July 9, 2015

Registering as Individual Entrepreneur in Armenia

It is possible for a person (including a foreign citizen) to register as individual entrepreneur (sole proprietor) in Armenia to do business without forming a company. It is important to remember that in Armenia only individuals registered as entrepreneurs are allowed to engage in business activities. Failure to register may result in very harsh administrative and criminal penalties. If you are not sure whether your activity qualifies as “entrepreneurship” you should consult with a lawyer.

Registering as an individual entrepreneur has its advantages and disadvantages vis-a-vis registering a company.

Advantages of individual entrepreneurs

  • The registration process is straightforward and does not require much paperwork
  • The removal from registry is quicker than company liquidation and less burdensome as no public notice is required
  • Unlike a company, which must have at least one employee (the managing director), an individual entrepreneur may operate without any employee and thus save on payroll (income) taxes
  • The accounting may be simpler and cheaper
  • Simplified procedure for decision-making (no meetings, minutes etc.)
  • Free disposal of profits, no requirement to pay dividends
  • Penalties and fines in excess of AMD 200,000 can be enforced only by court order

Disadvantages of individual entrepreneurs

  • Unlimited responsibility. Unlike companies individual entrepreneurs are personally responsible for all business-related liabilities
  • It is more difficult to attract investment and sell the business
  • Certain licenses/permits are available only for legal entities
  • May be perceived as less reputable/reliable by business partners

If you have questions regarding various possible forms of doing business in Armenia please feel free to contact our law firm.

Disclaimer: The content on this page is provided for informational purposes only and does not constitute legal, financial, or professional advice.

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