Starting Business In Russia

Contents:

• Registration of your own company
• Registration of a joint venture or purchase of a share in the business
• Opening of a branch or representative office
• Work through distributors
• Register a business yourself or entrust it to specialists?

Opening a business in Russia by citizens of another state is possible in several ways:

• registration of a legal entity (separate company);
• buying a stake in a business or participating as a co-founder;
• opening of a branch or representative office;
• cooperation with distributors.

Each of these options has its own characteristics: a different set of documents and requirements for individuals, types of taxation, as well as the availability of necessary permits. Let’s take a closer look at every opportunity for foreigners to open their own business in Russia.

Registration of your own company

Russian legislation allows foreign citizens to register several forms of business: a joint-stock company (JSC), a limited liability company (LLC),, as well as acquire the status of an individual entrepreneur (IE). In addition to the differences in the registration procedure and the package of necessary documents, there is another important nuance that may affect the choice of the form of entrepreneurship.

To register an LLC or JSC, the founder does not have to reside in Russia. He may not even be present at the registration in person – the necessary documents can be sent by mail. To open an individual entrepreneur, it is necessary to be legally in the Russian Federation: you need to get a temporary residence permit or a residence permit.

Another important point is whether the founder of the LLC or JSC is going to be the head of the company. If, after opening a business in Russia, the owner wants to hold the post of director, you will need to get a work permit. If a citizen of Russia or the countries of the Eurasian Economic Union (Armenia, Belarus, Kazakhstan, Kyrgyzstan) holds this position, a permit will not be required.

Also, an individual entrepreneur is responsible for the company’s debts with his own property. The liability of the LLC and JSC participants is limited by the size of their share. Representatives of small and medium-sized businesses in the Russian Federation can use the simplified taxation system.

What is necessary to open a business in Russia in the form of LLC and JSC:

• legal address;
• authorized capital of at least 10 thousand rubles;
• availability of a director and an accountant.

Within five days after submitting the documents, it will be possible to obtain a certificate of registration of the company. If the founder is a foreign company, you need to translate into Russian all the documentation on incorporation and notarize it.

To register an individual entrepreneur by foreigners, you need:

• application for registration in the form P21001;
• receipt of payment of the registration fee;
• a photocopy of a document with registration in the Russian Federation or a residence permit, a temporary residence permit;
• All documents submitted in a foreign language must be translated into Russian, and the translation is notarized.

Official foreign documents require legalization (apostille affixing) in the issuing country.

Registration of a joint venture or purchase of a share in a business

Foreign citizens can be co-founders of the company together with Russians. In this case, the business registration procedure is similar to the creation of an LLC or JSC. The conditions remain the same – you need a legal address, authorized capital, as well as a legal stay of a foreigner on the territory of Russia. All documents must be translated into Russian and notarized – this is a mandatory requirement.

In addition, opening a business in Russia is also possible through the acquisition of a share of the authorized capital. There is a way to do without buying: you need to register a new member of the company, which will increase the authorized capital with its own investments. In this case, registration of changes takes about 7 days. In addition to business investments, you will need to pay a state fee, as well as legal verification of documents and their translations.

A joint venture in Russia can also use a simplified taxation system. But this is possible only if the share of a foreign company is no more than 25%.

What you need to register a joint business of various forms of entrepreneurship:

• a statement including the name and legal status of the company;
• documents of the founders and management staff;
• indication of the size and form of the authorized capital;
• current legal address of the company;
• indication of the taxation system.

Opening of a branch or representative office

Representative offices and branches are another option for starting a business in Russia. How do these forms of activity differ? The representative office is engaged only in advertising and marketing, it has the right to conclude contracts, look for partners and interact with dissatisfied customers, etc. They have limited powers – they cannot engage in entrepreneurial and economic activities.

A branch is a full–fledged, enterprise that engages in the same activities as the parent company. Both representative offices and branches of foreign companies are considered non-residents, so the taxation system is regulated bilaterally according to the conditions adopted between the two countries.

What you need to register a branch or representative office of a foreign company in Russia:

• prepare the necessary documents, translate them into Russian and legally certify;
• pass the accreditation procedure (it takes about 30 days);
• coordinate the number of foreign employees with the Chamber of Commerce and Industry;
• pay a state duty in the amount of 120 thousand rubles.

This type of entrepreneurship is relevant only for large or medium-sized businesses. Any monetary or property transactions, including bank transfers, between branches and the main company are carried out directly, which greatly simplifies the distribution of funds within one enterprise.

An important point is that to open a branch or representative office, you need to register a legal address. All foreign citizens, including managers, must obtain a work permit in Russia.

The whole process of starting a business in Russia through the registration of a representative office or branch will take a total of about 1-1.5 months.

Working through distributors

Distribution is one of the ways of doing business in Russia by foreign companies. It is suitable for small and medium-sized enterprises. If a foreign company does not have offices, employees, sales channels for its products in the territory of the Russian Federation, then contracts should be concluded with distributors. They will receive the goods from a foreign company and will be engaged in its implementation.

What are the advantages of starting a business in Russia in this form? The main advantage is the minimum requirements and risks. There is no need to be on the territory of the country, obtain permits, register an enterprise and contribute the authorized capital. A well-written contract between the manufacturer and the distributor is enough. At the same time, a foreign company does not risk its property.

The disadvantage of cooperation with distribution companies is the lack of an opportunity to influence the promotion of goods, as well as independently appoint managers, expand the market. In addition, the intermediary can terminate the contract at any time, and you will have to look for a new representative.

Register a business yourself or entrust it to specialists?

Almost all ways of starting a business in Russia require thorough preparation. You need to collect a package of necessary documents, translate everything into Russian and notarize it before submitting it to different authorities. In addition, it is important to take into account the nuances of Russian and international legislation, which may vary depending on whether there are any tax agreements between the countries.

Large companies can entrust the solution of these issues to their own lawyers, but it is more profitable for representatives of small and medium-sized businesses to contact law firms that help with the registration of a subsidiary, branch / representative office or sole proprietor.

What is usually included in the services of such legal assistants:

• comprehensive legal advice;
• assistance in preparing the necessarypackage of documents;; support during the business registration procedure itself;; obtaining the necessary permits, payment of duties and other fees.

By contacting such a company, you can be sure that you will be properly prepared and certified with all the necessary papers. Another advantage is saving time. As a rule, everything is done in the shortest possible time, and the failure rate is low. But even in case of failure, legal assistants will bring the matter to an end by submitting the application again.

It is not necessary to have a full-time lawyer in order to quickly and competently start your own business in Russia. Moreover, you do not need to understand all the nuances yourself – it is enough to entrust the registration of the enterprise to specialists who will register a foreign company themselves, saving the founder from unnecessary hassle.