Starting your own business is an important yet challenging step that requires thorough preparation. To help aspiring entrepreneurs, we’ve prepared a current checklist considering the latest trends and recommendations.
1. Developing a business idea
“Every successful business starts with a dream and a clear vision”, — Richard Branson, founder of Virgin Group.
✅ Identify your area of interest.
✅ Research the market: what problems can your products or services solve?
✅ Create a business plan, including an analysis of the target audience, competitors, and financial forecasts.
2. Choosing a legal form of business
Two main formats are available for running a business in Ukraine:
- Sole Proprietorship (FOP): Simple registration, ideal for self-employed individuals.
- Limited Liability Company (LLC): Suitable for partnerships or large-scale businesses.
Comparison table: FOP vs. LLC
| Criterion | FOP | LLC |
| Owner | Personally, an individual conducting business activities. | There can be an unlimited number of owners, allowing for co-founders or partners. |
| Management | The entrepreneur manages the business themselves. | Management is carried out by the general meeting of participants. The executive body, usually a director, oversees daily operations. |
| Liability | The entrepreneur is fully liable for obligations with all their property. | The LLC is liable for obligations only with its assets, which do not affect the personal property of the owners. |
| Charter Capital | Not required by law. | Mandatory, but there is no minimum amount set. Some industries may have specific requirements. |
| Profit | The owner can freely use the funds received in their account. | Participants decide on the distribution of dividends earned by the company. |
| Closing the Business | Possible by submitting an application, which takes about one day. | Liquidation involves a complex process or the possibility of transferring shares or exiting the business. |
| Exit Options | Not applicable, as FOP is an individual entity. | An owner can sell their share or exit the business, receiving compensation at its market value. |
💡 Tip: If your business involves high risks, it’s better to choose an LLC, as it is only liable with its assets.
3. Choosing a business location
A sole proprietor (FOP) can conduct business at their registered address or other locations, such as a rented office. For taxation purposes, the tax address is used, which may differ from the actual address.
If operating in another locality, it is necessary to register an additional location by submitting an application using Form No. 5-OPP. LLCs must indicate the correct legal address, as it serves as the primary contact with government agencies.
Both FOPs and LLCs must notify tax authorities of all business locations by submitting Form No. 20-OPP. Failure to comply with these rules may result in fines.
4. Choosing a business name
The business name must be unique. It is recommended to register a trademark to protect your logo or other brand elements, which can enhance promotion and customer trust.
🔗 If you are ready to choose a name, read “How to Register a Trademark in Ukraine on Your Own”.
5. Choosing a tax system
An entrepreneur can choose a general or simplified tax system depending on the specifics of their business. It is also possible to register as a VAT payer.
Simplified tax system
Available for four taxpayer groups, it offers the advantage of simplified accounting. However, it has certain restrictions, such as:
- A prohibition on certain types of activities (e.g., gambling, mineral extraction, etc.).
- Income limits depending on the selected group.
Comparison table: simplified tax system Groups for FOPs
| Criterion | Group I | Group II | Group III |
| Legal Form | Individual entrepreneur (FOP). | Individual entrepreneur (FOP). | Individual entrepreneurs (FOPs) and legal entities. |
| Types of Activity | Retail trade in markets, household services for the population. | Providing services, producing or selling goods, operating in the restaurant business. | All types of activities except those prohibited by law for this group. |
| Maximum Annual Income | Up to 167 minimum wages. | Up to 834 minimum wages. | Up to 1,167 minimum wages. |
| Number of Employees | No employees allowed. | Up to 10 employees. | Unlimited number of employees. |
| Tax Rate | No more than 10% of the subsistence minimum. | Up to 20% of the minimum wage. | 3% of income for VAT payers or 5% for non-VAT payers. |
| Tax Payment Deadline | Monthly, by the 20th of the current month. | Within 10 days after the deadline for submitting the quarterly declaration. | Within 10 days after filing the declaration for the relevant reporting period. |
Group IV of the simplified tax system is available only for agricultural producers, where at least 75% of income comes from the sale of agricultural products. The tax rate depends on the normative value of the land.
General Tax System
Under the general system, taxes are paid on net income. The main tax rates are:
| Category | Taxes |
| FOP | 18% — income tax; 1.5% — military levy; 22% — unified social contribution (USC). |
| LLC | 18% — corporate income tax; 5% — dividend tax if paid to individuals. |
VAT
Registration is mandatory if turnover exceeds 1 million UAH per year (excluding simplified system payers in Groups I–III). Voluntary registration may be beneficial for working with other VAT payers, as it allows for obtaining a tax credit and VAT reimbursement.
6. Securing funding
If personal savings are insufficient, consider:
- Government grants for startups.
- Investments or partnerships.
- Small business loans.
“Financial planning is the map that helps avoid collapse”, — Robert Kiyosaki noted.
7. Licenses and permits
Ensure your activities comply with all legal requirements. For example:
- Licenses for medical or educational activities.
- Permits for the sale of alcohol or tobacco products.
8. State business registration
Document preparation
Registering as an individual entrepreneur (FOP) is simple: you only need to submit an application, have your passport, and provide your taxpayer identification number. To register an LLC, you will need:
- Registration application.
- Decision to establish an LLC (notarized).
- Charter or model charter.
- Documents on the ownership structure and beneficiaries.
- Power of attorney (if necessary).
- Additional documents for foreign founders.
Registration process
An FOP can be registered online through “Diia” using an electronic digital signature (EDS). An LLC can also be registered online if using a model charter and if all founders are individuals who are citizens of Ukraine. In other cases, documents must be submitted to a state registrar, who completes the registration within 24 hours.
After registration
- Stamp: Not mandatory, but it can enhance credibility.
- Bank account: Mandatory for LLCs, optional for FOPs unless online payments are required.
- Personnel documentation: Necessary when hiring employees.
- Permits and licenses: Required for certain types of activities (e.g., banking services, veterinary care, etc.).
Each stage of registration has its legal nuances. Careful preparation will help mitigate risks and ensure a successful business launch.
Conclusion:
Starting a business in Ukraine is feasible, even under unstable economic conditions. The key is a clear action plan, readiness to face challenges, and the desire to grow. As Steve Jobs once said:
“Your work is going to fill a large part of your life, so do what you truly love”.
