Selling on Instagram? That's already a business
Many people work for years without registering. You sew, bake cakes, make jewellery to order, and the money arrives on your card. It feels like a side gig. For the state, regular sales for profit are business activity, and carrying it on without registration is not allowed.
The tax office sees regular payments to your card, or a customer complains. Then you have to pay a fine and taxes for the whole period. That's far more than the small percentage you'd have paid as a sole proprietor from the start.
What sole proprietor registration includes
- A conversation about your activity. What you sell, to whom, how much you plan to earn.
- Choosing the single tax group. We calculate what you'd pay in each one.
- Choosing activity codes with room for what you'll be doing a year from now.
- Sole proprietor registration and the simplified system application.
- A cheat sheet: what, when and how much to pay, which reports to file.
Which sole proprietor group to choose
The groups differ in who you can sell to, whether you can hire people, and how much you're allowed to earn in a year. Income limits are tied to the minimum wage, so they change every year.
| Group 1 | Group 2 | Group 3 | |
|---|---|---|---|
| Who you sell to | Individuals: market retail, household services | Individuals and single tax payers | Anyone |
| Employees | No | Up to 10 | No limit |
| Tax | Fixed, up to 10% of the subsistence minimum | Fixed, up to 20% of the minimum wage | 5% of revenue, or 3% with VAT |
| Annual limit | Lowest | Medium | Highest, just over UAH 10 million in 2026 |
For entrepreneurs in Lviv who work with businesses, in IT or sell online, group 3 is most often the right fit. But if you're, say, a hairdresser serving individuals, group 2 may work out cheaper.
Three sole proprietorships per family: why it's a bad idea
To stay under the limit, a business gets “split”: sole proprietorships are opened for yourself, your wife and your mother. The tax office sees the shared premises, the same activity codes and the same clients, adds the turnover together and reassesses everything with a fine.
Splitting as such isn't prohibited. There's only one question: is there real, separate activity behind each sole proprietorship. If not, you need an LLC, not another sole proprietorship.
When a sole proprietorship gets too small
Turnover is creeping up to the limit, and you're afraid of one order too many in December. A big client only works with VAT payers. A partner comes along, and there's no way to give them a share in a sole proprietorship. That's when you've hit the ceiling of your business form.
The switch isn't as scary as it seems. I've described it in the article Sole proprietor or LLC: what to choose.
How it works
Your part: passport, tax number and a signature. The rest of the arrows are mine.
Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Associations”; Tax Code of Ukraine, Chapter 1 of Section XIV (simplified taxation system, single tax groups and rates); Law of Ukraine “On the Collection and Accounting of the Single Contribution for Mandatory State Social Insurance”.
Frequently asked questions about sole proprietor registration
How much does sole proprietor registration in Lviv cost?
From €150, including choosing the group and activity codes. State registration itself is free.
How much does a sole proprietor pay each month?
Single tax, military levy and the single social contribution (ESV). The amount depends on the group. In group 3 it's a percentage of revenue plus the minimum ESV. I'll give exact figures for your case after the calculation.
Can I be a sole proprietor and work under an employment contract?
Yes. But working as a sole proprietor for your own employer is risky: the tax office may treat it as disguised employment.
Can a foreigner register as a sole proprietor?
Yes, if they have a residence permit in Ukraine. More on the “Business for foreigners” page.
Can I change group later?
Yes, by filing an application with the tax office. You can switch from the next quarter.
What happens if I work without registering?
A fine for carrying on business without registration, and taxes reassessed for the whole period you worked.
If you have a brand, check whether the name is free: the trademark search is free. And an online shop will need website documents: a public offer and a privacy policy.