Individual entrepreneurship

A natural person is an individual citizen acting in his or her own name, while a legal entity is an organisation with separate property that answers for its obligations with that property and can sue or be sued (for example an LLC). An individual entrepreneur does not form a legal entity but registers with the state as a natural person; no charter fund, separate legal address, or director and accountant posts are required. The advantages are easy start and stop, independent management and simplified reporting; the disadvantage is unlimited personal liability: if there is a loss, the entrepreneur covers the debt with his or her own property. Hiring employees and the kinds of activity may be restricted by law, so this form suits large projects poorly. The tax regime depends on the type of activity, the place and the turnover: for some activities a fixed amount set in the Tax Code is paid, for others another regime applies, and exact rates must be checked in the Tax Code. Many payments and fines are expressed through the BHM, the basic calculation amount; the BHM and tax figures in the exercises below are only conditional numbers for learning. There is also a separate, simpler status — the self-employed person: once registered, he or she performs certain jobs or services listed in law without hiring staff, under a simplified procedure (the tax and social-payment rules are set by law).