As we have already mentioned in our previous publications, to carry out entrepreneurial activities, a person has the right to create economic companies, such as LLCs, or joint-stock companies, or to be a participant in them. However, a person can carry out business activities without establishing a legal entity, being registered as an individual entrepreneur (hereinafter also referred to as IE or a sole proprietor).
Within the framework of this article, we will look at the main requirements and legal regulations for being registered as an individual entrepreneur in Armenia.
The basis of being an IE is to have state registration in accordance with the law, as a result of which a person gets the opportunity to engage in entrepreneurial activities without establishing a legal entity. From the moment of registration as an individual entrepreneur, a person has the right to engage in entrepreneurial activity without forming a legal entity.
Who can be a sole proprietor?
Any individual who have civic capacity can be registered as an IE – a citizen of the Republic of Armenia or a stateless person. IE has the right to engage in any type of activity that is not prohibited by RA legislation.
What advantages will I have if I carry out business activities, being registered as an IE?
The advantages are the following: the registration process is faster with minimal documentation requirements, the IE does not have a balance sheet, does not have a charter capital (therefore does not distribute dividends), a charter, as well as property separation, which means that the IE, that is, a natural person, is responsible for his actions with the property he owns.
If you have decided to start a business as an individual entrepreneur, our team of experienced lawyers can assist you in the following matters:
- Preparation of necessary documents for registering an individual entrepreneur,
- Representation necessary for registering an IE in the Agency of the State Register of Legal Entities of the RA Ministry of Justice,
- If necessary, electronic registration of an IE,
- Organizing the process of deregistration of an IE.
What are the downsides of being a sole proprietor?
The only disadvantage of being an individual entrepreneur is that the latter is responsible for his obligations with all the property he owns, except for the property that is not subject to confiscation, according to the law.
What are the main differences between an IE and a LLC?
A person carrying out entrepreneurial activity is always interested which legal structure is most favorable for its implementation: being registered as an IE or establishing a LLC?
- Scope of liability and property
In the case of a sole proprietorship, an individual is liable with all his property for the obligations of the sole proprietorship, while the founders of an LLC bear no personal liability for the obligations of the LLC, and their liability is effectively limited only to the extent of their contribution to the authorized capital of the LLC.
An LLC owns separate property unlike a sole proprietorship and is liable for its liabilities with that property and not liable for the liabilities of its participants.
- Taxation
In terms of taxation systems, it makes no difference whether a person conducts business through a sole proprietorship or an LLC.
- Accounting
In terms of accounting, IE is relatively simpler, and the volume of documentation is less.
If several persons intend to carry out joint business activities, then it is necessary to register a legal entity: LLC or joint-stock company (closed or open, depending on the number of founders).
Where is the registration of an IE carried out?
It is possible to apply for registration both personally and through a representative, on the basis of a power of attorney, at the Agency of the State Register of Legal Entities of the Ministry of Justice of the Republic of Armenia (hereinafter referred to as the Agency).
What are the registration periods?
The registration of the IE is carried out immediately upon submission of the necessary documents. That is, the registration is carried out on the day of submission of the relevant documents to the Agency.
What documents are needed for state registration?
An IE submits an Agency for state registration
- Passport, and in the case of citizenship of a foreign country, a notarized translation of the passport,
- a document certifying the payment of state duty,
- in case of submission of an application by an authorized person, also the power of attorney.
Can I be registered as an individual entrepreneur remotely?
Yes, registration can be done electronically as well, only if you have an electronic signature.
Can the registration of IE be denied?
Yes, registration of a person as an individual entrepreneur is rejected if:
- he is already registered as an individual entrepreneur;
- the documents or information provided by him are not complete;
- he/she has been deprived of the right to engage in entrepreneurial activity in accordance with the law, and the conviction has not been extinguished or abolished.
Deregistration of the individual entrepreneur
A person registered as an individual entrepreneur or a person authorized to submit an application submits to the Agency the documents defined by the RA Law “On State Registration of Legal Entities, Separate Divisions of Legal Entities, Institutions and State Registration of Individual Entrepreneurs”, after which the process of deregistration of an individual entrepreneur is carried out.
If you have decided to start a business as an individual entrepreneur, our team of experienced lawyers can assist you in the following matters:
- Preparation of necessary documents for registering an individual entrepreneur,
- Representation necessary for registering an IE in the Agency of the State Register of Legal Entities of the RA Ministry of Justice,
- If necessary, electronic registration of an IE,
- Organizing the process of deregistration of an IE.
