The Balkan country Montenegro is on the shore of the Adriatic Sea with a population of 6.21 lakhs. Montenegro has resulted in significant economic development in the past couple of years. Podgorica is Montenegro’s capital city, and Cetinje is the old royal capital.
Montenegro is a developing nation, and it is quite profitable for investors to invest there. Australian, Italian, and Russian investors are already keen on investing in Montenegro.
As a result, entrepreneurs have started setting up their businesses in the country.
Sole proprietorship enterprises in Montenegro are favorable in the marketplace, and it can be an excellent start for young individuals to start their businesses. This guide teaches about setting up a sole proprietorship in Montenegro.
Who can be a Sole Proprietor in Montenegro?
A sole proprietorship is a one-person business. Only a single individual manages and runs this type of business. All business profits and losses resulting from business activities are entirely the responsibility of the sole proprietor. A sole proprietorship firm in Montenegro is one person’s business and is not a legal entity.
Residents in Montenegro can start a sole proprietorship business at 18 years or above. The age limit for foreigners is also the same. However, suppose foreign individuals want to start a sole proprietorship firm in Montenegro. In that case, they must show a resident permit and open a bank account in the country for business transactions. Montenegro allows foreigners to open a bank account which is a requirement before registering for a sole proprietorship.
To register as self-employed in Montenegro, the owner must open a sole proprietorship Montenegro bank account. The owner may or may not be a citizen of Montenegro to run a business in the country. A person may become a sole proprietor even on a tourist visa for the time being.
The registration time for registering the sole proprietorship may vary in Montenegro. Generally, it takes 4 to 5 days to get a registration certificate. No minimum share capital is required, and the proprietor can invest in the business according to his will and worth. Anyone willing to register as a sole proprietor in Montenegro has to present the required documents to the CRPS and register for the sole proprietorship taxes in Montenegro.
One can run a business and earn profits if one complies with all legal and regulatory standards.
Benefits of Sole Proprietorship in Montenegro
One of the easiest ways of establishing an independent business in Montenegro is the sole proprietorship. Compared to other forms of businesses with multiple shareholders and complex legal procedures, the risks are low in the case of a sole proprietorship, as a single owner exclusively runs it.
Here is a list of the benefits of registering as self-employed in Montenegro:
- Quick decision-making: Sole proprietorship firm in Montenegro encourages swift decision-making. All decisions are at the proprietor‘s discretion only. The sole proprietor is the business owner, and there is no need to discuss every minor problem with other people. This, in turn, results in quick decision-making.
- Confidentiality: As the proprietor is the only authority, sensitive information is kept safe. The sole proprietor in Montenegro is the only decision-maker of the business, which encourages confidentiality. Sole proprietorship Montenegro law does not compel the sole proprietor to publicize the business accounts.
- No sharing of profits: A sole proprietor in Montenegro is the complete owner of the business and hence the only bearer of profits. All profits arising out of the business operations belong to the proprietor. No obligation is there to share the business profits with anyone.
- Easier tax setup: Setting up a sole proprietorship company in Montenegro bears simpler tax requirements. There is no need for an employer identification number to apply for heavy corporate taxes, etc. Sole proprietorship taxes in Montenegro are payable according to the business’s earnings. It does not possess any fixed amount on the proprietor as payable to the State.
- Less paperwork: Sole proprietorship exempts the business owner from completing much paperwork daily. As the proprietor is the only person in charge of the business, no chain of command has to be followed with paperwork. Hence, significantly less paperwork is required.
Documents Required for Registering Your Business in Montenegro
The Central Register of the Commercial Court (CRPS) carries out all the procedures for registering businesses in Montenegro. The court’s database maintains all the business entities along with their names. However, a set of documents are necessary for registering sole proprietorship business in Montenegro that are enumerated as follows:
- Presenting the business name that is different from the legal name of the sole proprietor to the CRPS
- The personal identification card.
- The business owner must submit the complete registration form.
- Slip of the payment of the registration fee. (€10)
- Bill of the payment of the administrative fee press required for announcing the business name in the official gazette of Montenegro. (€12)
- VAT registration certificate, if applicable.
Other Criteria for Registering a Sole Proprietorship in Montenegro
There are some additional criteria to start a sole proprietorship in Montenegro that are as follows:
- Submit and certify all the articles of association of the business.
- Obtain a municipality ticket for registration.
- Acquire a tax identification number from the Central Registry.
- Seek customs authorization and the vat number for completion of the registration process.
- Must obtain a company or business seal.
- Obtain a work permit for a non-citizen to set up a sole proprietorship firm in Montenegro.
How to Register a Sole Proprietorship Firm in Montenegro
A sole proprietorship enterprise in Montenegro is the easiest business setup to operate. The sole proprietor is the only person responsible for the business’s assets and liabilities. To know how to register a sole proprietorship in Montenegro, follow the below-mentioned steps:
- Step 1: Pay the registration fees: Firstly, the sole proprietor has to pay the registration fees by going to any post office or bank in Montenegro. The registration fees include two types of fees, payable separately. The registration fee is €10, and the municipality fee is €3. Also, an additional postal charge fee of €0.4 is payable.
- Step 2: Prepare notary for the business documents: To register as self-employed in Montenegro, visit an authorized notary to notarise all the business documents. For notarising the documents, the ID card of the sole proprietor is necessary. The notarization fee is €2.98 per signature. It is a must to open a bank account for the business.
- Step 3: Register as a sole proprietor: The Central Registry of Commercial Entities (CRPS) in Montenegro is in charge of finalizing the registration of a business. It will provide a registration certificate to the sole proprietor. The sole proprietor has to visit the office in Podgorica and fill up the business registration application for sole traders and proprietors. For setting up a sole proprietorship firm in Montenegro, the owner must submit the registration application form with ID proof and payment slips.
- Step 4: VAT registration: VAT registration is optional for all sole proprietorship businesses in Montenegro. Business owners with an annual turnover of at least €18,000 must apply for VAT registration. One can do it in the CRPS office by submitting the registration form. The standard VAT rate in Montenegro is 19% on all goods and services.
- Step 5: Seek authorization stamp: The sole proprietor needs to take the registration certificate to a stamp maker to get an authorization stamp for the business. The sole proprietorship stamp in Montenegro amounts to €20.
- Step 6: Open a bank account: The sole proprietor has to reach a commercial bank to open a sole proprietorship Montenegro bank account for carrying out various domestic and international transactions. To open a bank account for a sole proprietorship in Montenegro, the proprietor must produce the registration certificate, proprietorship seal, notarized documents, and signature.
- Step 7: Register with municipality: As per the sole proprietorship Montenegro law, the owner must reach the office of the area municipality to register with the municipality. It requires filling out and submitting the trade or craft registration form.
- Step 8: Register with market inspection: If the sole proprietorship business in Montenegro is related to trade, the owners must register for the market inspection. The business owners can complete this by visiting any local market office.
Montenegro is a robust economy with growing potential, specifically in craft and hospitality businesses. Montenegro is an excellent choice for sole proprietorship and other microfinance companies to yield profitable results. While establishing a sole proprietorship firm in Montenegro may initially seem challenging, learning the legal requirements will make the process smoother.
Multiplier allows businesses to operate and hire talent in Montenegro without setting up a sole proprietorship company. The business owner will be in total control over the business operations and exempt from most corporate taxes. Multiplier acts as a guide by managing the employees’ payroll and offering timely and pertinent advice on the various business and legal spheres.