Individual entrepreneurs (IE) must adapt to changes in the requirements for doing business in Belarus. On October 1, 2024, provisions came into force that limit the list of activities permitted for IE. This means that IE whose activities go beyond the approved list must either cease operations or transform into a LLC by December 31, 2025.
A “seamless transition” procedure has been introduced to facilitate this process. This procedure allows an individual entrepreneur to transform into a LLC with minimal administrative and tax costs. In this case, all rights and obligations of the individual entrepreneur are transferred to the created LLC including commitments to counterparties, tax authorities, and other government agencies.
In this article, we will examine the key aspects of the transition from an individual entrepreneur to a LLC in Belarus, including the advantages and disadvantages of each form, step-by-step instructions for a “seamless transition,” and the tax and legal implications of this process.
Comparative analysis of Individual Entrepreneurs and LLC
Choosing between an individual entrepreneur and a LLC is an important strategic step, especially in light of recent legal changes. Let’s consider both business forms’ key differences, advantages, and disadvantages in the Republic of Belarus.
1. Registration and administration
EI
Registration is carried out according to a simplified procedure—usually within one day—through the Unified State Portal of Electronic Services, at the executive committee, or a notary. Accounting is possible in a simplified form (or not carried out at all), and reporting is minimal.
LLC
Registration also takes place no later than the next day after submitting documents. Still, more is needed: an application for state registration, a decision to establish a company, a charter, and opening a temporary account before the activities start, when the authorized capital is formed in monetary form. Full-fledged accounting and regular reporting to tax and statistical authorities are required.
2. Responsibility
EI
He has unlimited property liability—in case of debts, he is liable for all his property, including personal property.
LLC
Liable for obligations only within the limits of the authorized capital. The personal property of the founders (if they have not personally guaranteed it) is not affected. There may be cases of founders being liable for the company’s debts, but this is an exception.
3. Access to activities
EI
2024 comes into force, individual entrepreneurs can only engage in certain types of activities approved by the Resolution of the Council of Ministers (for example, retail trade, household services, etc. ). From 2026, individual entrepreneurs will not be able to engage in, for example, wholesale trade, provision of legal services, copying activities, document preparation, and other specialized office activities, or performing arts.
LLC
May engage in any activity not prohibited by law. Has the opportunity to participate in state and international tenders, obtain licenses and permits for specific types of work.
4. Business scale and hiring employees
EI
It can hire workers, but this is usually limited to small volumes—no more than three people, including those who cooperate with the individual entrepreneur under a civil law contract. The business scale is often small, and the income ceiling is 500,000 rubles. You must close the individual entrepreneur or open a LLC if the income is higher.
LLC
Unlimited by the number of employees. This form is optimal for medium and large businesses, especially when entering foreign markets.
5. Image and trust of partners
EI
It is suitable for starting a business and working with individuals or small contractors. However, in some areas (for example, B2B, foreign economic activity ), the status of an individual entrepreneur may be taken less seriously.
LLC
This form is preferred when working with large clients, suppliers, and investors. It inspires more confidence and allows for more serious contracts.
6. Taxation
EI
Entrepreneurs can pay a single tax or a 20% income tax, and depending on the type of activity, they can pay VAT, excise taxes, environmental taxes, and others. An individual entrepreneur must also contribute to the social security fund, even when he does not have hired workers.
LLC
We can work on a simplified taxation system or a general one. The general system assumes income tax (20%), VAT (20%), and other taxes. The simplified system assumes a little over 6% of revenue. All organizations also pay “salary” taxes – taxes on wages accrued to hired workers.
Bottom line: When is it worth transition from an Individual Entrepreneur to a LLC
Transitioning from an individual entrepreneur to a LLC can be a balanced decision or a forced measure.
The transition from an individual entrepreneur to a LLC is justified when:
- You are expanding your business, hiring more employees, and planning to enter international markets.
- Your activities go beyond the approved list for individual entrepreneurs.
- Participation in tenders, obtaining licenses for certain activities, or working with government agencies is required.
- It is necessary to limit personal property liability.
- The revenue exceeds the amount permitted for individual entrepreneurs.
Transitioning to the status of a LLC in 2025 is not only a forced measure for many individual entrepreneurs but also an opportunity to reach a new business level.
The procedure for a “seamless transition” from an individual entrepreneur to aLLC
Due to changes from October 1, 2024, Belarus provides for a simplified procedure for converting an individual entrepreneur into a LLC, known as a “seamless transition.” This procedure allows an entrepreneur to create a LLC while maintaining current obligations, contracts, and even the UNP, while minimizing tax consequences and re-registration costs.
1. What is a seamless transition?
“Seamless transition” is the opportunity to create a LLC based on an existing individual entrepreneur, in which :
- Continuity of obligations is maintained.
- They process the transfer of employees from an individual entrepreneur to a newly created organization.
- There is no need to close the individual entrepreneur in a separate liquidation procedure.
The transition occurs within the framework of one procedure through tax and registration authorities.
2. Who can use the procedure?
The procedure is available for:
- Individual entrepreneurs registered as of October 1, 2024, whose activities do not comply with the new list of permitted activities, and who intend to continue their business in a different legal form.
- Moreover, such individual entrepreneurs must not have tax debts and must not be in the process of liquidation/bankruptcy.
3. Step-by-step instructions for the transition
Step 1. Notification of interested parties
Employees and business partners must be notified no later than one month before an individual entrepreneur’s transition to a LLC.
An individual entrepreneur must submit a tax return on income for the period before state registration as an individual entrepreneur.
Step 2. Preparing documents
Individual entrepreneurs need to prepare the following documents:
- Application for state registration of a LLC (form according to the decree of the Ministry of Justice).
- Constituent documents (charter, founder’s decision, former individual entrepreneur).
- Documents confirming payment of state duty.
- Confirmation of absence of tax debts (obtained automatically through the tax authority information system).
- Documents by name (if necessary).
It is also necessary to consider the new company’s legal address and organizational and legal form. Usually, individual entrepreneurs choose LLC or CHUP.
Preparing a transfer act for the transfer of property from the individual entrepreneur to the organization requires the particular entrepreneur to conduct an inventory of the property.
Step 3. Submitting documents
The package is submitted to the registration authority (executive committee or through the Unified Portal of Electronic Services or a notary). Submission may be:
- Personally
- By mail
- In electronic form (with digital signature)
Step 4. Registration of a LLCand closure of an individual entrepreneur
After registration of a LLC:
- The individual entrepreneur ceases operations automatically (without a separate application for liquidation).
- The LLC is issued a Certificate of State Registration.
Step 5. Transfer of rights and obligations
As are individual entrepreneur licenses, all current contracts and tax obligations are transferred to the LLC.
Renegotiating all contracts is unnecessary; it is enough to notify the counterparties.
Step 6. Notifying interested parties
Is necessary when a LLC changes bank details and lease agreements.
If an organization pays the simplified tax system, it must inform the tax office within 20 days after state registration.
It will be necessary to renew employment contracts with employees and send information to the Social Security Fund.
Benefits of Seamless Transition
- There is no need to close and re-register a business from scratch.
- Reducing administrative and tax burden.
- Preservation of succession and legal status.
- Minimizing interruptions in business activities.
Practical recommendations for transition from individual entrepreneur to LLC
Transitioning from sole proprietorship to LLC is a responsible decision that requires a strategic approach and strict compliance with regulatory requirements. To avoid mistakes and ensure the smoothest transition possible, follow proven practical recommendations:
1. Assess the feasibility of the transition in advance
Before initiating the conversion procedure, it is worth:
- Conduct a financial and tax analysis of the individual entrepreneur’s activities.
- Assess the prospects for scaling the business.
- Compare the costs and benefits of LLC status (including tax burden , responsibilities , and reputational factors) .
- Consider whether your business falls under the restrictions of the new list of permitted activities for individual entrepreneurs ( from October 1, 2024 ).
- Conduct an inventory.
Advice: At this stage, it is beneficial to consult a lawyer or tax advisor who can help you make an informed decision based on your circumstances.
2. Prepare documents in advance
Document collection is one of the most sensitive stages. An error in the application or the absence of the necessary certificate may result in a refusal to register a LLC.
Recommended:
- Make a checklist of the necessary papers.
- Make sure that the data is correct and that the documents are valid.
- Specify whether prior notice to the tenant, partners, or banks is required.
Necessary: Our lawyers will not only check the package of documents but also prepare it as “turnkey,” considering the requirements of the executive committee or online registration.
3. Plan the transition with minimal disruption to work
While the “seamless transition” procedure avoids business interruption, it is essential to:
- Notify all counterparties (including banks and tax authorities) in advance.
- Consider changes in accounting and the tax system, and find a company that will handle accounting and personnel records.
- Ensure the continuity of employment contracts and contractual obligations.
Hint: Our specialists will advise you on how to issue notifications, change the details, and not violate the terms of current agreements.
4. Consider the tax strategy of the new LLC
When moving from an individual entrepreneur to a LLC, the reporting forms and the approaches to taxation change. Possible regimes are a simplified tax system with VAT, a simplified tax system without VAT, and a general taxation system.
Recommended:
- Choose a tax regime before applying.
- Calculate the expected tax burden for 1–2 years ahead.
- There is a need for new accounting and reporting procedures.
- Hire a chief accountant for a new organization or agree with a company that provides accounting services.
Legal assistance is especially valuable when choosing a tax strategy. Our experts will advise you on which regime is most beneficial for your business and how to properly transition to it.
5. Get the succession right
- To retain clients and partners, it is essential:
- It is not just about registering a LLC but also about formalizing the succession of obligations.
- Prepare templates for notifications to counterparties.
Update information in electronic platforms, marketplaces, and official databases.
Advice from practitioners: We will recommend how to correctly draw up legal notices and make all necessary changes to contracts and documents to avoid claims in the future.
6. Act with the support of professionals
Although the “seamless transition” procedure seems simple on paper, in practice, it requires precision and knowledge:
- Choosing the wrong tax regime can lead to increased costs.
- An error in the registration of succession leads to the loss of clients.
- Missed notifications lead to legal disputes.
That’s why it’s worth entrusting this process to our experienced lawyers. We:
- Let’s assess your situation.
- We will prepare the documents.
- We will accompany the submission.
- We will take on communications with government agencies and contractors.
- We minimize risks and provide complete legal protection at all stages.
Conclusion
Transitioning from an individual entrepreneur to a LLC is a logical step for those who want to expand their business, improve their business reputation, and reach a new level of partnership. However, along with new opportunities, this step also entails new responsibilities, including stricter reporting, taxation, and business in general requirements.
In Belarus, registering a LLC is relatively transparent and fast, but it is essential to understand that a “seamless” transition is not just a formality. It requires preparation, competent document execution, the correct choice of tax regime, and legally verified continuity of all obligations.
Enlisting the support of experienced specialists in advance is recommended to avoid risks associated with client loss, tax errors, or refusals from government agencies. Our lawyers have extensive experience supporting such transitions and will help you navigate this path calmly, quickly, and without unnecessary costs.
Contact us, and your business will continue to develop in a new status without pauses, conflicts, or legal difficulties.
