Documents and taxes. How not to run afoul of the law when opening a car service centre

When you dream of opening a business in the field of car maintenance, do not forget that it is not only an interesting and profitable occupation, but also paperwork to report to the state, as well as – paying taxes. Let's find out what form of ownership is preferable when setting up a service station, what documents will be needed to open a car service, and how taxation is related to all of this.

What form of ownership is preferable when setting up a service station?

The form of ownership when opening a service station

To register a car service station with the tax authorities, most often choose one of two forms of ownership: IE (individual entrepreneur) or LLC (limited liability company). The choice is primarily influenced by the planned activity. If you want to open a garage-type service station and provide repair services yourself, register an IE, and if you dream of opening a multi-profile car service using the labour of hired workers, register an LLC.

When registering a car service centre, the type of activity should be chosen according to the OKVED classifier.

Main differences between a sole proprietorship and an LLC

Individual entrepreneur – a natural person who:

• registered with the state authorities as a sole proprietor;
• conducts economic activity in a particular direction and is directly responsible for its results for the purpose of personal gain;
• has not registered a legal entity.

Limited liability company – an organisation that:

• registered with state authorities as an LLC;
• conducts economic activity, limited by the size of the authorised capital, in the direction chosen by its founders, with the aim of obtaining benefits for all its participants and bearing direct responsibility for the results of this activity;
• is a legal entity.

The advantages of a sole proprietorship over an LLC

If you decide to open your own business in the field of car maintenance and work individually, opening a sole proprietorship compared to an LLC will have a number of advantages:

1. Easy registration. To open a sole proprietorship it is enough to submit an application and pay the registration fee. A number of regions allow you to carry out this procedure via the Internet, avoiding queues in the office of the civil servant.
2. Allow you to open a sole proprietorship.
3. The absence of an authorised fund.
4. Simplified bookkeeping and absence of cash register.
5. Simplified taxation – 9% of profit or UNDV.
6. Low penalties and loyalty of state authorities.

But it is worth considering that:

1. registration of IE is made only at the place of residence of the entrepreneur;
2. to provide yourself with a pension must independently make contributions to the pension fund;
3. you are liable for personal property in case of debts to the state;
4. you may have difficulties in working with legal entities

Advantages of LLC over sole proprietorship

An LLC is a good choice for large car services with authorised capital, hired workers and a range of services (repair, tyre fitting, car wash, spare parts shop, etc.).

Why you should open an LLC:

1. this type of ownership can be approved as one or several participants (up to 50 people);
2. if there are several co-founders, liability for obligations is collective;
3. the owner of the LLC can work incognito, concluding transactions on behalf of the organisation;
4. convenient to work with both individuals and legal entities

The disadvantages of a limited liability company include a complicated accounting scheme, increased expenses on taxation items, high tax and administrative fines, mandatory use of KKM, mandatory contributions to the pension fund.

The disadvantages of a limited liability company include a complicated accounting scheme, increased expenses on taxation items, high tax and administrative fines, mandatory use of KKM, mandatory contributions to the pension fund.

Required documents

When you decide to open a car service centre from scratch, you need to submit a package of documents to the tax inspection.

For the procedure of registration of IE (private individuals) – see here.

The procedure for registering an LLC (legal entities) – see here.

If you want to study the question of forms of ownership thoroughly, we advise you to get advice from a lawyer or a representative of the Federal Tax Service.

For the success of any service station it is necessary to have professional equipment, which will not only improve the quality of your work, but also increase the income of your business. At the same time, the more stations and stands you have at your disposal, the more potential customers you will be able to serve. Therefore, it will not be superfluous and equipment for refuelling and diagnostics of car air conditioners.