A sole proprietor is the simplest and most common form of business registration in Albania. In this article, we will discuss in more detail sole proprietorships in Albania and the importance of this form for entrepreneurs.
According to the National Business Center, over 196,000 active businesses operate as sole proprietorships, nearly four times more than LLCs (sh.p.k.).
It is the preferred structure for independent professionals, freelancers, and single-owner businesses.
Any individual engaging in commercial economic activity is legally required to register as a sole proprietorship with the National Business Center (QKB), pursuant to Article 22 of Law No. 9723/2007.
This obligation applies to:
Standard Traders. Individuals who sell goods or provide services for profit, where the scale of the activity requires a commercial organization.
Independent Professionals. Lawyers, notaries, accountants, physicians, engineers, and artists, provided a specific law grants them the status of a trader.
Agro-Business Operations. When the activity focuses primarily on the processing and sale of agricultural or livestock products.
A natural person carrying out very small-scale activity, a small trader, is not required to register, in accordance with the thresholds approved by order of the Minister of Finance.
Read also: Should I register as an individual or as a company?
A natural person as a merchant is governed by the Civil Code and Law No. 9723, dated May 3, 2007, For Business Registration, as amended, still in effect.
According to the Civil Code, a trader is a natural person who exercises an independent economic activity that requires a standard commercial organization.
Three Essential Rules:
Businesses with annual revenue under 14,000,000 lek pay a 0.3% tax on profit until 2029, according to Law 29/2023. The general rule applies to this limit.
Depending on the category and annual turnover, a sole proprietorship may be subject to VAT, simplified turnover tax, or standard corporate tax. Detailed regulations can be found in the tax legislation.
Pursuant to Instruction No. 9/2026 (March 2026), if 80% or more of your income as an individual comes from a single client, or 90% or more from fewer than three clients, the tax administration may treat the relationship as disguised employment rather than as independent activity.
If you are in this situation, complete and file the Self-Employed Status Declaration with the regional tax office by March of the following tax year.
Yes. A sole proprietor can hire staff. You must register employees for social security and health insurance contributions and comply with the Labor Code.
Not directly. Albanian law does not recognize a direct conversion from a sole proprietorship to an LLC. You must deregister as a sole proprietor and register an LLC as a new entity, following the applicable deregistration and initial registration procedures.
While not legally mandated, it is highly recommended in practice. Although the owner can maintain the ledger of turnover, filing tax returns and managing payroll contributions require specialized expertise.
A sole proprietor receives an individual NIPT. This unique number identifies the business in all communications with the tax administration and the QKB, and it remains unchanged throughout the life of the activity.
Read also: How to register as a natural person on e-Albania.