Private entrepreneur (Sole trader) in Ukraine – registration and more
Here is full instructions about how the registration of a private entrepreneur (sole trader) goes in Ukraine. The author of the publication supported over 100 private entrepreneurs, analyzed legislation, practicing and investigate other articles from the network. If you want the registration of private entrepreneur (sole trader) in Ukraine to go smoothly – take advantage of this instruction or order service of opening a private entrepreneur in Ukraine.
Also, if you want you want to establish legal entity please, visit this article.
Another popular form of doing business in Ukraine is Limited liability company (LLC). You can get acquainted with this form of business by contacting Bogdan.
The article is constantly updated and is supplemented. If you have some questions, remarks, or you noticed inaccuracies – write in comments below.
Registration of a private entrepreneur (sole trader) in Ukraine – preparation
5th chapter of the Civil Code of Ukraine sets up general principles of registration, activity and termination of a Private entrepreneur (Sole trader) in Ukraine. Make a registration of Sole trader can only a person, who has full civil capacity and is 16 years old. Both, foreigners and local citizen can establish sole trader here in Ukraine. The person from 16 to 18 years old , for the registration procedure, had to has written notarized permit by parents or caretakers.
Law of Ukraine “About registration a business” provide exhaustive list of necessary documents for registration:
- Passport and the Ukrainian tax ID;
- Filled in application form № 10;
- Application for the simplified taxation system, only in case of choosing one;
- Power of attorney and original representative’s passport, only in case of registration the private entrepreneur by representative.
That listed documents are submitted to the state registration service or notary. On the basis on these documents entitled people enter information in Uniform State Register.
Take in mind, that foreigners can not register as sole entrepreneur without permanent or temporary residence permits or refugee certificate.
Ukrainian tax ID is easy to get. You need only filled in application form or order service in attorney.
There is no administrative fee for the registration a private entrepreneur in Ukraine.
How to choose Classifier of economic activities?
Classifier of economic activities shows what your private entrepreneur (sole trader) can do. You had to know, that without choosing the Classifier of economic activities – it will not be possible to register sole trader. This is not difficult to do at all.
The list of types of activities divided into the 21th industry. Construction, education, agriculture etc. At first, you had to choose the industry which you would like to work in. For example, coding, or IT service. This type of activity is connected with information technologies – you need go to the appropriate section which name is “Information and telecommunication”. Then there you can notice a unit of computer programming. It includes 4 Classifier of economic activities. It will be useful to choose all 4 types. You had to choose correct Classifier of economic activities because it’s very important for your counter-party and for tax service. For example, when you register on simplified taxation system – reduced tax rate applies only to those Classifier of economic activities, which are selected and properly registered in tax service. If you do other activities – tax service will additionally calculate the tax liabilities.
If we talk about your counter-party risks, then in case of cooperation with the entrepreneur, who is in simplified taxation system and carries out a kind of activity not registered in tax service – he runs the risk of being subjected to a tax audit with entrepreneur offender.
If you choose Classifier of economic activities not in proper way – tax service can cancel registration on simplified taxation system and will additionally calculate the taxes!
Records in statistics, pension fund and tax service
Registration of a private entrepreneur is not so difficult procedure how it was earlier. You should not visit the pension fund and statistics separately, to be registered. Applying form to the state registrar, information will be transferred to statistics, tax service and pension fund automatically.
Additional attention requires procedure of registration in tax service. Applying for the form № 10 to registrar seems, that you chose general tax system. However, both with form № 10 you can submit a application for using simplified taxation system and choose right tax group (from 1 to 3).
Moreover, a private entrepreneur is obliged to keep a book of income accounting. The private entrepreneur had to have such book, when he is as on simplified taxation system as on general tax system. The book of income accounting is required to register in tax service.
Yes, you can.
Foreigners can apply for the simplified taxation system in Ukraine.
The private entrepreneur also can be payer of value added tax (VAT) from the moment of registration. In this case you need to further register yourself as payer of value added tax. Pay your attention, that from the moment of registration it’s impossible to become either payer of value added tax or single tax payer – you had to choose one of them. From the next tax quarter you, already, can add other necessary element.
The book of income accounting for private entrepreneur (sole trader) in Ukraine
The payer is obliged to buy a book of income accounting and submit it to the tax service. The inspector will conduct the registration procedure of such book and make appropriate notation on the last page.
The books of income accounting are:
- For simplified tax payers on 1-3 groups;
- For payers on general tax system;
- For payers on general tax system with value added tax (VAT);
- For tax payers on 3 group with value added tax (VAT).
Before applying your book of income accounting to tax service you should fulfill it:
- Number all pages with both sides (in standard book there’re 38);
- To dress up all book’s pages;
- Sign and write the identification code, main Classifier of economic activities, place of living and carrying out activities.
In the book of income accounting and also in application form to simplified taxation system in column “Place of carrying out business activities” recommends to write “Ukraine”, not only your city or local address.
Excerpt of a simplified tax payer
Often the private entrepreneur are asked to show excerpt of a simplified tax payer. Registration of the private entrepreneur suggests opportunity to get such excerpt in tax service but it’s not mandatory document.
In order to get excerpt, you had to submit a request to tax service about receiving an excerpt of simplified tax payer.
The request about receiving an excerpt of simplified tax payer needs to submit to the tax service by place of residence. You can submit it by going yourself to tax service or send by post-mail. This document will confirm that you are a simplified tax payer, you are register in tax service and will contain a list of your Classifier of economic activities.
Is it possible to register a private entrepreneur (Sole trader) in Ukraine online?
It’s already 2019 year, however it’s still not possible to register a private entrepreneur (sole trader) in Ukraine online. Of course, there are some state portals, that offer you to make it online, for example, Online house of justice. Nevertheless, for registration you had to have electronic digital signature. If you have such signature – you can submit information to Unified State Register. However, visiting the tax service for registration a book of income accounting or to get excerpt of single tax payer is necessary. Moreover, you should visit the bank to open an account.
Registration of a private entrepreneur by post-mail
Often happened such situation, when person is located in one region of Ukraine, but address of registration is in another. For registration a private entrepreneur in Ukraine you can submit only within the area of registration – so you had to go to place of your registration. However, the application form № 10 you can send to registration service by post-mail.
Unfortunately, it’s not so easy. In case of sending an application by post-mail your signature had to be attested by notary and it increases costs on registration that is not desirable.
It can be interesting for you!
I have separate article about doing IT business in Ukraine as PE, please read it.
In order to submit the application about using simplified tax system to registrar – signature on such statement also had to be notary attested.
Typical problems at registration a private entrepreneur in Ukraine
The most actual problem is when tax system refuses you in registration on simplified taxation system. There are many reasons for it, however, in order not to lost opportunity to be a simplified tax payer from the moment of the submission of the statement for registration, you need to monitor the register of single tax payer.
The refuse of registration on simplified taxation system in connection with the existence of a tax debt. For example, you as an individual can have a debt for the real estate tax or the automobile tax, so that is basis for refusing at registration on simplified taxation system.
Registration on simplified taxation system can be only during 10 days from the moment of registration. Further changes can be made only ones in a quarter.
Moreover, widespread problem is that the application on a simplified taxation system, that was submitted through state registrar, was not received by tax service. In such case, you will not be informed about refusing by tax service, however a simplified taxation system will not be registered, as well.
Also, when you open your business, it is good to know how to close it in legal area. You can enjoy my other article on this topic.
Don’t forget, that payments to the pension fund is charged from the first day of registration. For example, if you will register on the 30th day in month, that is the last day – you still had to pay a full payment to the pension fund for full month. Sometimes, it’s better to wait and choose right day for submission your documents.