Sole proprietorship (self-employed person)

This page was last modified on 13-02-2017

A sole proprietorship indicates a person carries out his activity in his own name, whether he is a trader, a skilled craftsman or a self-employed intellectual worker. A self-employed entrepreneur takes decisions alone and has sole responsibility for the financing of the business. The entrepreneur therefore assumes full responsibility towards third parties (debts of the business) and commits his personal assets.

This form of operation guarantees independence as well as minimal formalities. There are nevertheless higher risks for the entrepreneur since liability is not limited to the amount of his contribution.

Who is concerned

The term 'sole proprietorship' covers all entrepreneurs running a business in their own name:

  • persons who carry out a professional activity on their own account (in their personal name), which falls within the competence of:
    • the Chamber of Trades (skilled craftsmen - Chambre des Métiers);
    • the Chamber of Commerce (traders and manufacturers - Chambre de Commerce);
    • the Chamber of Agriculture (farmers - Chambre d'agriculture).
  • self-employed intellectual workers, who can be divided into:

Entrepreneurs carrying out a business in their own name are affiliated to the social security as self-employed workers.

Prerequisites

Entrepreneurs must be in a position to acquire the status of a trader, craftsman or self-employed intellectual worker and must be in possession of the required qualifications and permits for their activity. Depending on the trade (profession), there may be additional conditions to satisfy in order to carry out the desired activity.

It may also be useful for married entrepreneurs to opt for the matrimonial regime of separation of assets in order to avoid exposing common assets to seizure by the creditors of the business.

How to proceed

Creation of the company

Constitutional documents

  • no constitutional document (articles of association) is required because the entrepreneur is acting in his own name;
  • no legal personality is created – only the business operator (entrepreneur) has a legal personality as a natural person.

Duration

In the event of death of the entrepreneur, the business is subject to the common law of successions with the possible risk of dismantling.

Capital

No minimum capital is required and the operator alone decides to commit capital to his business.

Partners

Numbers

Only the entrepreneur.

Conditions

  • the entrepreneur must be capable of administering assets;
  • depending on the activity, specific qualification is required.

Liability

  • private and professional assets are pooled;
  • the entrepreneur has unlimited liability for all the debts and commitments of the business on his personal assets.

Accounting and financial information

  • the annual accounts do not have to be published to third parties;
  • the entrepreneur must keep transparent accounts (ledgers that show monetary inputs and outputs).

Taxation

There is no withholding tax at source. The tax authority may subject the entrepreneur to a tax regime of quarterly advance payments.

Social security

  • the entrepreneur (natural person) is affiliated to the Social Security as a self-employed worker;
  • he is personally responsible for the timely payment in due form of social security contributions.

Who to contact

Chamber of Skilled Trades and Crafts
2, Circuit de la foire internationale
L-1347 - Luxembourg-Kirchberg
Postal box B.P. 1604 / L-1016
Luxembourg

Email contact@cdm.lu

14, rue Erasme
L-1468 - Luxembourg
Luxembourg
Phone: (+352) 42 39 39 - 330
Email info@houseofentrepreneurship.lu

Opening hours
from 8.30 to 18.00