littleangels        English Nanny
Results 1 to 6 of 6

Thread: Starting a business in Moscow region

  1. #1
    Join Date
    Oct 2016
    Location
    Kolomna
    Posts
    26
    Thanked: 3

    Starting a business in Moscow region

    I am going to be getting my TRP soon, so I wish to open my own English school in Moscow Region (not Moscow, but Moscow region).

    What taxes will I have to pay as a foreigner owning a business? I am not sure at the moment if I will want to have it as only myself, or if I will get a larger place and hire 1-2 others to work for me as well.

    I have read something about opening as an individual entrepreneur and how this way saves me from paying tax, though I am sure I am misunderstanding. From what I understand, if I do it this way, I am personally liable for anything that might happen at the school.

    I have also seen that an LLC is a possibility, which takes away the liability and will allow me to hire other teachers. However the taxes are going to be higher if I do this.

    For a small English school, what structure do you think would be best, and what taxes would be involved in this?

  2. The Following User Says Thank You to razor787 For This Useful Post:

    DiscoverLearn (19-06-2019)

  3. #2
    Join Date
    Nov 2016
    Location
    Corning, Нью-Йорк
    Posts
    2,863
    Thanked: 990
    Quote Originally Posted by razor787 View Post
    I am going to be getting my TRP soon, so I wish to open my own English school in Moscow Region (not Moscow, but Moscow region).

    What taxes will I have to pay as a foreigner owning a business? I am not sure at the moment if I will want to have it as only myself, or if I will get a larger place and hire 1-2 others to work for me as well.

    I have read something about opening as an individual entrepreneur and how this way saves me from paying tax, though I am sure I am misunderstanding. From what I understand, if I do it this way, I am personally liable for anything that might happen at the school.

    I have also seen that an LLC is a possibility, which takes away the liability and will allow me to hire other teachers. However the taxes are going to be higher if I do this.

    For a small English school, what structure do you think would be best, and what taxes would be involved in this?
    If you intend in the future to hire other people for your business, you can't be an individual entrepreneur. For the taxes, you need an accountant. It's so much easier than trying to do everything on your own.

    And if you get an accountant, don't just pick the first one you see with a sign in the window. Go to one of your Russian friends and have them introduce you to one of their friends who is in the accounting business. That way, you will save money, too, they won't "see you coming" and charge you "foreigner rates".
    Freedom isn't Free - Thank a Veteran

  4. The Following User Says Thank You to TheInterocitor For This Useful Post:

    DiscoverLearn (21-06-2019)

  5. #3
    Join Date
    Oct 2016
    Location
    Kolomna
    Posts
    26
    Thanked: 3
    Quote Originally Posted by TheInterocitor View Post
    If you intend in the future to hire other people for your business, you can't be an individual entrepreneur. For the taxes, you need an accountant. It's so much easier than trying to do everything on your own.

    And if you get an accountant, don't just pick the first one you see with a sign in the window. Go to one of your Russian friends and have them introduce you to one of their friends who is in the accounting business. That way, you will save money, too, they won't "see you coming" and charge you "foreigner rates".
    Would it be possible to start my business as an individual entrepreneur, and after a year "upgrade" to being an LLC?

    I have a lot of students at the moment, a few of which are businessmen/women who I am sure can connect me with their accountants.

  6. #4
    Join Date
    Nov 2010
    Location
    Moscow
    Posts
    1,719
    Thanked: 689
    It's not true that an individual entrepreneur can't hire others. It may even be best to have your spouse establish the business and hire you.

    It is fairly difficult to convert a business from a пбоюл (entrepreneur without legal entity status, the formal name for the way an individual entrepreneur operates) into a company (LLC or other). If the business doesn't have many assets and contracts are not too complex you just formally start over.

    Note I'm not making any claim that an individual entrepreneur status is easy to hire people from legal or tax perspective. Just that there are no formal constraints on doing so. I know some fairly big 'companies' that work this way.

  7. #5
    Join Date
    Oct 2016
    Location
    Kolomna
    Posts
    26
    Thanked: 3
    Quote Originally Posted by Armoured View Post
    It's not true that an individual entrepreneur can't hire others. It may even be best to have your spouse establish the business and hire you.

    It is fairly difficult to convert a business from a пбоюл (entrepreneur without legal entity status, the formal name for the way an individual entrepreneur operates) into a company (LLC or other). If the business doesn't have many assets and contracts are not too complex you just formally start over.

    Note I'm not making any claim that an individual entrepreneur status is easy to hire people from legal or tax perspective. Just that there are no formal constraints on doing so. I know some fairly big 'companies' that work this way.
    I had thought about having my wife start the company. Doing it that way would mean that we would need to pay tax on both of us rather than just me though, wouldn't it?

  8. #6
    Join Date
    Nov 2010
    Location
    Moscow
    Posts
    1,719
    Thanked: 689
    Quote Originally Posted by razor787 View Post
    I had thought about having my wife start the company. Doing it that way would mean that we would need to pay tax on both of us rather than just me though, wouldn't it?
    I don't consider myself a tax expert but here's what I understand about it. Do your own research, don't rely on what I'm saying. Keep in midn though you're saying 'tax' and there are lots of various taxes, social contributions that employer pays, etc.
    -if a company, and she is owner, she doesn't have to pay herself a salary, i.e. she doesn't have to work there - profit tax though would come out. (If she does get paid a salary, like if you decide she needs to be general director, it can be pretty low). You and company would be paying income tax, social contributions, etc. If/when you take out profits later (which may be never), there may be dividend withholding and stuff like that. (Will the company make a formal profit or pay it all out to you/her as main employees? Which is better? No idea.)
    -Individual entrepreneur: honestly I don't know this system well. I think 'she' (the individual entrepreneur/owner) would be the main taxpayer, the business taxes blend in with personal (in a way I don't fully understand). Same income tax/social contributions if 'she' pays you. (But if you're going to share your income, you could pay yourself the smallest salary and hence lower income taxes and that).

    So obviously there are ways to establish things/income/salary/bonuses and all that to minimize or at least moderate the hit. No idea which is better. You'd be relying on her in many respects. Also depends what kind of business - if it's just some service business with no assets to speak of and you don't need outside financing, that has fewer issues. There may be some legal/tax risks to be cautious about.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •