Sole Proprietorship

Sole Proprietorship is the most common legal form of small business, mainly due to its flexibility and immediacy in decision-making and execution, the limited costs of organization and administration and the relatively simple set-up process. In a sole proprietorship, whether other people are employed or not, the entrepreneur is both the owner and the manager. As a sole partner, it is solely responsible for the decisions and operation of the company as well as for its obligations, with all its personal property. Serious issues of the company depend on this relationship, such as its creditworthiness and ultimately, its very existence.

The adoption of this legal form of business is recommended for small commercial and technical enterprises, which are characterized by the need to quickly adapt to market conditions - are free to differentiate themselves in the products and services they trade without modification of its articles of association -, as well as agricultural or craft enterprises, where personal work and supervision in matters concerning the size and quality of production is considered crucial.

 

The model of the Sole Proprietorship was, and still is, the backbone of the Greek economy, enumerating advantages based on its easy, fast and inexpensive establishment - the establishment process, as we will see below, is very simple, without the requirement of a minimum set-up capital and with low fixed costs (organizational - operational), due to the non-mandatory continuous accounting monitoring. We should also consider the speed and flexibility in making / executing decisions as well as the adaptability to market changes to be an important advantage. Neither boards nor shareholders' boards, the owner is solely responsible for making each business decision and at the same time for how it will be implemented.

 

The main disadvantage is considered to be the assumption of the business risk entirely by the entrepreneur. His liability for the company's liabilities to its creditors extends to his personal assets, when those of the company are insufficient. Another disadvantage is certainly the difficulty of expanding the business due to lack of capital and due to limited access to the capital markets, as well as the inability to transfer the assets to another person. Finally, excessive centralization of responsibilities, in order to save costs, is often an obstacle to its further development. The above, under the appropriate conditions (economies of scale), lead the Sole Proprietorship to its transformation into another legal form such as Ltd., PC. or its "abusive conversion" into a SA.

 

Establishment

The establishment of a Sole Proprietorship can be easily distinguished in the following stages:

1. Determining the place of establishment of the business which is proved either by a lease, or by a concession, or by a real estate contract, if it is a privately owned space.

   • Registration in the Compulsory Insurance Fund (Insurance Organization for Freelancers - O.A.E.E.).

   • Certificate of pre-registration information for the right to use the Distinctive Title, which has been chosen to be used, by the relevant Chamber. 

2. Certificate of Commencement of Activity and VAT number from the competent tax authority.

   • Registration of the company in the Chamber where it belongs depending on its activity (Commercial & Industrial, Craft or Professional Chamber) for receipt of "Certificate of registration and payment of annual contributions".

   • Issuance of "OPERATION LICENSE" for the cases of exercising specific activities.

The establishment of a Sole Proprietorship is not a part of the new One Stop Services (YMS) process. This practically means that the whole process of establishment takes place in the local Tax Offices and in the local services of the relevant Chamber. The registration is completed, at the earliest, the next day after the submission of the supporting documents and after checking them, the registration of the Company's Name and Distinctive Title in the Protocol of Insignia and Distinctive Titles, the subscriptions due to the Chamber are fulfilled and its registration in the General Commercial Register-ΓΕΜΗ take place.