What does the self-employed status provide? Pros and cons of registering as self-employed

<h2>What does self-employed status offer?In Russia, the number of people choosing self-employed status for conducting their professional activities has been growing in recent years. This is due to numerous factors that make this form of taxation attractive. But what does self-employed status really offer, and is it worth taking this step? Let's consider all the pros and cons of this decision.<h3>Advantages of registering as self-employed</h3>1. Simplified taxation systemSelf-employed individuals are entitled to use a special tax regime—tax on professional income, with a tax rate significantly lower than other forms of taxation. For income received from individuals, the rate is 4%, and for income from legal entities and individual entrepreneurs, it is 6%.2. No mandatory pension fund contributionsUnlike sole proprietors and employers, self-employed individuals are not required to pay fixed contributions to the Pension Fund of Russia. This means their only obligation is to pay the tax on professional income themselves, reducing the financial burden.3. Simple registration and accounting processRegistration as a self-employed individual is done through the mobile application “My Tax” or the State Services portal. The process takes only a few minutes. Moreover, there is no need to maintain complex accounting records—one only needs to record income receipts in the application.4. Legalization of activityBy becoming self-employed, an individual obtains official confirmation of their activities, allowing them to cooperate with large companies and receive payments to a bank account without any issues. This enhances business reputation and increases opportunities for professional growth.<h3>Disadvantages of registering as self-employed</h3>1. Income limitationOne of the main disadvantages of self-employed status is the income limitation. A self-employed person cannot earn more than 2.4 million rubles per year. If this threshold is exceeded, they will need to switch to another taxation system.2. Limited types of activitiesNot all types of activities can be carried out under self-employed status. The law defines a list of exceptions, which include, for example, trading in excisable goods and activities requiring licensing (medical, educational, etc.).3. Lack of social guaranteesSelf-employed individuals are not entitled to sick leave, vacations, and other social guarantees provided to employed workers. All social risks and health insurance responsibilities fall on their shoulders.4. Limited tax deduction opportunitiesUnlike the taxation of sole proprietors or corporate structures, the self-employed cannot apply VAT deductions or reduce their taxable base by accounting for various expenses. This means their tax base remains fixed, without the possibility of reduction through deductible costs.<h3>Conclusion</h3>Registering as a self-employed individual has its advantages and disadvantages. The simplified tax system, lack of mandatory pension contributions, and easy registration process make this status attractive to many people. At the same time, some limitations and the lack of social guarantees can be significant downsides for those accustomed to stability and security. Therefore, before deciding to register as self-employed, it is important to carefully analyze all the pros and cons and determine whether this step will be the best choice for your specific case.</h2>