Responsibility of an individual entrepreneur for obligations arising from entrepreneurial activity

• Main Authors: Vinichenko E.N., Bidnenko N.P.
• Format: Article
• Language: English
• Published: State Higher Educational Institution “Ukrainian State University of Chemical Technology” 2020-12-01
• Series: Економічний вісник Державного вищого навчального закладу Український державний хіміко-технологічний університет
• Subjects: an individual entrepreneur; responsibility of an individual entrepreneur (ie) for obligations; entrepreneurial activity; small business
• Online Access: http://ek-visnik.dp.ua/wp-content/uploads/pdf/2020-2/Vinichenko.pdf

The problem of small business development is currently quite relevant. Low initial investment and fast adaptive abilities allow a small business to survive or quickly transform in a constantly changing external environment. In turn, the organizational aspect, regulated by regulatory and legislative acts, is of great importance in the development of small business. The important factors influencing the decision whether to register a business as an individual are the simplicity of doing business and the degree of acceptable liability. An urgent task is to delineate the responsibility of an individual entrepreneur (IE) and an individual who has terminated entrepreneurial activity. The purpose of this article is to determine the limit of liability of an individual who has registered the termination of entrepreneurial activity for obligations received in the course of conducting an individual entrepreneur business. It has been established that individuals who have registered the termination of entrepreneurial activity are fully responsible for the obligations earned, but not covered as a result of their economic activities. The responsibility of legal entities and individuals for obligations received in the implementation of these economic entities has been determined. The owners of legal entities, unlike (sole proprietorship), have the right to choose the form of ownership and, as a result, the measures of responsibility of the business entity and its founders. The article presents a comparative characteristic of the regulation of liability for obligations received as a result of economic activities, legal entities and individual entrepreneurs. The existing normative-legislative acts of Ukraine more strictly regulate the responsibility of the sole proprietor, depriving him of the right to choose, in contrast to the responsibility of legal entities. This approach leads to negative consequences in the organization of economic activities and, as a result, in the coverage of the individual entrepreneur's obligations for the IE, and for its counterparties, and for the state. A mechanism is proposed that allows differentiating the responsibility of an individual as an individual entrepreneur and a private individual. This mechanism will mitigate the responsibility of the sole proprietor and the individual, the “owner of the sole proprietor” and make this responsibility the same responsibility of legal entities and their owners.