Who this guide is for
This guide is written for someone who has never had a registered business: a person with a trade, an idea for a shop, or a first client. We assume no prior knowledge — every term is explained the first time it is used. By the end you will know which legal form to choose, where registration takes place, when the VAT obligation arises, whether you need a fiscal cash register, and how to hire your first employee lawfully.
Step 1 — Choose the legal form: sole proprietorship or LLC
This is the one decision in the process that is genuinely difficult to change later, so do not make it by looking only at the cost of setting up.
The sole proprietorship (individual business, B.I.) is the form in which the business and the person are one and the same in the eyes of the law: you are the only owner, but liability is unlimited — if the business runs up debts it cannot settle, creditors can reach your personal assets.
The limited liability company (SH.P.K., an LLC) is a legal person separate from you, with a founding act, its own capital and room for several shareholders. A shareholder's liability is limited to what they have invested, not to their entire personal wealth.
| Issue | Sole proprietorship | LLC |
|---|---|---|
| Liability | Unlimited — extends to personal assets | Limited to the capital invested |
| Ownership | A single person | One or more shareholders |
| Formation | Registration form | Founding act and statute, with founding capital |
| Taking money out | Directly by the owner | By salary or profit distribution, documented |
| When it makes sense | Trades, individual services, small retail | Partnerships, large contracts, operational risk |
As for tax, the difference at the outset is smaller than most people assume. Sole proprietorships with annual gross receipts up to €50,000 — and commercial companies up to €30,000 — are taxed at simplified rates on turnover: 3% for trade, transport and agriculture, and 9% for services, crafts and professions, with a minimum of €37.50 per quarter. Above that level full books are kept and tax is calculated on actual profit — but not at the same rate: a commercial company pays 10% of taxable profit, whereas a sole proprietorship is taxed at progressive rates: 0% up to €3,000, 8% on €3,000–5,400 and 10% above €5,400 per year. So when turnover is small, the legal form does not change the tax burden much; what it changes is liability — and, above the threshold, the rate itself.
The question that helps you decide is this: how large is the maximum damage if something goes wrong? The larger that damage — goods on consignment, construction contracts, a sizeable workforce — the more an LLC is worth it. We work through this decision under business advisory.
Step 2 — Registration with KBRA and the unique identification number
Registration takes place at the Kosovo Business Registration Agency (KBRA), the only institution responsible for it. You apply online or at KBRA's municipal One-Stop-Shop centres — counters where everything is handled in one go.
The form declares the business name, the owner or the shareholders, the main economic activity and the units in which the activity will be carried out. For a sole proprietorship, the abbreviation B.I. is added to the name. Take your time over the main activity: it affects your tax treatment later on.
You come out of this step with the unique identification number (NUI) — a nine-digit number beginning with 81 that goes on every invoice, contract and tax return.
Step 3 — Registration with TAK happens by itself
Many people believe that after KBRA they must register separately with the Tax Administration of Kosovo. That is not the case: the moment you are issued the NUI, you are registered with TAK as well. What you do have to arrange yourself is access to EDI — the electronic system through which payroll, VAT, tax instalments and the annual return are filed. For our clients we file the returns ourselves, as we describe under how we work.
One thing catches new businesses off guard: the obligation to file starts with registration, not with the first invoice. Even a month with no turnover is declared — at zero.
Step 4 — Opening the business bank account
With the registration certificate and the NUI you open an account in the name of the business. This is no formality: the law on tax procedures requires transactions above €300 between persons carrying out economic activity to go through a bank account, and large cash payments put the deductibility of the expense at risk. Do not mix business money with personal money, not even as a sole proprietor.
Step 5 — VAT: when the obligation arises
VAT registration does not happen when the business opens. The obligation arises when annual turnover exceeds the threshold of €30,000. Below that threshold you charge no VAT on your invoices, but neither do you deduct the VAT you pay on purchases.
Voluntary registration is allowed below the threshold as well, and it is worth it when your main clients are themselves VAT-registered businesses, or when you have start-up investments with deductible VAT. It is not worth it when you sell to final consumers, because the price goes up by 18%. Once registered, the rates are 18% standard and 8% reduced for a limited list of products, and the return is filed by the 20th of the month. The details are in our VAT questions.
Step 6 — The fiscal cash register
Everyone supplying goods or services in places open to the public is required to use an electronic fiscal device (EFD) — a fiscal cash register, a fiscal printer or a fiscal system integrated with the existing till, purchased from operators authorised by TAK.
The obligation has three parts, and all three are checked: the device must be fiscalised, a fiscal receipt must be issued for every sale, and the data must be transmitted to TAK periodically.
Step 7 — The first employee
This is where a new business goes wrong most often, because the obligations begin before the first day of work.
- A written employment contract — setting out the position, the working hours, the duration and the pay. Pay cannot be below the minimum wage, which from 1 July 2026 is €500 gross per month, or around €3 per hour.
- Notifying the employee through EDI — the employer notifies TAK that the contract has been concluded one day before the employee starts work, using the employee registration form. This is the deadline that is forgotten most often.
- Calculating the pay — the pension contribution is 5% from the employee and 5% from the employer. The taxable base is arrived at by deducting the employee's contribution from gross pay, and the monthly brackets are applied to it: 0% up to €250, 8% on the portion from €250 to €450, and 10% above €450. On €500 gross, net pay comes to €456.50.
- Filing — the payroll list, the wage tax and the contributions are declared by the 15th of the month for the preceding month.
Before you make the offer, work out what the employee actually costs you — gross plus the employer's 5% contribution — with the salary calculator.
Deadlines that start immediately
| Deadline | What is filed |
|---|---|
| By the 15th | The payroll list, the wage tax and the pension contributions |
| By the 20th | The VAT return and payment, if you are a VAT filer |
| 15 April, 15 July, 15 October, 15 January | The quarterly advance tax instalments |
| 31 March | The annual return and the financial statements |
The full calendar is on the tax deadlines page.
The mistakes we see most often
- Choosing the legal form on cost alone. The sole proprietorship looks easier, until the first debt that cannot be settled arrives.
- The employee starts work before being notified through EDI. Work of even a single week without it is treated as undeclared employment.
- Not filing in months without turnover. A zero return is still a return; silence counts as failure to file.
- Large cash payments. Anything above €300 between businesses has to go through the bank.
- Losing sight of the VAT threshold. Turnover is monitored during the year, not at the end; crossing the threshold without registering creates a retroactive liability plus a penalty.
- Keeping invoices in a box. A lost invoice is lost VAT and an unrecognised expense.
Once the business is registered and the account is open, the real work has only just begun: invoices have to be recorded, returns have to be filed and deadlines have to be met. That is what our accounting service covers, including for businesses that have only just started out.