Personally owned small business

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What is a personally owned small business?

This business type is targeted for people who just want a parttime- or leisure business. In a personally owned small business there can only be one owner.

There is a series of things that are important to know before starting a personally owned small business:

  • You are personally liable with your private fortune
  • The profits from the business are taxed as personal income.
  • The business may only have a maximum yearly turnover of 50.000 kr.
  • The business cannot be VAT registered
  • Bookkeeping must be done according to the Danish Financial Statements Act (Generally Accepted Accounting Principles (GAAP or US GAAP) are a collection of commonly followed accounting rules and standards for financial reporting.)
  • The business cannot have any employees
  • You must have a Danish CPR-number
  • You can only have one personally owned small business
  • You cannot import or export to countries outside of the EU

Benefits from a personally owned small business:

  • The business is not liable to pay VAT
  • You are not legally required to send in an annual report to the Danish Business Authority
  • It is free to register the business
  • There is no requirement to deposit capital when the business is founded
  • If the business has a deficit, you get a personal tax deduction
  • You get deductions for the business’s expenses

If you start a personally owned small business, it is still possible to change the business type later. For example, it would be ideal to change the business type if the business’s profits exceed 50.000 kr. annually.    

If you want to start a personally owned small business, you can do so on Virk.dk, where you will get your CVR-number.

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