Soviet economic history is an interesting and complicated subject, especially since most information was always classified and any unbiased study was likely to land the researcher in prison (or worse, depending on the time period -- see footnote 1).
However, there are several major periods:
- Civil War 1917-1921: the population is treated as slaves of the state and supplied a subsistence ration, as the communist government fights against the "white movement". Ended as the white movements petered our and were replaced by popular uprisings stimulated by hunger.
- New Economic Policy 1921-1929: small private enterprise coexists with the state monopoly on industry and banking as the communists engage in the internecine struggle for power. Ended as victorious Stalin decided to fast-track industrialization at the expense of the agricultural sector in preparation for the "world revolution" (as the propaganda called his plans for the European conquest / restoration of the Russian imperial borders).
- (Pre-)War Economy 1929-1986: state monopoly on all discernible economic activity. Ended with the economic bankruptcy as the country was unable to afford a credible counter to SDI.
- Gorbachev Reforms 1986-1991: more and more radical economic reforms intended to stimulate private economic activity result in uncontrolled inflation.
My answers are related to the 3rd period. This is a long time, encompassing pre-WW2, WW2, post-WW2 recovery, arms/space race &c.
The main defining factor of the economic life during this period was that the country was either fighting a war, of actively preparing for an imminent war right around the corner.
The immanent inefficiencies of the Soviet system were observed by the leadership and several attempts at reform were made.
They changed little from the economic POV.
Workers were paid a piece work or hourly wage which also depended on the worker's skill category and region (i.e., if you work in a remote region, you earn more; this is determined by Moscow, not the local administration, of course).
Engineers were paid a fixed salary which also depended on rank and region.
There were quite steep increases for an advanced degree: usually an engineer would make about half of what a worker would make (yes, an entry-level salary for an engineer was, say ~120 r/mon, for a worker 200-300 r/mon), earning a Candidate degree (= PhD) would up the salary by 50-100%, and a Doctorate (= Professor) would be making another 100% more.
There were various national prizes which were quite sizable.
Limitations on Possessions
There were no official limits.
However, if your neighbor thought that you have more than you can legitimately earn with your occupation, they were very likely to report you to ОБХСС and you would have to explain how you came up by the car you own but obviously cannot afford (note the presumption of guilt) because you are not a General or a Professor (or famous singer or artist or writer - these were really well off).
Thus people would often register their cars (largely unavailable to the general population - see footnote 2) and country homes in the names of their relatives.
The extreme case was jailing people who did not engage in a state-sanctioned occupation.
All land was owned by the state. To own a country home, one had to join a special coop (and it was not easy either).
Owning and especially trading foreign currency was illegal (the few lucky ones who worked abroad had to exchange foreign currency for special "checks" which could be used to buy rare stuff at beryozka).
How would one create a new business or company
One would not, unless one is longing for a prison camp spot.
"Business activity" was a felony.
The most you could do after
was over in 1929 was to engage in individual work like fixing shoes or
sewing dresses for private customers, or private tutoring (there were
minor variations with time, but "small stuff" was rarely prosecuted --
although Iosif Begun was
jailed for "social parasitism" while he was earning his living by Hebrew
tutoring). Any attempt to hire an employee (as opposed to house help
or babysitter) was a major felony. This does not mean that no one did
Павленко), but those who were caught went to jail. There were even show trials for economic crimes.
There was a "cooperation" loophole (technically - but not in fact - "kolhoz" was a "cooperative"), but it was never used until Gorbachev (because it was a loophole, intended to catch people trying to hire workers).
According to some estimates, the Soviet "shadow economy" employed ~10% of national workforce and supplied 30% of workers' income.
This is a testament to both monumental inefficiency of the "public sector" and its focus on military production.
And, yes, this also means that ~10% of workforce was liable for prosecution for economic crimes (cf. Three Felonies a Day committed by each American).
Here is a joke from 1970ies - early 80ies:
A college student comes out from an oral exam on Political Economy.
He is shining with bliss.
Classmates ask him: "What is your grade?"
He replies: "Fail!"
"Then what are you so happy about?!"
"My buddy was arrested right there!!"
A person has been waiting in a line to buy a car. Finally he receives a postcard telling him that the car for him has been placed on the production plans and he will receive it in 4 years, 3 months and 5 days, and he should plan accordingly - to come to the store to collect the car on that day.
The guy frantically calls the store and asks whether he should come in the morning or afternoon.
The clerk at the store asks why does it matter.
The lucky future car owner answers: they have scheduled a visit from the plumber on that exact day in the morning.