Russia has changed tremendously in the past few decades. The country has improved on its human rights records, reduced the level of corruption, and is now pursuing a strong agenda to become more integrated into the global economic space. Starting a business in Russia offer foreigners a great opportunity to explore new grounds, expand their brand, and access a market with high purchasing power. Here are all entrepreneurs need to know about starting a business in Russia.
In-Demand Small Business Ideas
The most important aspect of starting a business abroad is to consider what type of business you want to do. You want to make sure that your choice of trade, product or service has a market that demands it. Some of the most lucrative businesses you can start in Russia includes oil and gas, fish and seafood business, grain framing, metal works, clothes and accessories, educational consultancy, and retail trading. These businesses are good for startups because Russia is the major supplier of these products to the wealthiest European countries.
Foreigners starting a business in Russia must get their entity registered for proper documentation and recognition according to the law. There are two options; you can register your company as a Limited Liability Company and Private Joint Stock Company, or as a subdivision of a foreign company (representative office or branch). In this piece, we will be discussing how to get your business registered as an LLC or PJSC so that you can do proper business without any restrictions.
Legal Status – LLC and PJSC are Russian legal entities with the power to conduct any form of commercial activities that have been legalized by the state. Shareholders/participants cannot exceed 50, and any number of Russian or foreigners may be founders and shareholders.
Registrations And Accreditation – Registration is done by tax authorities and companies also have to register with state committee for statistics and at least three non-budgetary funds, (Social Security Fund, Pension Fund, and Obligatory Medical Security Fund). Registration duties are around 2,000 rubles, and there are also other charges for company seal of which is no more than ~ 80 USD.
Authorized Capital – The minimum authorized capital for starting an LLC or PJSC business in Russia is about 10,000 rubles (~370 USD).
Management Structure – There are three tiers including general meeting, the board of directors, and the executive body, of which the general meeting is the highest and must meet at least once every year. Board of directors supervises business activities, and the administrative authority may be represented by an individual or a group of people.
Shares And Units – Authorized capital is divided into shares and units based on the participants’ contribution in the capital. A unit is not a security and can be sold to anyone.
Accounting And Tax Compliance – Every LLC and PJSC company is Russia must file an accounting and tax reports, every quarter, to the tax authorities, while VAT must be filed every month.
Foreign Staff – Companies have to obtain an employment permit to hire a foreign staff, after which the employee must also obtain a work visa and personal work permit.
Opening The Company’s Bank Account
Banks may require documents related to the founders of a new corporation and investigate their financial status and history before allowing them to open an account. Requirements as regards to procedures vary depending on the bank you apply with, and a confirmation letter is issued once your account application has been accepted.
The reform of Russia’s legislation on the business environment has made it possible for foreigners to start and run a successful corporation in the country. You can start an LLC, PJSC, sole ownership and other types of entities, without problems, as long as you follow the rules and the dictates of the law.