Publication date: 26.06.2024
The procedure for registration of an individual entrepreneur (IE) in Ukraine
Registering as an individual entrepreneur (IE) in Ukraine is a relatively simple process that can be done either in person or online. Below are the main steps to register as a sole proprietor.
Step 1: Choosing a taxation system
Before you start registering, you need to decide on the taxation system you plan to use:
- General taxation system.
- Simplified taxation system (single tax).
Step 2: Prepare the documents
To register as a sole proprietor, you will need the following documents:
- Application for state registration of an individual entrepreneur (Form 10).
- A copy of the passport.
- A copy of the identification number (TIN).
Step 3: Submitting documents
In person at the ASC
- Contact the nearest Administrative Service Center (ASC).
- Fill out an application for state registration of an individual entrepreneur.
- Submit the application and required documents to the administrator.
- Receive confirmation of acceptance of documents.
Online through the Diia portal
- Register on the Diia portal.
- Go to the "Services" section and select "Sole proprietorship registration".
- Fill out the online form and upload scans of the required documents.
- Confirm your application with an electronic signature.
Step 4: Obtaining an extract from the Unified State Register
After submitting the documents, the registrar checks them and, if there are no errors, performs the registration. You will receive:
- An extract from the Unified State Register (USR), which is a confirmation of the sole proprietorship's registration.
Step 5: Registering as a taxpayer
Registration as a single tax payer
If you have chosen the simplified taxation system, submit an application for the simplified taxation system to the State Tax Service (STS):
- This can be done simultaneously with the registration of a sole proprietorship or within 10 days after registration.
Registration as a VAT payer (if necessary)
If you plan to become a value-added tax (VAT) payer, you must submit an application to the State Tax Service.
Step 6: Opening a bank account
To carry out entrepreneurial activities, open a bank account in the name of a sole proprietorship in any bank in Ukraine. You will need:
- Passport.
- Identification number.
- Extract from the Unified State Register.
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Step 7: Record keeping and reporting
After registering as a sole proprietor, you must keep records of income and expenses and regularly submit tax reports to the State Tax Service in accordance with the chosen taxation system.
Choosing a taxation system for individual entrepreneurs in Ukraine
Choosing a taxation system is an important step for an individual entrepreneur (IE) in Ukraine, as it affects the amount of taxes, reporting, and general obligations to the state. There are two main taxation systems for sole proprietorships in Ukraine: the general taxation system and the simplified taxation system (single tax).
General taxation system
The general taxation system is suitable for sole proprietorships that have large amounts of income or specific types of activities that are not suitable for the simplified system.
Main characteristics:
- Personal income tax (PIT): 18% of net income (income minus expenses).
- Military duty: 1.5% of net income.
- Unified social contribution (USC): 22% of the minimum wage (minimum).
Advantages:
- The ability to deduct expenses to reduce taxable income.
- No restrictions on the amount of income and types of activities.
Disadvantages:
- More complex accounting and the need to keep track of expenses.
- Higher tax rates compared to the simplified system.
Simplified taxation system (single tax)
The simplified taxation system is suitable for small and medium-sized businesses with lower revenues and less complex accounting.
Main groups:
The first group:
- For whom: Individual entrepreneurs who do not use hired labor, carry out retail trade in the market or provide household services to the public.
- Income limit: up to UAH 1,085,500 per year (as of 2024).
- Single tax rate: up to 10% of the subsistence minimum (as of 2024 - up to UAH 268.4 per month).
- UNIFIED SOCIAL TAX: 22% of the minimum wage (minimum).
The second group:
- For whom: Individual entrepreneurs engaged in the provision of services, production and/or sale of goods, with a limit on the number of employees (up to 10 people).
- Income limit: up to UAH 5,421,000 per year (as of 2024).
- Single tax rate: up to 20% of the minimum wage (as of 2024, up to UAH 1,340 per month).
- UNIFIED SOCIAL TAX: 22% of the minimum wage (minimum).
The third group:
- For whom: Individual entrepreneurs engaged in any activity not prohibited by the simplified taxation system, without restrictions on the number of employees.
- Income limit: up to UAH 7,621,000 per year (as of 2024).
- Single tax rate: 3% of income (if a VAT payer) or 5% of income (if not a VAT payer).
- UNIFIED SOCIAL TAX: 22% of the minimum wage (minimum).
Advantages:
- Simple accounting.
- Low tax rates for small businesses.
- Fixed tax rates for the first and second groups.
Disadvantages:
- Restrictions on the amount of income and types of activities.
- The inability to deduct expenses to reduce taxable income.
Conclusion.
The process of registering as a sole proprietor in Ukraine is quite simple and fast. You can choose between submitting documents in person at an ASC or registering online through the Diia portal. The main steps include preparing documents, submitting an application, obtaining an extract from the Unified State Register, registering as a taxpayer, opening a bank account, and keeping records and reports.
