Buying or starting a business - which is better in Russia?

To run a business in Russia, you don't necessarily have to create a blank company - you can buy a ready-made business. But which option is smarter?

1) FLEXIBILITY
The main benefit of starting your own venture from scratch is obvious: you are free to do with it whatever you want. If you came up with an interesting and unique business idea you are passionate about, only this option suits you. If you have your own vision of how a business should operate, then destroying the established system of a ready-made organization can lead to its collapse - it is better to start from zero. Also, it may be difficult for a Russian legal entity to move to another region - the Federal Tax Service may deny it.

2) TRANSPARENCY
You know for sure the firm you founded has no old debts and obligations that may suddenly pop up. For example, a company promised to build a house for a client a year ago, received money for it, but never did it. When you buy this enterprise, the client goes to court against you for unfulfilled obligations. There is also risk of bankruptcy.

3) RISKS
A newly established business often faces uncertainty and may not survive in the market due to the owner's lack of experience or resources, while if the old organization has stood the test of time, then most likely it will continue to generate income in the foreseeable future.

4) WAY TO SUCCESS
The need for investment in product development, marketing and other start-up costs, as well as long-term work in the red is the main disadvantage of a new company. The budding entrepreneur will have to wait patiently until it starts turning a profit.

5) ESTABLISHED STRUCTURE
Registering, preparing all necessary paperwork, obtaining licenses, finding a reliable landlord, accountant and employees may be very stressful. In an existing company, all licenses and permits are ready, all equipment is bought, and workers already know and remember what to do. Established vendor relationships also help avoid problems with fraudsters.

6) BRAND AND CUSTOMER BASE
Without brand recognition, reputation and loyal clientele, it is difficult for a new business to make money.

7) SCAMS
Not everyone who claims to be selling a ready-made business is one - clients often contact us with fake documents from potential sellers. But even if the company is real, it may turn out to be blank, with zero income, zero employees and zero customers, the owner asking an unreasonably high price. Or the seller may turn out to have nothing to do with the company he allegedly sold - there are plenty of different scams.

WHAT IS CHEAPER?
It depends. The state fee for registering an LLC is 4,000 rubles, it is not much, but the start-up capital might exceed the value of a pre-existing operational entity.

WHAT IS FASTER?
Changing the owner of an existing business and registering a new one takes the same amount of time. Although, of course, it is necessary to take into account that a new company needs time to get going, sometime a lot.

WHAT IS LESS RISKY?
From the point of view of survival in the market, the business that has already proven itself to be good is less risky. In terms of old pitfalls, the best idea would be to start your own venture. But even if you're buying a company, you can minimize the risks by due diligence, which include verification of the compliance of the company with the legal requirements for the relevant business structure, verification of constituent and other internal documents, licenses, collection and analysis of information on court proceedings, search for enforcement proceedings and many other things. If you need to conduct due diligence, feel free to contact us, we have long experience in working with legal entities and, in particular, conducting due diligence.

Need legal help? Feel free to contact us:
Tel: +7 909 961-19-09
Email: legalsolutions@inbox.ru
Visit us: Moscow, Zubovskiy bulvar, building 4/1, office 308

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