Ukraine is a potentially attractive country for almost any business. Agriculture, alternative energy, information technology, infrastructure, and production attract the special attention of foreign investors in Ukraine.
The main advantages of opening a company in Ukraine
Business in Ukraine has significant advantages, which include:
- Simplified taxation system. Enterprises with a turnover of 5 million hryvnias ($ 179,000) per year pay only 5% tax on gross income.
- Exchange Rates. For those who come to Ukraine with a budget in dollars and euros, it is very profitable to exchange currency.
- Cheap labor market. Doing business in Ukraine is beneficial for business owners since the average salary in the country is about 10,000 hryvnias, which is around 358$.
- Low prices for raw materials make it profitable to process and manufacture goods in Ukraine.
- Favorable location. Ukraine is the geographical center of Europe with more than 170,000 km of roads, 22,000 km of railway lines, and 13 ports. Almost any destination in Europe can be reached in 2 days by truck transport from Ukraine. It is another significant competitive advantage for logistics and warehouse companies.
- Opening a small and medium business in Ukraine is a relatively simple procedure. The sale of a business in Ukraine and re-registration are also processed quite quickly, unlike in some other European countries.
Forms of doing business in Ukraine
There are the following basic types of forms of ownership in Ukraine:
- limited liability company;
- private joint-stock company;
- puddle joint-stock company;
- private enterprise.
The difference between one organizational and legal form from another is in:
- the procedure for creating a company;
- method of forming the authorized capital and its minimum size;
- the procedure for managing the company;
- the responsibility of the members of the management bodies;
- the decision-making procedure.
The most popular forms of doing business in Ukraine are individual entrepreneurship and LLC (limited liability company).
Each form of business has its pros and cons, so you need to consider what is more suitable for a particular activity.
Individual entrepreneurship is easy to register and keep records and reports. It can be in the group of the simplified taxation system. However, in the event of any entrepreneurial risks, the individual entrepreneur is liable to creditors with all the property it owns (in particular, housing, car, etc.), and bears personal responsibility for activities to regulatory, law enforcement, and other authorities. Individual entrepreneurship cannot hire a director and delegate such powers to him/her.
Besides, individual entrepreneurship cannot share the authorized capital with a partner or investor. It practically excludes their participation in business. Another disadvantage of a private entrepreneur is that it cannot be sold as a ready-made business.
Limited Liability Company
LLC is the most common form of doing business in Ukraine. Here you can attract partners and investors, divide the authorized capital, and income, and build a specific structure with the distribution of functions between various management bodies. The advantage of legal entities is that they can be sold as a ready-made business with all assets.
In some cases, the sale of a legal entity is carried out as an “express liquidation”, which can also be attributed to the pluses in the realities of Ukrainian business. The owner, manager, name, and address are changing. Such a “transaction” is legal, but its purpose is for the most part to evade any obligations, which, of course, cannot be acceptable to the rule of law.
The liability of an LLC participant is limited to the contribution to the authorized capital. It means in this case, housing, cars, or other things will not be lost, and another person may be hired as a manager. That is why, for many business owners, this form of business is more acceptable.
Documents for registration company in Ukraine
To register individual entrepreneurship, only a passport and an identification code are required. Also, the future entrepreneur needs to decide on the types of activities (KVED codes) and the tax system.
List of documents for LLC registration:
- registration (location) address;
- types of activity (KVED codes);
- passports and identification codes of founders and managers;
- the size of the authorized capital and its distribution among the founders (if there are more than one);
- taxation system;
- form of constituent document (charter).
All these data are included in the decision on the establishment of an LLC, which is signed by the founders. If they did not choose a model charter, then this decision also approves the charter and the signatures of the founders which must be notarized.