How to establish individual entrepreneurship (IE) Printable versionLast update: 03.04.2023
To start a small business, it is enough to register as an individual entrepreneur (IE).
The status of an individual entrepreneur entitles to legitimately conduct business and make a profit from it, provided that taxes are calculated and paid scrupulously.
Being an individual entrepreneur, a citizen can legally cooperate and establish partnerships with other companies and organizations. Also, potential customers tend to trust more to those businessmen who are officially registered.
The material contains information about conditions for registration of individual entrepreneurs, taxation regimes and online registration of individual entrepreneurs.
1. Conditions for registration of individual entrepreneurs
Individual entrepreneurship is carried out in the form of individual or joint entrepreneurship.
Individual entrepreneurship is carried out by one individual independently based on property belonging to him/her. Joint entrepreneurship is carried out by a group of individual entrepreneurs based on property owned on the right of common ownership.
One should register as an individual entrepreneur if:
- labor of employees on a permanent basis will be used;
- an annual income exceeding 12 times the minimum wage, i.e. 12 x 70,000 = KZT 840.000 (in 2023, the minimum wage is KZT 70.000) will be raised.
Otherwise, any activity will be considered illegal, and administrative responsibility may be imposed.
2. Taxation regimes for IE
There are several taxation regimes and after selecting one of them an individual entrepreneur is registered. Major tax regimes are listed below:
Standard taxation regime
An individual entrepreneur applying the standard taxation regime submits a tax return on individual income tax annually (until March 31 of the following year).
In a tax return, profit ("income" minus "expenses") received during the reporting period is calculated, which is subject to IIT taxation at the rate of 10%.
Special tax regime based on simplified declaration
It is applied by taxpayers who comply with the following conditions:
- The average number of employees for the period is up to 30 people;
- Income for the entire period does not exceed 24,038 MCI (KZT 82.931.100 in 2023).
The tax under a simplified declaration is 3% from income.
Special patent-based tax regime
Special patent-based tax regime is used by individual entrepreneurs who:
- do not engage employees;
- get marginal income for the year no more than 3,528 MCI (KZT 12.171.600 in 2023).
The individual income tax for a patent-based tax regime is 1% from income.
3. Registration of an individual entrepreneur
To register as an individual entrepreneur, one just needs to notify a tax authority about the beginning of entrepreneurial activity.
Notification makes it possible to conduct business from the moment of submission and in itself is a confirmation of registration as an individual entrepreneur.
The service for notification submission is fully automated and delivered within 1 working day on a free-of-charge basis.
Registration of individual entrepreneurship online
To send a notification on commencement of business, one should register on the e-licensing portal (elicense.kz). To do this, one needs to get a digital signature. Detailed instruction can be found here.
After registration, one needs to click "Notification on the commencement of activity as an individual entrepreneur" service.
Click "Order Service Online" button, after which you will be asked to choose a licensor, i.e. the tax authority to which you will be assigned.
Then fill out an application, specify the name of individual entrepreneurship, address, type of activity (CCEA) and select one of the tax regimes. Then, sign an application using your digital signature.
One can track the status of a submitted application and receive notifications in personal account in the section "My permits" -> "Notifications". This is how the IE registration procedure is carried out online.
Moreover, today, it is possible to submit a notification through the mobile applications of second-tier banks, while the service for registration as an individual entrepreneur is delivered through the “e-License” state information system.