Solo entrepreneurship or LLC ?
Which organisational form should you choose when registering your business in Ukraine? Today we will explain the benefits and downsides of two legal entities: solo entrepreneurship and limited liability company (LLC).
Being a solo entrepreneur is beneficial in the following cases:
Your activity is mainly providing services
Your official expenses are not very high
You are just starting with your commercial activity
You work mainly with people and your turnover doesn’t exceed 5 million UAH
It is not expensive to maintain
There are less taxes
Solo entrepreneurship is easier to register and it’s more simple to organise its accounting. Some entrepreneurs are doing their accounting themselves. LLC accounting requires a specialist.
Solo entrepreneur can also freely use his income and doesn’t have to report it. It is enough to pay taxes on time and declare the income.
It is also much easier to unregister as a solo entrepreneur.
You also won’t be needing an office or a cash register (if your turnover is less than 1 million UAH).
The downsides of being a solo entrepreneur are the following:
You will be responsible for your commercial obligations with your personal property.
It will be more difficult to cooperate with big companies.
When is it better to register an LLC?
When you have outgrown solo entrepreneurship and you would like to expand
When you have business partners and you need to establish shares in your business
Your commercial activity requires an LLC
If you plan to involve investors
If you work with big business
LLC is responsible for its commercial obligation only with assets that are part of its statutory property.
On the other hand, LLC registration is more expensive - you will need some statutory assets and a package of statutory documents. An LLC also requires a legal address, so you might need an office.
If you consider all of the above information - it will become a little easier to decide which organisational form is more suitable for your commercial activity.