- An LLC can be on the group 3 single tax: 5% of revenue, or 3% with VAT.
- There are restrictions on activities, founders and annual revenue.
- Dividends to the owner are taxed separately. Run all the numbers before registration.
Most people opening a business are afraid of an LLC because of taxes. They say: 18 percent corporate profit tax and a mountain of accounting.
But an LLC can perfectly well pay five percent, just like an ordinary sole proprietor.
Group 3 is open to companies too
Yes, an LLC can be on the group 3 single tax. And for some reason almost nobody mentions it when deciding which business form to choose.
The conditions are the same as for a group 3 sole proprietor:
- 5% of revenue, or 3% if you're a VAT payer;
- an annual revenue limit, just over UAH 10 million in 2026;
- as many employees as you like.
But it doesn't suit everyone
Some activities are not allowed on the single tax. There are requirements for who can be a founder. And when you want to take profit out as the owner, dividends are taxed separately.
So for one business an LLC on the single tax is ideal, while for another it's better to stay a sole proprietor.
Your own employee
There's one more detail that makes an LLC seem more expensive than it is. You really can open an LLC through Diia in half an hour. But the model articles include a director's post, and as soon as you appoint yourself to it, you have an employment relationship with your own company.
And with it comes the obligation to pay a salary even when the company hasn't earned a single hryvnia: at least UAH 8,647 a month, taxes on it, the single social contribution and an employee report. The social contribution alone comes to almost UAH 23,000 a year.
This could have been avoided. The law allows a sole member to run the company themselves, without an employment contract, and then there's no salary. But it has to be written into your own articles; the model ones can't do that.
Sometimes a director's salary is exactly what you need: for your pension record or so the bank sees official income. It's worth deciding this before registration, while nothing has to be redone.
Conclusion
You can protect your assets and avoid overpaying taxes at the same time. You can have both the protection of an LLC and a tax almost like a sole proprietor's. The key is to calculate it before registration, for your specific business.
More on choosing a form: sole proprietor or LLC. Ready to start: LLC registration in Lviv.
Frequently asked questions
Can I switch to the single tax after registration?
Yes, by filing an application with the tax office. But it's simpler to choose the system straight away, together with registration.
How many employees can an LLC on the single tax have?
In group 3 the number of employees isn't limited.
Does the director have to be paid a salary?
Not always. If there's one founder, they can run the company without an employment contract, but this has to be written into the articles.
This article is general in nature and is not legal advice. Every situation has its own nuances.
