Can the sole founder be a director? Director and sole founder

When a company is created, the director is elected by the general meeting of participants. An employment contract is concluded with the manager. But according to the law, one person can establish a limited liability company. Is an employment contract necessary in this case and how to conclude it correctly? How to pay for the work of such a “sole worker” and not make mistakes with taxes? You will learn about all this from our article.

The general director of the company is elected by the general meeting of its participants (Clause 1, Article 40 of the Federal Law of 02/08/1998 No. 14-FZ “On Limited Liability Companies”; hereinafter referred to as Law No. 14-FZ). The founders can appoint a person to this position, either from among themselves or from outside.

In general, an employment contract () is concluded with the elected manager. The employer in relation to the employee - general director is the organization represented by one of its owners. On behalf of the organization, the agreement is signed by one of the participants to whom the general meeting has granted such powers.

To avoid controversial and dangerous situations, you can pay both dividends and salaries. In this case, the salary may be the minimum, but not lower than the established one or the industry average.

"Salary" taxes

Both salaries and dividends are taxed, but at different rates. Salary - 13%, dividends - 9%.

Dividends are paid from the net profit of the organization to shareholders (participants) if they have a property right to a share in the authorized capital of the organization. This is not a work activity. Dividends are also not payments related to the performance of work (services) under any civil contract. Therefore, they are not the basis for the calculation and, accordingly, payment of insurance premiums ().

On a note

In the event of liquidation of an organization, the director, the sole founder, can assert his rights both as a creditor and as a shareholder.

As a creditor, he will secondarily claim payment in the amount of average monthly earnings ().

As a shareholder, he lays claim to the property remaining after satisfying the claims of all creditors ().

When calculating wages, an obligation arises to pay insurance contributions to extra-budgetary funds. They are accrued on all remunerations and payments in favor of the employee made within the framework of labor relations and civil contracts for the performance of work or provision of services (Article 7 of the Federal Law of July 24, 2009 No. 212-FZ “On insurance contributions to the Pension Fund of the Russian Federation , Social Insurance Fund of the Russian Federation, Federal Compulsory Medical Insurance Fund"). This also applies to the payment of salaries to the director - the only founder. For an organization, this is a waste of money. But for a person it is undoubtedly a positive factor, since he has the right to all types of social insurance benefits - maternity benefits, etc. - on an equal basis with all other employees. This is directly indicated in subparagraph 1 of paragraph 1 of Article 2 of the Federal Law of December 29, 2006 No. 255-FZ “On compulsory social insurance in case of temporary disability and in connection with maternity.”

Thus, the manager has to make a choice and take into account that with the payment of dividends and a lower income tax rate, he will have to make contributions for future pension provision from personal funds.

How to account for expenses

In general cases, accrued wages can be taken into account as part of labor costs (). What about the salary of the director - the only founder? In our opinion, this clause of the Tax Code is applicable in this case, even if a written agreement with the general director - the sole founder was not concluded. After all, labor relations take place, since the employee is actually allowed to work, regardless of whether the contract is concluded “on paper” or not (,).

There is no need to draw up an employment contract with the director - the sole founder. After all, there should not be the same signature on both sides of the agreement, and the organization does not have another owner (letter from the Ministry of Health and Social Development of Russia dated August 18, 2009 No. 22-2-3199)

Paragraph 1 of Article 255 of the Tax Code determines that labor costs include any accruals to employees in cash and in kind related to the maintenance of these employees, provided for by the laws of the Russian Federation, labor or collective agreements. This paragraph refers, in particular, to established legal norms. And the basic norms of legislation in the field of labor relations and labor contracts are enshrined in the Labor Code.

In addition, in accordance with all expenses must be economically justified and documented. Labor costs, in the absence of an employment contract, can be confirmed by any documents indicating the existence of an employment relationship between the manager and the organization. This could be a staffing table, pay slips, and so on. That is, this once again confirms that the expenses for the salary of the general director - the only founder - can be taken into account in tax expenses.

And yet, it is necessary to take into account that during the inspection the Federal Tax Service may not agree with such conclusions and this position will have to be defended in court. But there is positive judicial practice for the taxpayer (resolutions of the Federal Antimonopoly Service of the North-Western District dated October 11, 2007 No. A42-5270/2006, East Siberian District dated October 10, 2007 No. A33-15270/06-F02-6504/07, North-Western District dated April 23, 2010 in case No. A13-5979/2009).

O. O. Kruzhilina, for the magazine "Practical Accounting"

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How to formalize an employment relationship and is it necessary to conclude an employment contract? Should the CEO's salary be calculated and paid and can it be taken as expenses?

Increasingly, there is a situation in which the general director and the founder are the same person. This is not prohibited by law: one person can establish a company. True, this situation arises both as a result of the departure of other founders from the organization over time, and in the event of one person acquiring 100% of the organization’s shares. Note that in the business environment the term “founder of an LLC” is often used, and the law uses the term “member of an LLC.” The terms are almost identical, but the founder is the participant who creates the LLC.

Employment contract with the head of the company raises questions. Even specialists cannot say unambiguously whether it is necessary to conclude an employment contract with the director.

So the Ministry of Finance and Rostrud are sure that it is impossible, since there are no labor relations. However, the Russian Ministry of Health and Social Development, foundations and courts do not agree with this.
The fact is that the norms of Chapter 43 of the Labor Code “Features of labor regulation of the head of an organization” do not apply to the case when the head of the company is the only participant.
From this clause it follows that the relationship between the company and the director as the sole participant is not labor relations! And the signing of an Employment Agreement by one person on behalf of the employee and the employer is not allowed.
So, if the director and founder are the same person, it is unnecessary to conclude an employment contract. The director does not have an employer and there is simply no one to enter into an agreement with.

But the director needs to formalize the employment relationship.
The founder can assume the position of director on the basis of the Decision, which he himself will sign. Moreover, the decision also stipulates the conditions for performing the work: duties, amount of remuneration, working hours, and so on.

Another document is an order to take up a position, which confirms the right to carry out labor activities. After signing the Decision and on the basis of the order to take office, an entry is made in the work book about taking office from a specific date.

The salary of the head of the company in the case where he is also the founder, in the absence of a written employment contract, can be provided for in the staffing table.
If there is an employment contract, then according to Art. 57 of the Labor Code of the Russian Federation, the condition for remuneration of the employee must be included in this document.

Of course, personal income tax and insurance premiums must be withheld from the income received by the founding director. But the amounts paid to him (provided they are justified and properly documented) can be taken into account as part of the organization’s expenses when paying income tax, which is beneficial: from payments to an employee, the organization withholds personal income tax in the amount of 13%, and the tax rate when paying corporate income tax is at the general rule is 20%.

Also, the founding director may receive dividends and not receive wages. When paying them, the following conditions must be met: dividends can be paid no more than once a quarter; as well as at the expense of the organization’s net profit remaining after paying all taxes; Dividends must be paid based on the owner’s decision.

Advantages of a company manager in the case where he is also the founder: the management system in an LLC does not become single-level; it simply uses a Sole Executive Body, called the “General Director”. All decisions in the organization are made by the same person, but from a legal point of view it is a two-level management system. In this case, the powers of the participant are determined by the charter of the LLC, and other issues are resolved by the general director.

Also, for an organization with one participant-director, the rules of Law 14-FZ on interested-party transactions and major transactions do not apply (Part 1, Clause 5, Article 45 and Part 1, Clause 9, Article 46 of the said law).

A big plus is the absence of a conflict of interest; an organization with a founding leader in administration and from a management point of view resembles an individual entrepreneur.
At the same time, an additional advantage over an individual entrepreneur is limited liability. The founder of an organization, an individual, transfers part of his property to the LLC, and the organization is liable for its debts with this property.

The situation when the director and the founder are the same person can cause some difficulties, which can be easily eliminated if everything is completed correctly, with which our company is ready to help you. Call and get free legal advice on LLC registration.

Current legislation does not prohibit the creation of a legal entity by one participant. The only limitation is the creation of a limited liability company by another company with one participant.
As a rule, according to this scenario, either subsidiaries of large business entities are created, or their direct opposite - micro-enterprises, those that were once called IPEs (individual private enterprises).
If the subsidiaries of large companies do not have a problem with appointing a third-party director in principle, then in small enterprises the director and the participant are often the same person; misunderstandings arise from the moment of preparing documents for state registration.
Let's start with a contribution to the authorized capital of the newly created company, which, according to the law, must be paid in at least half by the time of state registration of the company.
If a contribution to the authorized capital of a limited liability company is made in cash, then everything is clear - a temporary account is opened in the bank, the participant deposits funds into it, the bank, in turn, issues the appropriate paper stating that the contribution has been made as payment for the authorized capital a certain amount and that’s all, this certificate is a confirmation for the registering authority of the fact of contributing funds to the authorized capital.
But the vast majority of founders of small enterprises form the authorized capital at the expense of their property. in this case, the transfer of this property to the authorized capital is possible only by an act of acceptance and transfer.
In our opinion, the act of acceptance and transfer in this case may well be signed by one person - a participant transferring something to the authorized capital of his company.
Some pundits may argue that this is wrong, that the very concept of the act of reception - transfer already implies the presence of at least two parties - the transmitter and the recipient. But, as you understand, a newly created society with a single participant cannot have this in principle, if only because the created society is not yet registered, in a sense, an ephemeral entity that does not have legal personality (this is the clever name for legal capacity for legal entities) and, therefore, cannot accept anything on their own behalf or for themselves.
And after state registration, please put the property transferred to the company on the balance sheet according to the general accounting rules.

Is an employment contract necessary when the director is the only founder?

According to the Labor Code, an employment contract must be concluded with an employee of the organization. And the director, oddly enough, within the meaning of the law is exactly the same employee as everyone else. And he must have an employment contract. But, with the exception of the case when the director is the only founder. On this issue, the letter of the Federal Service for Labor and Employment dated December 28, 2006 N 2262-6-1 specifically stipulates that: “... an employment contract is concluded between an employee and an employer. In this situation, in relation to the general director, his employer is absent. Thus, in this case, an employment contract with the general director as an employee is not concluded.
At the same time, the general director enters into employment contracts with employees, acting as an employer in them. Signing an employment contract by the same person on behalf of the employee and on behalf of the employer is not allowed.”
For particularly meticulous readers, it is recommended to look at the opinion of the Ministry of Social Health Development of the Russian Federation, set out in letter dated August 18, 2009 N 22-2-3199, which stated that: “Chapter 43 of the Labor Code of the Russian Federation establishes the specifics of regulating the labor of the head of the organization and members of the collegial executive body of the organization. According to Art. 273 of the Labor Code of the Russian Federation, the provisions of this chapter apply to heads of organizations regardless of their organizational and legal forms and forms of ownership, with the exception, in particular, of the case when the director of the organization is the only founder (participant), member of the organization, owner of its property. This norm is based on the impossibility of concluding an employment contract with oneself, since the organization simply does not have other participants (members, founders). The only participant in the company in this situation must, by his decision, assume the functions of the sole executive body - director, general director, president, etc. Management activities in this case, in our opinion, are carried out without concluding any contract, including an employment contract.”
And finally, in 2016, a clarification from the Ministry of Finance was issued (letter of the Ministry of Finance of the Russian Federation dated March 15, 2016 No. 03-11-11/14234) in which, with reference to a rather “ancient” decision of the arbitration court, it is stated that if the director is the only founder , then in this case the relationship with the manager is formalized not by signing an employment contract, but by the decision of a single participant.

The question “whether or not to conclude an employment contract between the founder and the manager if this is one individual” is key in this list.

If we turn to the labor legislation that regulates labor relations and relations directly related to it, we will see that the legislator has not directly established in the Labor Code of the Russian Federation (hereinafter referred to as the Labor Code) the need to conclude an employment contract between the founder and the manager, if this is the same person; There is also no direct prohibition on concluding such an agreement.

Article 16 of the Labor Code states that labor relations arise between an employee and an employer on the basis of an employment contract concluded by them in accordance with this Code, including as a result of appointment to a position or confirmation in a position. Labor relations between an employee and an employer also arise on the basis of the employee’s actual admission to work with the knowledge or on behalf of the employer or his representative in the case where the employment contract was not properly drawn up.

Article 273 of the Tax Code of the Russian Federation states that the provisions of Chapter 43 of the Labor Code do not apply to the situation when the head of the organization and its sole founder are the same person. The specified 43rd chapter of the Labor Code considers the peculiarities of regulating the work of the head of an organization.

What does this collectively mean? The fact that an employment relationship between one individual (like any other relationship) does not arise at all, or that an employment relationship arises even without a contract, or another meaning, remains a question. Lawyers, personnel service workers, and judicial authorities interpret this problem differently; just look at any legal reference system.

Official bodies, judging by the documents they issue, do not have a unified approach.

Thus, in some letters it was concluded that the conclusion of an employment contract between the sole founder and the manager, if they are the same person, is not possible on the basis of Art. 273 of the Labor Code of the Russian Federation, (Federal Service for Labor and Employment, Letter dated December 28, 2006 of the Russian Federation No. 2262-6-1; Ministry of Health and Social Development of the Russian Federation, Letter dated August 18, 2009 No. 22-2-3199).

There is an example of a consultation with the Federal Tax Service on a private issue, which also confirms this approach - no agreement is concluded.

Other letters indirectly indicated the possibility of the existence of such an agreement. So, for example, from the letter of the Ministry of Finance of the Russian Federation dated 09/07/2009 No. 03-04-07-02/13 regarding the Unified Social Tax, it follows that an employment contract can be concluded between an individual (manager) and the sole founder (as a representative of the organization).

Order of the Ministry of Health and Social Development No. 428n reflects the following: the head of an organization who is in labor relations with this organization, as well as in the case when he is the only founder (participant), member of the organization, owner of its property, for the purpose of compulsory social insurance in case of temporary disability and in connection with maternity, applies to persons working under an employment contract.

Federal Law No. 379-FZ also indirectly confirms the legality of the existence of an employment contract between the sole founder and the manager in one person. This law amended the Federal Laws “On compulsory social insurance in case of temporary disability and in connection with maternity” No. 255-FZ; “On compulsory pension insurance in the Russian Federation” No. 167-FZ, “On compulsory health insurance in the Russian Federation” No. 326-FZ. The meaning of the amendments enshrined in paragraphs. "b" clause 2 of Art. 3, Art. 5 and art. 7, Law No. 379-FZ, is that if the manager (who is also the only founder) works under an employment contract, he is also an insured person.

The courts believe that a manager appointed to a position by decision of the founder is his employee, even if an employment contract has not been signed. The courts also recognize the legality of employment contracts signed by one person.

Thus, due to the uncertainty of the legislation and the presence of different interpretations, if a situation arises where the manager and the sole founder are one person, each founder independently decides whether an employment contract will be concluded or not. It is clear that such an employment contract is signed on behalf of the employer and on behalf of the employee by the same individual. It can be formulated, for example, as follows: LLC (name) represented by the director (full name), hereinafter referred to as the Company, on the one hand, and the citizen (full name), hereinafter referred to as the General Director, concluded this employment contract...

The form of the employment contract with the manager is developed independently, taking into account the requirements of the Labor Code of the Russian Federation. The duration of such an employment contract is determined by the charter (indefinite, fixed-term).

We also note that in any case, the founder secures the status of a manager by his decision. The wording can be free, for example, “By this decision, I assume the duties of the sole executive body - the General Director without drawing up an employment contract (with drawing up an employment contract).”

When concluding an employment contract, the employee presents a work book, this is stated in Art. 65 of the Labor Code of the Russian Federation, and the employer maintains this work book (makes appropriate entries), in accordance with the procedure established in Art. 66 Labor Code of the Russian Federation.

The answer to the question “whether to accrue wages or not, and what personal income tax rate to apply in this case” depends on what decision was made on the previous question.

If the employment contract has been signed, formally there is a basis for calculating wages based on the terms of the employment contract and the working time sheet.

The personal income tax rate is applied on the basis of clause 1 of Art. 224 of the Tax Code of the Russian Federation: 13% - for tax residents, and 30% - for non-residents, clause 4 of Art. 224 Tax Code of the Russian Federation.

If a decision was made not to conclude an employment contract, then on the basis of Art. 43 of the Tax Code of the Russian Federation, payments that an individual founder-manager will receive when distributing profits remaining after taxation should be considered as dividends. It should be noted that as long as there is uncertainty in the legislation, which we discussed above, there remains the risk of disputes with regulatory authorities on the issue of additional personal income tax assessment based on a rate of 13%. The existence of judicial practice indicates the possibility of such disputes. In this situation, in our opinion, there is a high probability of defending one’s position both in court and in pre-trial proceedings, relying on arbitration practice that is positive for the taxpayer.

If the employment contract is not signed and there is a decision of the founder to calculate wages for performing the duties of a manager without concluding an employment contract (this practice also exists), personal income tax should be calculated at the same rate as in the presence of an employment contract. The author does not recommend using this option, as it is associated with income tax risks. After all, recognition of expenses for wages and insurance premiums is possible if there is an employment contract; this will be discussed further.

Is it necessary to accrue dividends to the only participant if he works under an employment contract?

Yes, it is necessary if there is a corresponding decision of the founder. According to Articles 31, 32 of the Law “On Joint Stock Companies” No. 208-FZ, shareholders have the right to dividends. In accordance with paragraph 1 of Art. 8 of the Law “On Limited Liability Companies” No. 14-FZ, company participants have the right to participate in the distribution of profits. There are no restrictions in the form of an employment contract.

It should be remembered that it is important to document the payment of dividends; in the absence of a founder’s decision, dividends can be reclassified as wages, with all the corresponding tax consequences (the author draws attention to this, since in practice quite often the founder-manager in one person approaches the issue carelessly documenting your decisions). Interim and annual dividends are allowed to be paid. The decision to pay interim dividends may be based on performance results for each quarter. The decision to pay annual dividends is made based on the results of work for the year.

Taxation of dividends is quite simple.

In accordance with paragraph 4 of Art. 224 of the Tax Code of the Russian Federation, dividends from individuals who are tax residents of the Russian Federation are subject to personal income tax at a tax rate of 9%. Dividends from individuals who are not tax residents of the Russian Federation are taxed at a rate of 15%.

When paying dividends, personal income tax is withheld by the tax agent (employer) and transferred to the budget. In paragraph 4 of Art. 226 of the Tax Code of the Russian Federation stipulates that tax agents are obliged to withhold the accrued amount of tax directly from the taxpayer’s income upon their actual payment.

Dividends are not included in expenses taken into account for profit tax purposes; this is expressly stated in clause 1 of Art. 270 Tax Code of the Russian Federation.

Insurance premiums are not charged, since dividends are not related to wages.

Tax deductions (standard, property, social, professional) are not applied, which is enshrined in clause 4 of Art. 210 Tax Code of the Russian Federation.

For example

The founder-manager, a tax resident of the Russian Federation, decided to accrue annual dividends for 2011 in the amount of 1,500 thousand rubles.

The following entry is made in the accounting records as of the date the decision is made:

“dividends of 1,500 thousand rubles were accrued.”

when paying dividends:

“dividends of 1,365 thousand rubles were transferred. (1500-1500*9%),

personal income tax withheld 135 thousand rubles. (1500*9%),

personal income tax was transferred to the budget in the amount of 135 thousand rubles.”

If wages are accrued, is it legal to recognize them for tax accounting purposes, and what insurance premiums should be charged?

Based on Article 255, the taxpayer’s expenses for wages include any accruals to employees provided for by the laws of the Russian Federation, labor agreements (contracts) and (or) collective agreements.

In paragraph 21 of Art. 270 of the Tax Code of the Russian Federation stipulates that when determining the tax base, expenses in the form of expenses for any types of remuneration provided to management or employees in addition to remuneration paid on the basis of employment agreements (contracts) are not taken into account.

With regard to compulsory pension insurance, compulsory social insurance, compulsory medical insurance, it should be said that on the basis of Law No. 379-FZ, which was mentioned when discussing the first issue, which came into force on January 1, 2012, insured persons include, among others, managers organizations that are the only participants (founders), if they work under an employment contract. Based on Art. 264 amounts of insurance contributions to the Pension Fund of the Russian Federation for compulsory pension insurance, to the Social Insurance Fund of the Russian Federation for compulsory social insurance in case of temporary disability and in connection with maternity, to the Federal Compulsory Medical Insurance Fund and territorial compulsory medical insurance funds for compulsory medical insurance , accrued in the manner established by the legislation of the Russian Federation, relate to other expenses associated with production and sales.

Thus, if there is an employment contract, both the amount of wages and the amount of compulsory insurance contributions are recognized as expenses. In the absence of an employment contract, expenses for wages and insurance contributions are not taken into account for tax purposes.

Option I

The sole founder-manager signed an employment contract. He is a tax resident of the Russian Federation and has one child. The salary for April 2012, based on the terms of the contract and the working time sheet, amounted to 100 thousand rubles. The cumulative total from the beginning of the year is 400 thousand rubles. and did not exceed 512 thousand rubles. (the base for calculating insurance premiums is for each individual an amount not exceeding 512,000 rubles on an accrual basis from January 1, 2012). Contributions to the Pension Fund - 22%; in the Federal Social Insurance Fund of the Russian Federation - 2.9%; to the Federal Compulsory Medical Insurance Fund - 5.1%, a total of 30%. When calculating personal income tax, a deduction for a child is not applied, since income for January-April exceeded 280 thousand rubles.

“Salaries of 100 thousand rubles have been accrued,

Pension Fund contributions of 22 thousand rubles were accrued. (100 *22%),

FSS contributions of 2.9 thousand rubles were accrued. (100*2.9%),

Compulsory medical insurance contributions of 5.1 thousand rubles were accrued. (100*5.1%),

personal income tax accrued 13 thousand rubles. (100*13%)".

Option II

Based on the same conditions, let us assume that the founder has not signed an employment contract, but, based on his decision, performs the duties of the general director. Wages and salary deductions are calculated and paid based on the decision.

In this case, tax accounting will not recognize expenses for both wages and contributions to insurance funds.

In accounting, it is necessary to accrue a permanent tax liability of 26 thousand rubles. (130*20%) .

Let us note that regulatory authorities have the right to question the legality of the employment contract between the sole founder-manager in one person. Until the legislator directly establishes the procedure for the sole founder to perform managerial duties, there will be risks of disputes with tax authorities and the likelihood of reclassification of payments to this individual even in the presence of an employment contract.

Liliya Mikhailovna Kuleshova,

Lead Auditor “What to do Audit”

The material presented in this article is provided for informational purposes only and may not be applicable to your particular situation and should not be taken as a guarantee of future results. For solutions to specific questions, we recommend contacting our company’s specialists.
We draw attention to the need to take into account changes in legislation that occurred after the date of preparation of the material.