Russia’s economy has been growing steadily over the past couple of years. When the Soviet Union collapsed, changes were made in modern-day Russia. These changes have made it easier for foreign investors to invest in Russia. Let's take a look at how and why one should start a general partnership in Russia.
General partnership defined
In Russia, a general partnership is an agreement between two or more people to engage in business. The deal involves contributing equally to the business. Each partner has equal decision-making powers. Also, the partners may share any liabilities that arise from the business. The profits obtained are also distributed equally among the partners.
Taxes are not calculated through the general partnership; instead, each partner is responsible for handling their tax payments. Should legal issues arise, members of the partnership may be accountable for their taxation issues.
General partnerships allow all members to participate in structuring the business in any way they see fit. Decisions are made faster, and control liabilities significantly improved. A written agreement is generally encouraged for future reference.
Regulations for starting a General Partnership
The Russian civil code is a must-know for all who wish to start a general partnership in Russia. Also, a foundation agreement needs to be signed by partners before commencing business. The foundation business is the document that acknowledges that two or more people have become partners in a business.
Legally, partners are jointly liable for any debts that the business may incur. This means every partner is responsible for the repayment of any outstanding loans or payments.
Documentation required to start a general partnership in Russia
Below is the list of documents needed to register a company in Russia.
▪︎Investors identification documents (passports);
▪︎A Russian visa;
▪︎General partnership registration form;
▪︎Article of association;
▪︎Statement from the state trade register;
▪︎Notarized power of attorney;
▪︎Minutes from the general meeting held by stakeholders.
All documents will be translated to Russian where necessary before submission. The documents are to be certified by a Russian authority.
The steps involved in registering a partnership
▪︎ Establish the company name and have it verified with the Russian company registration office.
▪︎Prepare documents of association and signature.
▪︎Open a bank account
▪︎Register with the federal tax service and acquire an identification number
▪︎Obtain a license and all relevant permits
▪︎Obtain a company seal
How much will it cost?
》Processing documents and certificates will cost you EUR 113
》Obtaining a virtual office costs an average of EUR 68 per month
》When opening a bank account for a general partnership in Russia, a minimum of EUR 140 is deposited
》The company formation fee will be approximately EUR 1400
》Depending on the accounting firm you choose to hire, the accounting service will cost about EUR 100 per month.
Advantages of starting a general partnership in Russia
▪︎Starting a general partnership in Russia is much less cost-intensive. This stems from the fact that most decision-making is in-house.
▪︎Much less paperwork is required to start this kind of business as compared to corporations. Again this is mainly because most of the planning is done among the members, and only registration administration may be the hassle.
▪︎Since the entity may comprise a chosen number of people, control over the operations is easier. Having several unfamiliar board members may be problematic.
So likewise, having two or three partners makes it much easier to agree on decisions and the way forward.
Profitable business ventures in Russia
If you haven’t yet decided on what kind of business you would like to start in Russia, here’s a list of some of the profitable businesses you might try. These were explicitly compiled regarding conditions in Russia.
Fishing: Since the Arctic, Pacific, and Atlantic oceans are easily accessible from Russia, investing in fishing may be profitable. These water bodies have abundant fish, and the likelihood of success of the business is high. However, you need to have certain minimum startup funds to get started.
Agriculture: Russia has vast, fertile lands. Leasing land is common in Russia, and banks often provide loans to individuals who want to pursue the agric business. Farming equipment is relatively cheap as Russia readily manufactures it.
Machine parts and tool manufacture: With Russia being extremely industrialized, the demand for machine parts and tools is high. Managing to start up a competent fabrication company proves to be profitable in Russia.
Fashion: Investing in winter clothing in Russia may be a good idea. Almost all year round, most of Russia is covered in snow. You can penetrate the market with affordable winter wear and make profits.
Furniture: Russia boasts rich, thick forests. Compared to other nations, their forests are generally untapped. You can find a lot of timber at lower costs.
Tea and coffee retail: since it's so cold in Russia, you will find many tea and coffee lovers. Depending on the location, affordability, and quality of the product (tea/ coffee) can turn out to be very profitable.
With over 6.5 million square miles of land and a population of 144 million, Russia may be a fruitful destination to start a partnership business. To get started, you only need to have all your legal documents in place, and you must know the business registration process.
Taking into account all the information mentioned above can help you to identify the business that's suitable for you. You can research more to have an in-depth understanding of your prospective business.