The process of registering a Danish sole proprietorship
The choice of legal form for a new business can be crucial to its success. In Denmark, a sole proprietorship, known as Enkeltmandsvirksomhed, offers simplicity and flexibility, ideal for those taking their first steps in entrepreneurship. If you have difficulties registering a sole proprietorship, we are happy to assist you.
Why is it worthwhile to run a sole proprietorship in Denmark?
The most popular and simplest legal form of doing business in Denmark is the sole proprietorship, known as Enkeltmandsvirksomhed. This is an excellent solution for people just starting out who have limited financial resources and cannot yet predict the company's future turnover.
The minimal financial and administrative requirements make Enkeltmandsvirksomhed a tempting solution for young entrepreneurs. Among the key advantages of running a sole proprietorship are:
- There is no obligation to have share capital.
- The minimum expenses for starting a business are DKK 10,000, which at the current exchange rate is equivalent to more than PLN 6,000.
- Running a business is simple - a sole proprietorship is easy to manage, which is especially beneficial for young entrepreneurs who do not yet have much experience.
- If difficulties are encountered, the Danish administration offers support in dealing with business registration formalities.
- Business taxes can be reported in a single tax return, which results in revenues being taxed only once.
- A company does not have to register as a VAT payer, as long as annual income does not exceed 50 thousand crowns.
- It is possible to grant power of attorney to other persons to represent the company.
How to carry out the registration of a sole proprietorship in Denmark?
The process of registering a sole proprietorship in Denmark (Enkeltmandsvirksomhed) is quite simple. To register a sole proprietorship, it is recommended to use the online platform erhvervsstyrelsen.dk and register with Erhvervsstyrelsen.
To register a sole proprietorship in Denmark, follow these steps:
- Before you start the registration process, make sure you have the following information prepared:
- company address,
- PKD code (type of business),
- CPR number (personal identification number),
- company name.
When a Danish registered office is not required, such as when operating a business online, consider using a virtual office service to obtain an address in Denmark for your business. - The process of registering a sole proprietorship is done online through Virk.dk, where you need to fill out a registration form. The form will be sent to the relevant authorities once it is approved.
- After submitting the registration form, you will receive a CVR (Central Business Register) number, which is a unique identifier for your company. It will be necessary for all business-related formalities.
- Set up a separate bank account for your business to simplify financial management and the tax settlement process.
- Take care of your bookkeeping in accordance with Danish regulations. If you have the necessary skills and experience, you can take care of this yourself or use an accounting firm.
- Ensure that you regularly report taxes and file tax returns as required by the Danish Tax Authority (SKAT).
- It is important to have all the necessary licenses and permits to operate your business. Also consider taking out adequate insurance. Careful adherence to all steps and deadlines will help avoid legal and administrative problems in the future.
- If you anticipate that your company's annual turnover will exceed DKK 50,000, you will need to register for VAT. This can also be accomplished through the Virk.dk portal:
- Log on to Virk.dk.
- Find the VAT registration form.
- Fill out the form and submit it.
Also consider using the services of a VAT tax representative. Such assistance can be useful not only in VAT registration, but also in paying the tax and many other related formalities.
What are the requirements for registering a sole proprietorship in Denmark?
Enkeltmandsvirksomhed is definitely an easier form of doing business in Denmark compared to other legal options, as it does not require raising share capital. In addition, the self-employed can count on support from the Danish administration in the formalities of business registration.
In the case of a sole proprietorship, the founder makes all decisions regarding the running of the business on his own. Nevertheless, he or she has the option of granting power of attorney to others to represent the company on his or her behalf.
A form of business such as a sole proprietorship entails that the owner bears full responsibility for all debts of the company. The owner is directly responsible for all financial obligations, both business-related and tax-related. When the company encounters financial problems, the owner is obliged to cover its debts from his own assets, such as his house or car.
Those moving to Denmark have the option of registering their own business with Erhvervsstyrelsen (the Agency for Business and Enterprise, part of the Ministry of Economic Affairs). Before making this decision, it is important to become thoroughly familiar with the requirements, deadlines and necessary documents for the various legal forms of Danish companies. It is also a good idea to analyze all the advantages and disadvantages, which will allow you to make an informed choice in accordance with your expectations and possibilities.