Doing business as a sole proprietor (FIE)
- What must be done before establishing a FIE?
- How to register a FIE?
- What are the costs of establishing a FIE?
- How long will it take to establish a FIE?
- What must be done after registering a FIE?
A sole proprietor (also referred to here by its Estonian acronym, FIE) is a form of business that is best suited to those who are going into business alone or with their family.
The advantages of operating as a FIE:
- No minimum capital requirement.
- Registration is simple.
- Sole proprietors are not required to have articles of association.
- However, sole proprietors have unlimited personal liability for debts incurred in business.
A sole proprietor can suspend his/her activities by notifying the Commercial Register about it, with the indication of the time range during which the sole proprietor will be suspending his or her business operations. A sole proprietor who is doing a seasonal job can notify the Commercial Register holder about the start and the end dates of the sole proprietor’s operation. A sole proprietor can notify the Commercial Register about the start and the end dates of sole proprietor’s operation also if the sole proprietor is operating temporarily.
What must be done before establishing a FIE?
Before registering as a FIE, find the answers to the primary questions that will determine the most important rules governing your everyday activity.
- What will your FIE’s business name be? The FIE’s business name must consist of the entrepreneur’s given name and surname. The FIE’s business name must be clearly distinguishable from other business name registered in the same area.
- What will your initial area of activity be? Do you need activity licences or other licences?
- What will your FIE’s address be?
Application for operating as a FIE
To establish a sole proprietor, you must only submit an application. The requirement is the existence of a bank account suitable for business activity. You can submit the FIE registration application to the Commercial Register electronically or through a notary. No memorandum of association or articles of association need to be drafted upon forming a FIE.
How to register a FIE?
Register the FIE electronically through the Company Registration Portal
To register electronically, you will need the technical capability for digital signatures (ID card and ID card reader). If you meet the following criteria for registering the FIE, you can establish a FIE under expedited procedure:
- all of the persons involved in establishing the FIE have a registered place of residence in Estonia;
- the state fee has been paid electronically via the Company Registration Portal;
- you indicate information on the area of activity according to level 4 of the Estonian Classification of Economic Activities.
Registering a FIE through a notary
You can also register a FIE through a notary. Most notary offices have the samples and templates necessary for the formation of a FIE.
What are the costs of establishing a FIE?
To establish a FIE, you will have to pay a state fee of 13 euros. If you use the services of a notary to establish the FIE, you will have to pay a notary fee as well. The fee for notarizing the authenticity of a signature is 12.75 euros. If you would like the notary to prepare a draft application, an additional fee of 18.20 euros will be charged. VAT will be added to all of the notary fees.
How long will it take to establish a FIE?
If you register electronically under expedited procedure, a FIE can be registered in just a few hours in the best case; still, budget one business day. Registering a FIE through a notary will take 2-3 days.
What must be done after registering a FIE?
Depending on your area of activity and turnover, a varying number of additional steps must be taken.
- If you will be operating in an area of activity subject to special requirements, you will have to apply for an activity licence.
- If your annual turnover exceeds 16 000 euros, you will have to register as a VAT payer with the Tax and Customs Board.
- If you hire employees, you will have to register them with Tax and Customs Board.
- If you hire underage employees, you will have to notify the Labour Inspectorate that the FIE has started operating.