How to independently open a private entrepreneur of the 2nd group: step-by-step analysis

Opening a private entrepreneur (PE) of the 2nd group is a common way to legalize small business in Ukraine and optimize tax burden. The registration procedure is formally not complicated, however, in practice, applicants often face questions: which activity codes to choose, which documents to prepare, where to submit the application, and how to correctly switch to the simplified taxation system.

This material presents a step-by-step analysis of the stages of independently opening a PE of the 2nd group — from data preparation and choosing the KVED to registering as a single tax payer and accounting with regulatory authorities. This approach will minimize errors, reduce time costs, and avoid typical organizational and legal miscalculations at the start of entrepreneurial activity.

Preparation for registering a PE of the second group: analysis of requirements and selection of types of activities.

The first step is to understand whether this tax model is suitable for you. Analyze revenue limits, the list of permitted types of activities, and the prohibition on working with certain categories of counterparties. Compile a list of potential clients: individuals, PEs, legal entities under the simplified or general system. Then compare it with the requirements of the second group to avoid additional charges and fines after a few months of work. It is useful to think in advance about the work scheme: whether you will provide services remotely, work offline, combine several areas, or scale one key product.

• Determine the key service/product — what exactly you will sell and to whom.
• Form a pool of types of activities (KVED) — main + reserve for expansion.
• Check compliance with limits — projected income and work format.
• Consider restrictions — prohibited areas and types of services for group 2.

Step-by-step procedure for registering an individual entrepreneur through the Diia portal and in the CNAP practical recommendations

Through the portal Diia the process takes minimal time: log in using your digital signature/BankID, in the «Services» section select entrepreneur registration and fill out the electronic form. Prepare in advance: KVED code (main and additional), address of business activity and contact details. In the form, indicate your desire to become a payer of the single tax of group 2 and to be registered in the ESV system — there are separate checkboxes and fields for this. Before submitting the application, check the match of passport data and RNOCPP, the correctness of the email and phone number. After signing the application with a digital signature, the status can be tracked in the cabinet; the result will be an entry in the EGR and an electronic extract.

• In the CNAP submit a paper application in the established form, indicating group 2 of the single tax.
• Bring with you: passport, RNOCPP, if available — a power of attorney for the representative.
• Write out the list of KVED codes in advance to avoid corrections and resubmission.
• Clarify the reception schedule and the need for prior appointment in a specific CNAP.

Choice of taxation system and single tax rate for individual entrepreneurs of the second group

At the registration stage, it is important to immediately determine whether you will work under the simplified system or remain on the general one. For individual entrepreneurs of the second group, the optimal option is usually the simplified system with the payment of a single tax and ESV. When choosing, consider the format of activity, average check, number of clients, and the presence/absence of hired personnel. It is important to understand the limitations: there is an established list of permitted types of activities, an annual income limit, and a ban on working with certain categories of counterparties. Incorrect choice may lead to tax reassessments, so calculate the financial model in advance for at least a year ahead.

The single tax rate for the second group is set by the local council as a percentage of the minimum wage, but not exceeding the maximum amount approved by the Tax Code. The actual amount to be paid may vary depending on the region, so it makes sense to check the decisions of your city or village council and compare the tax burden for different types of activities before submitting an application.

• Consider income limits – if exceeded, you will have to change groups or switch to the general system.
• Check the KVEDs – not all types of activities are allowed for the second group.
• Assess the type of clients – predominantly the population and other individual entrepreneurs on the single tax.
• Compare rates by communities – in different communities, the amount of the single tax may vary.

Organization of accounting and tax accounting for FOP of the second group to minimize risks and fines

For safe operation under the simplified system, it is important to establish clear and systematic accounting from day one. Determine how you will record income: in spreadsheets, specialized services, or through accounting software. The main thing is daily registration of receipts and reconciliation with bank statements. It is useful to immediately set up a separate current account for entrepreneurial activities to avoid mixing personal and business funds, as well as to keep all primary documents: acts, invoices, receipts. This will allow you to confirm the origin of funds and the structure of income if necessary.

• Control of income limits — monitor to ensure you do not exceed the established threshold for the second group.
• Monitoring of types of activities — check that the actual services correspond to the declared OKVED.
• Timely reporting — submit declarations and pay the single tax and ESV without delays.
• Transparent calculations — avoid cash transactions without supporting documents.

Concluding thoughts

In summary, registering as an individual entrepreneur of group 2 is a clear and achievable task provided that all stages are carefully followed: from document preparation and registration to choosing a tax system and registering with regulatory authorities.

Strict adherence to a step-by-step algorithm minimizes the risks of errors and unnecessary time expenditures, as well as ensures legal and transparent operations from the very first days of work.

In case of non-standard situations or doubts in interpreting legal norms, it is advisable to seek consultation from relevant specialists — an accountant or a lawyer. This will help adapt general recommendations to your specific business model and avoid potential violations in the future.