2021 by 6.6%,
- in 2021 - by 6.3%,
- in 2022 - by 5.9%,
- in 2023 - by 5.6%,
- in 2024 - by 5.5%.
In 2024, the cost of the pension coefficient will be 116.63 rubles. (43% higher than the current value), fixed payment towards pension - 7131 rubles.
Increases will be made on January 1 of each year.
From 2015 to 2025, it was planned to gradually tighten the requirements for the minimum length of service and the number of pension coefficients (points) for assigning a pension - they gradually increased. So, if in 2015 the minimum experience was from 6 years, and the number of points - from 6.6, then by 2024 the minimum experience should increase to 15 years, and the number of points by 2025 - to 30. Requirements for points and experience for assignment of an insurance pension in 2018 - 9 years and 13.8 points.
The Pension Fund explained that the full insurance pension, according to the new rules, will be provided to citizens who begin working in 2015. For future retirees who started working before 2015, the formed pension capital is converted into individual pension coefficients.
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Details
Why insurance premiums are important for an individual entrepreneur’s pension
If an entrepreneur conducts legal activities, then he pays insurance premiums for himself for compulsory pension insurance. The size of the contribution is affected by the amount of income. If it does not exceed 300,000 rubles, then the fixed payment for individual entrepreneurs in 2021 is 26,545 rubles. The fee must be paid by December 31 of the current year.
If the income goes beyond 300,000 rubles, then the individual entrepreneur pays an additional 1% on top of the amount that exceeds 300,000 rubles. in a year. At the same time, the maximum amount of insurance premiums in 2018 cannot be more than 212,360 rubles, including fixed insurance premiums for yourself. In this case, the payment deadline is extended until July 1 of the following year.
The frequency of payments is determined by the entrepreneur himself - if he wishes, he can do this several times a year, for example, quarterly, or pay the entire amount of insurance premiums at once.
The amount of insurance premiums paid by individual entrepreneurs affects pension points: the more points, the higher the pension.
Self-employed pensioner: is he obliged to pay insurance premiums?
Does the situation with the payment of insurance premiums change if an individual entrepreneur, even after retiring, continues to conduct business? The Ministry of Finance issued clarifications on this issue in Letter dated 08/08/2017 N 03-15-05/50651. Some people mistakenly believe that such an obligation is abolished. However, the document analyzes the situation in detail, emphasizing that the abolition of the obligation to pay insurance contributions for compulsory pension insurance for individual entrepreneurs-pensioners may lead to abuses in re-registration of business activities in the name of such persons.
Other theses of the letter from the Ministry of Finance:
- Ch. 34 of the Tax Code of the Russian Federation does not provide for the exemption of individual entrepreneurs from paying insurance premiums for themselves. The exception is certain periods specified in paragraphs 1, 3, 6 - 8 of Part 1 of Art. 12 of Federal Law No. 400-FZ of December 28, 2013, during which they did not operate (clause 7 of Article 430 of the Tax Code of the Russian Federation).
- Individual entrepreneurs pay insurance premiums regardless of age, type of activity performed and the fact of receiving income from it in a specific billing period.
- Insurance premiums for compulsory pension insurance are paid to receive compulsory insurance coverage, and if the citizen is a pensioner, the insurance premiums paid affect the recalculation of the pension received.
- The obligation to pay insurance premiums for compulsory pension insurance arises for an individual entrepreneur from the moment of acquiring the corresponding status until the moment of exclusion from the Unified State Register of Individual Entrepreneurs.
- If an individual entrepreneur is not excluded from the Unified State Register of Individual Entrepreneurs and retains the status of an individual entrepreneur, then he is obliged to pay insurance premiums, regardless of the fact of receiving income and carrying out or not carrying out business activities.
Are pensions indexed for existing entrepreneurs?
According to changes in pension legislation, from 2021, working pensioners will be paid an insurance pension and a fixed payment to it without indexation. The category of working pensioners includes individual entrepreneurs registered with the Pension Fund. The pensioner will begin to receive a pension, taking into account all missed indexations, only after he ceases his activities.
From January 2021, indexation of insurance pensions applies only to pensioners who were not working as of December 1, 2021.
Will the individual entrepreneur receive a larger pension?
Surely many individual entrepreneurs are interested in the question of how much they will receive a pension and whether they will be able to live on it. The fact is that the methodology for calculating pensions is very complicated. The size of the pension is calculated taking into account changing data, such as the individual pension coefficient (the number of points accumulated over the years of work) or the amount of insurance contributions for oneself.
You can approximately calculate the size of an individual entrepreneur’s pension on the Pension Fund website using a special pension calculator.
Let's assume that your annual turnover as an entrepreneur is 1 million rubles. By the time you retire, your work experience as a self-employed citizen will be 35 years. If you enter the appropriate data into the calendar and make calculations, the service will automatically give you the amount of the insurance pension - 13,928 rubles. Of course, in the pension calendar there are many other values that should be indicated for calculating pensions: “How many years have you served / are you planning to serve in conscription?”, “How many years after the right to an insurance pension arises are you ready not to apply for its assignment?” etc. All of them influence the final amount in one way or another.
A more accurate amount can be found if you use the data contained in your personal account on the Pension Fund website. The fact is that citizens’ pension rights are recorded in individual personal accounts in the Pension Fund. What has already been generated is contained in your personal account. You can also use the Pension Fund mobile application. Having seen all payments, the number of accumulated points and length of service, you can calculate the size of your future pension using the same pension calculator.
Representatives of the Pension Fund have repeatedly said that hired workers have larger pensions than individual entrepreneurs. This is explained by the fact that the average annual payment to the Pension Fund for an employee is higher. After all, the employer calculates and pays insurance premiums from his salary every month. And since it is from insurance contributions that pension points are formed, which directly affect the calculation of the insurance pension, the more such points, the higher the pension. It can be assumed that those who combined paid work with entrepreneurial activity will feel best in retirement.
It is also necessary to take into account the following important principle of compulsory pension insurance: if an individual entrepreneur does not develop the necessary insurance experience and does not earn minimum pension points, then he will not be able to count on an insurance pension when he reaches retirement age.
In 2021, the maximum annual 8.7 points can be generated with a salary that reaches the maximum amount for which insurance premiums are paid; in 2021 it is 1,021,000 rubles.
The only consolation can be the fact that, in principle, the state will not leave anyone without a pension. If a citizen does not have the parameters important for the formation of an insurance pension, then 5 years after reaching retirement age he will be assigned a social pension.
How to increase your pension?
Unfortunately, there are few options in this case. After all, pension legislation defines length of service as periods of working activity when insurance premiums are paid. If you ran a business illegally, you did not pay fees. If you worked legally and paid minimum contributions, then the pension in the end will still be “minimum”.
There are two ways to make up for lost experience. They were once voiced by the heads of the OPFR in the Khabarovsk Territory:
- Postpone your pension. The years after the right to an insurance pension arises are considered premium coefficients. So, for example, if 5 years after the right to a pension arises you do not apply for its assignment, then its size will increase by 40%.
- “Buy” work experience. According to Art. 29 of Federal Law No. 167-FZ of December 15, 2001, one individual can pay insurance premiums for another - for example, a working spouse for a non-working spouse. But there is a condition: the “bought” experience should not exceed half of the required one. So, if in 2021 the minimum required experience is 9 years, then you can “buy” only 4.5 years. The remaining 4.5 years must be earned by the person for whom insurance premiums have been paid.
- Additionally, form a funded pension. This will allow for additional payment of insurance premiums for future pensions. You just need to conclude an appropriate agreement with the Pension Fund.
- Participate in voluntary pension programs of non-state pension funds.
Please share in the comments how you influence the size of your future pension? What are you doing to make it bigger?
Fictitious individual entrepreneurs, risks associated with their opening
Nowadays, you can meet young people, working citizens, who register an individual entrepreneur in the name of their elderly relative. They hope to get benefits and get rid of the need to pay taxes.
Pensioners need to know that no benefits are provided for them when opening an individual entrepreneur. With fictitious registration, all the burdens of paying taxes will fall on their shoulders. Their ignorance will not be a basis for exemption from liability to the state.
In case of non-payment of taxes, the pensioner will have to repay the debt by paying with personal property, pay a fine, and perform forced labor. He may lose the right to continue doing business. In the worst case, he could be deprived of his freedom.
Is it profitable to work in retirement - pros and cons
On the one hand, a pensioner can work and receive a pension at the same time, on the other hand, he will receive a pension much less than he should, because it is not subject to indexation. What is the best way to proceed?
To answer this question, let's look at the main pros and cons of working in old age.
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Thus, if a pensioner’s salary and his health allow him to neglect state support, then it is more profitable to work and receive a non-indexed pension. Plus, this is an excellent opportunity to accumulate experience and points and increase the amount of benefits in the future. However, if a citizen has a good pension, taking into account indexation, various social benefits, etc., or he has health problems, or wages at work do not cover the costs of losing state assistance, then it is better to devote his old age to himself and his grandchildren and “stay at home” .
Additional features
An individual entrepreneur will have the opportunity to use property rights if he needs to purchase any real estate, so he will increase his capital. Acquired real estate can be passed on by inheritance. If desired, a pensioner will be able to work in several organizations at the same time and engage in intellectual work.
A business makes a profit at any age if the entrepreneur is well versed in the laws, pays taxes on time, and is familiar with his rights and responsibilities.
Can a pensioner become an individual entrepreneur?
Individual entrepreneur is the most convenient and quite popular format for running your own business in Russia. It is mainly used by small business entrepreneurs. However, you can register your business by meeting a number of requirements. They concern:
- citizenship - Russian Federation (however, foreigners can also open a private business in Russia if they confirm their place of temporary stay or place of residence);
- age - from 18 years (earlier opening of an individual entrepreneur is possible with the consent of the parents, after emancipation and in some other cases);
- legal capacity – full, without any restrictions.
Other restrictions are also possible, for example, in relation to certain types of activities, opening an individual entrepreneur is impossible and requires registration of a legal entity.
The legislation does not establish a maximum age threshold for opening an individual entrepreneur. This means that a pensioner can obtain the status of an individual entrepreneur if he is fully capable.
If retirement is still ahead
The question of self-employed status for those who have not yet reached retirement deserves special attention. We mentioned that the period of activity in this status is not counted towards the insurance period. This means that if you are self-employed for the entire working time required to calculate your pension, then you will not have to count on an insurance (formerly labor) pension. Upon reaching the appropriate age, a social benefit will be assigned, but its amount is smaller and assigned later.
Voluntary pension contributions were also mentioned - essentially, this is an opportunity to buy insurance coverage. For example, in order for 2021 to be fully included in it and taken into account when calculating pensions in the future, you need to transfer 32,448 rubles for it. In principle, a self-employed person has the right to pay a smaller amount for voluntary pension insurance. However, then it will not be the whole year that will count towards the seniority, but only part of it.
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What benefits are there for pensioners?
In Russia, entrepreneurs of retirement age should not count on special benefits. Along with other individual entrepreneurs, the pensioner pays all taxes and contributions.
Note! All individual entrepreneurs may not pay personal income tax, referring to Art. 145 of the Tax Code of the Russian Federation. The article states that the payer is exempt from this tax if the income for the previous 3 months did not exceed 2 million rubles. Therefore, entrepreneurs cannot receive deductions on income tax refunds, for example, from a mortgage.
For retired entrepreneurs, 5 tax systems with a reduced rate are available:
- A single tax on imputed income. The limit on annual revenue and the number of employees is abolished. The tax is calculated based on the possible amount of profit, not the actual amount. Types of activities under UTII are limited. You cannot engage in construction, production, or wholesale trade. The activity is selected from the permitted list established by law.
- Patent system. To switch to this regime, you must obtain a patent for a certain type of activity. Available for entrepreneurs with a staff of no more than 15 people. Under PSN, the type of permitted activity is not limited. The main condition is that profit cannot exceed 60 million rubles.
- General taxation system. The most complex of all regimes, as it includes a large tax burden. Under OSNO, all types of work are permitted. There are no restrictions for an individual entrepreneur under this regime.
- Simplified system. There are 2 tax rates: 6% - for individuals whose business does not require large expenses; 15% (income reduced by the amount of expenses) - an entrepreneur can fix the rate if he purchases a lot of goods or uses services to service his business.
- Unified agricultural tax. The regime can be applied by individuals engaged in the production of agricultural goods. The individual entrepreneur will pay 6% on all income. There is no limit on earnings. The main conditions are that income from the sale of agricultural products must exceed 70% of the total profit. An entrepreneur can employ no more than 300 people.
You can switch to the simplified tax system only at the end of the year, to the PSN - in any month. An application for choosing a system is submitted simultaneously with the submission of documents for business registration. If insurance payments are made on time, an individual entrepreneur can take advantage of the right to reduce taxes.
Do I need to pay contributions to the Pension Fund?
A pensioner who has registered an individual business is not exempt from paying insurance premiums “for himself”. Exemption from mandatory payments is possible only in cases in which the individual entrepreneur cannot conduct activities: child care, period of military service. Lack of activity must be confirmed by relevant certificates and documents.
Important! The benefit, which allows not to pay fixed contributions, is available only to disabled people engaged in commercial activities upon reaching retirement age.
Results
From all that has been said, it follows that the legislator recognizes a pensioner who pays professional income tax as unemployed. This is due to the lack of payment of insurance premiums to them (or for them). Accordingly, he retains the right to annual indexation of his pension and additional payment to his pension up to the subsistence level. But for those benefits that depend on the general level of income, this rule does not apply.
Sources:
- Tax Code of the Russian Federation
- Law “On conducting an experiment to establish a special tax regime “Tax on professional income” dated November 27, 2018 No. 422-FZ.
- Law “On Insurance Pensions” dated December 28, 2013 No. 400-FZ
- Law “On Amendments to Certain Legislative Acts of the Russian Federation on the Issues of Assignment and Payment of Pensions” dated October 3, 2018 No. 350-FZ
- Law “On State Social Assistance” dated July 17, 1999 No. 178-FZ
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