How to Register as a Sole Proprietor (FOP): What You Need to Know
After losing their jobs because of the war, many Ukrainians are considering starting their own businesses. They begin by looking into how to register as a sole proprietor (FOP). Here’s an overview of how sole proprietor registration works.
In Ukraine, FOP is the simplest legal form for running a business. The requirements for registration are straightforward: you do not need to register founding documents or have start-up capital. Anyone aged 16 or over can register as a sole proprietor.
The requirements for becoming a sole proprietor are set out in the Law of Ukraine No. 755-IV dated 15 May 2003, “On State Registration of Legal Entities, Individual Entrepreneurs and Public Associations” (hereinafter, Law No. 755). Below is a step-by-step guide.
## 1. Prepare the required documents
The list of documents required to register as an individual entrepreneur is set out in Article 18 of Law No. 755. To register your business, you need to complete an application for state registration as an individual entrepreneur (Form 1, available for download here). This is the key document that changes your status from an individual to a sole proprietor. You may be wondering how much registration costs. Registering as an FOP is free of charge.
You may also need to submit additional documents:
- If you choose to become a single tax payer, you must also submit an application to opt for the simplified taxation system using the relevant form, which can be downloaded here.
- If you intend to use the general taxation system and wish to voluntarily register as a VAT payer, you must submit the relevant application (Form No. 1-VAT) together with the main application.
If you submit the documents in person, you need a Ukrainian passport, a temporary Ukrainian citizen’s certificate, or a foreigner’s passport or equivalent document, as well as a certificate confirming your taxpayer registration number (formerly known as the tax identification number). You may also have someone submit the documents on your behalf, provided their authority is notarized.
## 2. Choose a convenient registration method
You can register on paper or electronically. Paper documents may be submitted in person by the applicant or their authorized representative, or sent by post. To do so, contact a state registrar, an Administrative Services Centre (ASC), or a notary.
Electronic FOP registration is available through Diia, Ukraine’s Unified State Web Portal of Electronic Services, using a qualified electronic signature (QES). You will also need the Diia mobile app to complete the FOP registration process. You can also register as an FOP using other government IT services.
## 3. Find your Administrative Services Centre
Under current legislation, an individual entrepreneur must be registered at their place of permanent residence. Internally displaced persons may register at their temporary place of residence without official registration (Article 4 of the Law of Ukraine No. 1669-VII dated 2 September 2014, “On Temporary Measures for the Period of the Anti-Terrorist Operation”). The requirements are simplified for this group: in addition to a passport and taxpayer number, an internally displaced person certificate is sufficient.
If there is no ASC in your locality, you can contact any accredited state registrar. A list is available on the Ministry of Justice website.
The registration procedure is the same as at an ASC.
## 4. Or contact a notary
If you do not want to handle the FOP registration process yourself, you can use a notary’s services by providing them with all the required documents. A notary’s services are subject to a fee. The notary can answer your questions about registering as an FOP, ensure that your application is completed correctly, and help you obtain an extract from the Unified State Register.
## 5. How can you register as an FOP today?
Documents submitted for state registration as an individual entrepreneur are reviewed within 24 hours of receipt, excluding weekends and public holidays (paragraph 1, part 1, Article 26 of Law No. 755). Registration should therefore take no more than one day, although in practice it is often completed within a few hours.
## 6. No need to rush to the tax office!
You do not need to contact the tax office to register for tax purposes. The registration authorities send the relevant information to the tax office, and the date of registration, as well as registration as a taxpayer and unified social contribution payer, is indicated in the extract from the Unified State Register.
If you choose to become a single tax payer when registering your FOP through a state registrar, ASC, or notary, and submit an application to use the simplified taxation system along with your registration application, you will also be automatically added to the Register of Single Tax Payers.
If you register through Diia, you can check your extract after registration to see whether you have been added to the Register of Single Tax Payers. If not, submit an application to opt for the simplified taxation system through your personal tax account. Be sure to specify your business address and activity codes (KVED); if you choose Group 3, you must also specify the tax rate.
The deadline for submitting this application after FOP registration depends on the group you choose:
- FOPs choosing Group 1 or Group 2 must submit the application by the end of the month in which they registered. They will then be considered single tax payers from the first day of the following month.
- FOPs choosing Group 3 without VAT registration (5%) must submit the application within 10 days of state registration. They will then be considered single tax payers from the date of registration.
Registering as an FOP is simple, affordable, and quick. So register and work legally! Be a responsible citizen, build your reputation, and succeed!
# Frequently Asked Questions
## Can my FOP registration application be rejected?
Yes, if:
- The documents were submitted by someone without the authority to do so.
- The Unified State Register contains information about a court decision prohibiting the registration action.
- The grounds for suspending the review of the documents were not resolved within the prescribed period.
- The documents were submitted to an unauthorized state registration body.
- The law prohibits you from engaging in business activities.
- The Unified State Register already shows that you are registered as an FOP.
- The submitted documents do not comply with Ukrainian law (part 2, Article 28 of Law No. 755).
If your registration is rejected, you will be sent a notice within 24 hours, excluding weekends and public holidays, explaining the reason in detail. The notice must refer to the specific legal provision (clause or article) and explain what was violated when the documents were completed or submitted. Once the issue has been resolved, you can resubmit your FOP registration documents.
## Can I be held liable for operating without registration?
Individuals who conduct business without state registration may be held liable. This is provided for by two codes: the Code on Administrative Offences and the Tax Code. The fines vary, and the amount applied depends on the tax authorities’ assessment. Specifically:
Conducting business without state registration may result in a fine of UAH 17,000 to UAH 34,000, with or without confiscation of the products, means of production, raw materials, and money obtained through the administrative offence.
If the same violation is identified again within a year, or if a large amount of income is earned (more than UAH 17,000), the fine increases to UAH 34,000–85,000, with confiscation of the above assets (Article 164 of the Code of Ukraine on Administrative Offences).
Conducting business without state registration as an FOP, or engaging in independent professional activity without tax registration, is subject to a fine of UAH 340 (paragraph 117.1, Article 117 of the Tax Code of Ukraine).
## How can the tax authorities find out about an unregistered business?
The tax authorities may identify these violations during an audit if they receive information from any source that a person is conducting business without registration. A bank may also provide such information if it determines that a client regularly receives money for goods or services.
Following an audit, the supervisory authority may independently calculate the tax liability for the relevant reporting periods and impose a fine of 25% of the assessed tax liability, regardless of whether the person paid tax (Article 123 of the Tax Code of Ukraine).
