Registration of a Sole Proprietorship

Have you decided to start your own business? Excellent! In Ukraine, for most aspiring entrepreneurs, this journey begins with registering as a sole proprietor (known as FOP). And for good reason, as it is the simplest and most straightforward form for conducting business, whether you are a freelancer, the owner of a small coffee shop, or an Instagram store. Does it seem complicated and involve a lot of paperwork? Not at all, especially today when most processes have moved online. We at BuhalteriO have prepared a simple guide for you to help you get through the registration process easily and without unnecessary stress.

Preparing to Start – The Most Important Decisions

Before you rush to submit your application, you need to sit down calmly and decide on two main issues. Believe us, a lot depends on them, including how much tax you will pay and whether problems will arise in the future.

• Choosing KVED codes. KVED (Classification of Types of Economic Activity) is essentially a list of what you plan to do. You need to choose one primary activity and it’s advisable to add several additional ones “just in case.” For example, if you are a photographer, also add photo processing, video shooting, or design. It’s free, but it will save you from having to urgently change something later if a new type of order comes up.
• Choosing a taxation system. Everything is simple here: there is a general system (complex, with high taxes) and a simplified system (just what you need to start). Most sole proprietors choose the latter. The most popular options are the 2nd and 3rd groups of the single tax. If you provide services to individuals (manicures, repairs) or sell goods, the 2nd group will most likely suit you. If you work with IT companies or other businesses, especially foreign ones, you should immediately consider the 3rd group, which involves paying 5% of your income.

Time to Register! Online via “Diia” or in Person at a TsNAP?

Here you have a choice, and everyone can find a convenient option for themselves.
The simplest and most popular option today is, of course, registering a sole proprietorship online through the “Diia” portal. The whole process takes 10-15 minutes, and you don’t need to go anywhere. The only condition is that you must have a QES (Qualified Electronic Signature), which can be easily and freely obtained right in your bank’s application (e.g., Privat24, Monobank).
If you trust the “good old” paper method more, your path lies to a TsNAP (Center for the Provision of Administrative Services). This is also not difficult, it just requires a bit more time for the visit.
Whatever you choose, here is a small checklist to have everything at hand:

• Your passport.
• Identification code (Taxpayer Registration Number).
• Application for registration (Form 1).
• Application for switching to the single tax (if you chose the simplified system).

When visiting a TsNAP, you need these documents in paper form, but in “Diia” you simply enter the data into the appropriate fields, making the process even easier.

You’ve Registered. What’s Next?

Congratulations! You are now officially an entrepreneur. But it’s too early to relax; there are a few final steps to make sure everything works like clockwork. You need to obtain an extract from the register of single tax payers—this is the main document you will show to partners and clients. You can order it in the electronic cabinet of the tax service. Next, open a separate business bank account. It is important not to mix personal money with business funds—this is required by law, and it is simply more convenient for accounting. And, of course, if you will be accepting card or cash payments for goods/services, do not forget about registering a cash register (RRO/PRRO).

As you can see, registering a sole proprietorship is not rocket science, but a completely understandable process, especially if you know what to do and in what sequence. The main thing is to pay attention to preparation, as a mistake in choosing a KVED code or tax group can later result in unnecessary fines and problems with the tax authorities.

And so that you don’t waste time studying all the nuances and can start earning right away, there’s us—the BuhalteriO team. We will not only help with the registration of your sole proprietorship but also advise on which taxation system will be most profitable for you, and we will take care of all subsequent accounting. Contact us for a consultation, and we will make your start in business as easy and safe as possible.