Step-by-Step Guide to Opening a Sole Proprietorship (FOP) in 2026

Opening a sole proprietorship (FOP) does not start with filling out an application. First, you need to understand exactly what the entrepreneur will be doing, who will be paying for the goods or services, and what the projected annual income will be.

1. Formulate the main direction of activity.
2. Select the primary and additional KVED codes.
3. Determine the circle of future clients.
4. Calculate the expected annual income.
5. Choose between the general or simplified taxation system.

A mistake at this stage can be more costly than the registration itself. For example, the 2nd group is not suitable for an entrepreneur providing services to companies under the general system or to foreign clients.

When a Sole Proprietorship is Not Suitable

An individual entrepreneur is liable for debts with their personal property. An FOP also cannot distribute shares among several founders or attract an investor to the authorized capital.

The query “how to register an LLC” should be dealt with separately if the business will have partners, high contractual risks, significant assets, or plans to sell corporate rights. For activities that require licensing, involve non-residents, or non-standard contracts, consulting a lawyer about registration might be necessary.

How to Choose KVED Codes for an FOP

KVED describes the type of entrepreneurial activity. One code is indicated as the main code, and the law does not limit the number of additional codes.

Before submitting the application, check whether the selected codes cover all planned income-generating activities:

• sale of goods in a store and online;
• provision of services to individuals;
• work with Ukrainian companies;
• cooperation with foreign clients;
• rental of real estate or equipment;
• advertising, consulting, or IT activities;

It is better to specify as the primary KVED the one that will bring the largest share of income. The code itself does not replace a license, permit, or other mandatory document.

Income from activities not included in the registry of single tax payers may be taxed at 15%. The tax authority may also revoke the entrepreneur’s right to work under the simplified system.

Which Tax System to Choose

When registering an FOP, you can immediately submit an application to switch to the simplified system. If not done, the entrepreneur will operate under the general system.

FOP Group 2

Group 2 suits retail trade, restaurant business, manufacturing goods, and providing services to the public or other single tax payers. The entrepreneur can have no more than 10 employees.

In 2026, the indicators for this group are as follows:

• annual income limit – 7,211,598 UAH;
• single tax – up to 1,729.40 UAH per month;
• minimum unified social contribution (USC) – 1,902.34 UAH per month;
• military tax – 864.70 UAH per month;

The exact single tax rate is set by the local council but cannot exceed 20% of the minimum wage. Fixed payments are charged regardless of actual income unless the entrepreneur has a lawful exemption.

An FOP in group 2 cannot provide services to legal entities or entrepreneurs operating under the general system. The restriction on clients does not apply to the sale of goods.

FOP Group 3

Group 3 is suitable for IT specialists, consultants, marketers, online stores, service exporters, and entrepreneurs working with companies of various tax systems. The number of employees is not limited.

As of 2026, the conditions are:

• annual income limit – 10,091,049 UAH;
• single tax without VAT – 5% of income;
• single tax with VAT – 3% of income;
• military tax – 1% of income;
• minimum USC – 1,902.34 UAH per month;

Under the model without VAT, the total tax burden on income is 6% plus USC. Official limits and rates are confirmed by the State Tax Service of Ukraine.

General System

Under the general system, the entrepreneur pays 18% personal income tax (PIT) and 5% military tax on net taxable income. Net income is the difference between revenue received and documented expenses directly related to the business activity.

This regime may suit businesses with large expenses or activities for which the law prohibits the single tax. Accounting here is more complex. Primary documents, correct calculation of expenses, and systematic work with tax reporting are required.

Documents Needed to Open an FOP

No charter, stamp, or authorized capital is required for registration. The basic package is minimal.

To submit the application, prepare:

• passport or other identity document;
• RNOKPP, i.e., tax identification number;
• information about the registered place of residence;
• list of main and additional KVED codes;
• electronic signature for online submission;
• notarized power of attorney if documents are submitted by a representative;

A person aged 16 or older who does not yet have full legal capacity must additionally submit a notarized consent from parents, guardians, or the guardianship authority. For family farming, an appropriate contract or declaration is required.

How to Register an FOP Online via Diia

Registration of an FOP via Diia is automatic, without participation of a state registrar. According to the Diia portal, filling out the application takes about 10 minutes, and automatic registration up to a minute.

To register an FOP online, follow these steps sequentially.

1. Log in to the Diia portal using a Qualified Electronic Signature (QES) or Diia.Signature.
2. Open the service “Automatic registration of FOP.”
3. Check personal data and tax address.
4. Select primary and additional KVED codes.
5. Specify the place of business activity.
6. Choose the general system or the appropriate single tax group.
7. Review the final application.
8. Sign it electronically and submit to the EDR (Unified State Register).

A notification will be sent to the electronic cabinet and email. The record in the EDR may appear within two working days, and the electronic extract will have legal force.

When the Single Tax Takes Effect

For groups 1 and 2, the status of a single tax payer begins from the first day of the month following the registration month. Until then, the entrepreneur is on the general system, so receiving payment immediately after opening might be unfavourable.

A newly created FOP who submits an application for group 3 without VAT within 10 days is considered a single tax payer from the registration date. These timelines are provided by the State Tax Service of Ukraine.

How to Register an FOP Offline and Outside the Registration Address

A paper application can be submitted through a CNAP (Center for Administrative Services), state registrar, the local council executive body, or a notary. Standard state registration takes up to 24 hours after receipt of documents, excluding weekends and holidays.

Approaching the registrar is allowed regardless of residence. However, registering an FOP outside the registration address does not change the tax address: it remains the official place of residence recorded in the EDR. This address is where the tax service registers the entrepreneur for primary accounting.

How Much Does It Cost to Open an FOP

State registration is free both online and when submitting in person. No administrative fee is required. There is also no requirement to contribute authorized capital.

Costs may arise in other cases:

• notarizing a power of attorney;
• obtaining a paid QES from the chosen provider;
• opening and servicing an entrepreneurial bank account;
• connecting cash registers or online cash registers (RRO or PRRO);
• purchasing a license or permit;
• professional accounting services business registration;

Thus, the answer to how much registration of an FOP costs is simple: the procedure itself is free. Further costs depend on the bank, payment acceptance method, type of activity, and chosen taxation system.

What to Do After State Registration

Entry in the EDR only establishes entrepreneurial status. For full operation, it is necessary to set up payment acceptance, accounting, and reporting.

1. Download the extract from the EDR.
2. Check registration in the single tax payers’ registry.
3. Open a separate entrepreneurial account in IBAN format.
4. Obtain payment details for taxes in the taxpayer’s cabinet.
5. Register RRO/PRRO if accepting cash or card payments.
6. Set up accounting for income, expenses, and primary documents.
7. Create a calendar of tax payments and reports.

If the customer transfers funds to the entrepreneurial IBAN with full banking details, RRO or PRRO is usually not required. When receiving cash, card payments, or online acquiring payments, a cash receipt is generally mandatory. The State Tax Service of Ukraine explains this distinction.

Taxes, Accounting, and Reporting After Opening

FOPs in groups 1 and 2 pay single tax and military tax monthly by the 20th of the current month. They file a declaration once a year within 60 calendar days after the end of the reporting year.

FOP group 3 reports quarterly. The declaration must be submitted within 40 calendar days after the quarter ends, and single tax and military tax within the next 10 calendar days. These deadlines are confirmed by the STO.

Under the simplified system, income accounting can be kept electronically or on paper without registering a book with the tax office. It is necessary to keep bank statements, receipts, acts, invoices, contracts, and other primary documents.

At the start, it is useful to gather practical tips on bookkeeping and review the material “Top-7 Free Services for Accounting”. When operations increase, an outsourced accountant can control deadlines, taxes, and primary documents without hiring a full-time employee.