Main points
- Switching to a general taxation system for individual entrepreneurs may be more advantageous due to the absence of income limits and the ability to reduce the tax burden by paying taxes on profit rather than turnover.
- Disadvantages of the general system include higher taxes (18% personal income tax, 5% military levy, 22% social security contribution) and more complicated accounting, which may be disadvantageous for large turnover with small margins.
General system for sole proprietors in Ukraine / business.olx.ua
Most Ukrainian entrepreneurs are used to working on a simplified system – this is understandable: a minimum of bureaucracy, understandable taxes and relative ease of doing business. However, now for some individual entrepreneurs, switching to the general system no longer seems difficult or disadvantageous – on the contrary, it becomes a well-thought-out and even safer decision.
Why is it worth switching to the general taxation system for individual entrepreneurs?
Until recently, distributing turnover between several sole proprietorships seemed like a convenient life hack. Today, it is one of the riskiest strategies, writes YANKIV.
The tax authorities, the BEB and banks are now monitoring such schemes much more closely. If several sole proprietors actually operate as one business, this can be classified as “business fragmentation”. The consequences are serious:
- blocking accounts;
- additional tax assessment for previous periods;
- fines;
- criminal liability.
Therefore, entrepreneurs are increasingly looking for “clean” alternatives. And one of them is the transition to a common system.
Among the advantages of the overall system are the following:
1. No income limits
You can conduct any turnover through one sole proprietorship – even 30, even 100 million hryvnias. Without the need to split the business and take risks.
2. You can delegate normally
On a shared system, it is easier to formally delegate some of the work to others:
- accountant;
- manager;
- cashier.
All roles can be legally formalized – without “verbal agreements” and gray schemes.
3. Taxes – on profit, not turnover
This is the key difference. You pay taxes on your net income, not on all your income. Expenses can include:
- rent;
- salaries;
- advertising;
- equipment;
- fuel.
The better the accounting, the lower the tax burden in reality.
4. You can credit taxes paid abroad
For those who work or live outside Ukraine, this is a big plus. If you have already paid taxes in another country, they can be taken into account in Ukraine thanks to international agreements.
5. Fewer risks due to formalities
On the simplified system, an error with the KVED or payment purpose can cost you your status. On the general system, this is not critical.
6. No complaints about crushing
One sole proprietorship, one business, one accounting – and no questions from regulatory authorities. In 2026, this is, without exaggeration, one of the main arguments.
7. Easier to adapt to VAT
If the rules change and VAT becomes mandatory for most, entrepreneurs on the general system will already be ready. But for those on the simplified system, it could be a painful transition.
What are the disadvantages of the general taxation system?
Main disadvantages:
- higher taxes: 18% personal income tax + 5% military levy + 22% social security contribution;
- more complex accounting;
- requirements for primary documents.
Compared to the 5% single tax, this looks significantly more expensive. Especially if you have a large turnover but a small margin.
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What else should individual entrepreneurs in Ukraine know?
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The best days to open a sole proprietorship are considered to be the first days of the month. And this is regardless of the individual entrepreneur's group. Thus, there is time to check all the important nuances and not have to overpay taxes.
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For activities without registration as an individual entrepreneur, a fine of 340 hryvnia is provided, and for economic activities without registration – from 17 to 34 thousand hryvnia with confiscation. In case of repeated violation, the fine is from 34 to 85 thousand hryvnia with confiscation, and improper record-keeping can lead to a fine of 51 to 136 hryvnia.
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Individual entrepreneurs of groups I, II, IV pay military duty as 10% of the minimum wage monthly, i.e. 864.70 hryvnia. However, for individual entrepreneurs of group III, the amount of the special duty is calculated as 1% of income quarterly.
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Individual entrepreneurs who are doing military service may not pay military duty, single tax, personal income tax, and single social contribution.