What is the difference between a sole proprietorship and a private enterprise?

A SP (sole proprietor) and PE (private enterprise) are popular forms of doing business in Ukraine. The main differences between them are as follows:

1. Legal Status:

• SP: A natural person engaged in entrepreneurial activity without creating a legal entity.
• PE: A legal entity established on private ownership by one or more individuals.

2. Liability for Obligations:

• SP: Liable for obligations with all personal assets, including personal property.
• PE: Liable only with the enterprise's assets; founders do not bear personal liability.

3. Taxation System:

• SP: Can choose a simplified tax system (single tax) or a general tax system.
• PE: Usually applies the general tax system but may opt for a simplified system under certain conditions.

4. Accounting:

• SP: Keeps simplified accounting for income and expenses.
• PE: Must keep full accounting according to standards.

5. Registration Procedure:

• SP: Simple and quick registration without the need for statutory documents.
• PE: Requires the development of a charter, formation of authorized capital, and a more complex registration process.

6. Management and Structure:

• SP: Managed individually by the entrepreneur.
• PE: Can have a more complex management structure with the possibility of involving multiple founders.

The choice between a SP and a PE depends on the specifics of the business, the scale of operations, and the level of responsibility the entrepreneur is willing to assume.