Registering an LLC (Limited Liability Company)

The most widespread form of conducting business in Russia is as a limited liability company. This business type allows people to avoid complications in issuing and registering shares (which is required in the case a joint-stock company is registered) as well as, as a general rule, limiting the liability of its founders (shareholders) to the size of the reserve capital. Unlike an LLC, a sole proprietor is responsible for the circumstances along with all of his or her property.

If one chooses to go with a limited liability company, the next stage will be to prepare a documents package to submit to the registration authority. At this stage, the filer will have to answer the following questions:

1. What will be the title of the LLC? Will the title be in a foreign language?
2. How many founders will there be?
3. What address will the LLC be registered at?
4. Will the organization act on the basis of a standardized articles of association or will a customized one need to be developed?
5. Who will be appointed the president?
6. What amount must be entered into the reserve capital and how should shares be allocated if there are several founders?
7. What OKVED code should be indicated as the main one and which additional OKVED codes should be attributed to it?
8. What tax system is best to choose?

All of these questions are subject to thorough analysis, since discrepancies in the documents with Russian law will result in a refusal of government registration. For instance, the LLC title must correspond to article 1473 part 4 of the Civil Code of the Russian Federation. Furthermore, no titles of foreign governments or government bodies can be included in the title or profanity or titles already registered as trademarks.

One should be sure to pay special attention in choosing the legal address (or rather, “location address”), since the tax authorities often conduct checks at that location in particular. The best option is to use facilities that are owned by the founders or a rental office. In the latter case, the facility owner will need to sign an address guarantee letter and also confirm that the organization operates at that address in the case that a tax inspection takes place. It's important to obtain incoming correspondence in a timely fashion at the address where your organization is located. Otherwise, your company risks ending up on the “blacklist” and being attributed an invalidity note in the tax register.

An artitcles of association envisages the fundamental bases of the LLC as well as options for the shareholders and management bodies to interact with each other in addition to their rights and obligations within the company. There are 36 variations of standard agreements developed by the tax inspectorate, each of which establishing separate terms and conditions for the shareholders and the president of an LLC. In the event that none of the standard articles of association works for you (or you don't want to bother yourself with the nuances of each one), you could do worse than to consult a lawyer for an explanation and, possibly, have them develop a custom articles of association for you.

After the documents package for the LLC is ready, now it's time to provide them to the tax organ. One can take the documents to the registration organ in person or use the services of a notary. In the case of a visit in person, you’ll have to pay a government fee of 4,000 RUB. In the event you submit the documents via a notary (this can be done online), the founders will not be required to pay the fee, but they’ll have to pay the notary's rate.

Registration of a limited liability company takes three business days. Upon registering the LLC, the filer will receive the following documents:

• an LLC registration statement;
• a tax registration certificate;
• an articles of association with a stamp from the tax authority.

Situations in which filers often come to us include the following:

• in creating an LLC involving foreigners;
• in the event the LLC’s documents need to be prepared abroad;
• in the event that there are several founders with interests in different areas;
• when the creation of an LLC entails the necessity to perform an entire range of actions (trademark or patent registration, processing a work permit, shares acquisition, etc.);
• in cases where creating an LLC is prefaced by the development and signing of a partner agreement between founders (investors);
• as a whole, when an entrepreneur has a good habit of seeking counsel from lawyers to prevent any potential issues from happening in advance rather than doing so after they've already found themselves in trouble.