What is a sole proprietorship?
Many people choose to start a sole proprietorship (Enkeltmandsvirksomhed abbreviation EMV). As a first step toward independent business. A sole proprietorship means that one individual is the owner.
💡 However, this does not mean that only one person can work in a sole proprietorship - nothing prevents you from hiring employees. The name „one-person” refers only to the issue of ownership.
Advantages and disadvantages of running a sole proprietorship
Running a sole proprietorship has its pros and cons. It is worth knowing them before making a decision.
Advantages
✅ No registration costs - setting up a business is free,
✅ No initial capital requirement (In the case of a partnership in Denmark, Aps is DKK 20,000),
✅ No obligation to audit annual reports (revision af regnskaber),
✅ No need to file annual financial statements, the company's financial performance is not visible to the public,
Disadvantages
❌ As the owner of a sole proprietorship, you are responsible for its debts with your own private assets,
❌ You can be the sole owner - a sole proprietorship does not allow for joint ownership.
How to start a sole proprietorship?
Starting a sole proprietorship is quick, easy and completely free. If you want to start your own business, all it takes is a few steps:
- Visit virk.dk and click „Start virksomhed”,
- Log in with MitID,
- Choose the form of business: „Enkeltmandsvirksomhed” (sole proprietorship),
- Provide your personal information (name, surname, address, etc.), as well as information on VAT registration and other tax obligations,
- Click „OK.”.
Once registration is complete, you will receive a CVR (Central Business Register) number for your e-Box usually within a few days.
Attention! If you are collecting unemployment benefits (dagpenge) or other benefits and you want to run a company in addition, make sure to check with the office that pays the money to see if you can do so.
What requirements must a sole proprietorship meet?
Many entrepreneurs opt for a sole proprietorship because its registration does not require any initial capital - unlike limited liability companies (ApS) here the minimum capital is DKK 20,000 or joint stock companies (A/S) - minimum capital is DKK 400,000.
There is also no obligation to appoint a management or supervisory board - all decisions are made by the Owner.
However, a sole proprietorship must meet certain basic legal requirements:
- The company name must not be confusing and should be clearly distinguishable from other registered companies,
- The company must keep accounts in accordance with the Danish Accounting Act (bogføringsloven) so that all financial transactions are documented.
Who is responsible?
As the owner of a sole proprietorship, you are responsible for its debts with your own private assets.
This means that if the company goes into debt then people or institutions to whom you owe money can demand repayment from your personal assets - such as your car, house or savings.
Taxes and VAT in a sole proprietorship
A sole proprietorship pays income tax on its profit. The owner accounts on the same basis as an individual, which means that he pays tax on the full amount of income.
Example (simplified):
Jan runs a VAT-registered one-man construction company (MOMS). In 2025, his revenue (the amount of money the company earned excluding VAT) was 500,000 DKK, and operating costs, such as materials, fuel and tools, amounted to DKK 200,000 (excluding VAT).
Income calculation:
DKK 500,000 (revenue) - DKK 200,000 (expenses) =. 300,000 DKK (income before tax)As a sole proprietor, Jan does not pay tax as a company, but settles like an individual. This means that his income is subject to the same tax rules as for a salaried person.
If the company makes losses, you can deduct them from your own income or your spouse's income.
A sole proprietorship usually has to be registered for VAT(Moms). If you expect to make a profit running a sole proprietorship then set up a B-skat advance tax. Read more about B-skat read here: https://your-adviser.dk/b-skat/.
Conversion of a sole proprietorship into an ApS
If you set up a sole proprietorship, but later notice that the business is growing, it is worth considering converting it to an ApS. This can be a good idea to reduce liability risks and other forms of taxation. In addition, it allows for other ownership and board structures.
How about a PMV instead of a sole proprietorship?
An alternative to a sole proprietorship is the following PMV (Personligt ejet Mindre Virksomhed). - That is, the so-called one-person small personal business.
Thanks to PMV - Personligt Ejet Mindre Virksomhed you can try your hand at business without much cost, without much bureaucracy, and without start-up commitments. 🚀
The biggest difference between a PMV and a sole proprietorship is the turnover limit. For a PMV, revenues cannot exceed DKK 50,000 In other words, a company cannot bill more than 50,000 kr in a calendar year. If you exceed this limit, you must convert your business into a sole proprietorship (EMV) or other legal form.
Main Advantages and Disadvantages compared to a sole proprietorship (EMV) :
✅ you save time and money - you don't have to keep VAT records or file VAT returns,
✅ you can offer lower prices to customers and be more competitive, or earn more because you don't have to add VAT to your invoices.
❌ you can't deduct VAT on purchases, but you can include the total cost of the purchase in your tax return
❌ You can't have employed workers,
❌ You cannot import or export to countries outside the EU.
PMV it's the perfect A startup solution if you're not sure if your business will grow. Once you exceed DKK 50,000 per year, you can easily turn your business into a Enkeltmandsvirksomhed (EMV). And further develop the business.
Want to know more about PMV? You can find all the essentials in our article here:
Have a business idea? Take the first step with PMV and grow at your own pace
Differences between EMV and other forms of business in Denmark
When you need to choose a form of business, there are many different factors to consider. Ultimately, the right form of business will always depend on your specific situation and needs.
To make it easier for you to choose, we've prepared an overview where you can quickly learn the similarities and differences between the four most popular business forms for self-employed people and entrepreneurs: PMV, sole proprietorship EMV, I/S and ApS.
| Criterion | PMV | EMV | Partnership (I/S) | Ltd. (ApS) |
|---|---|---|---|---|
| CVR number | ✔️ Yes | ✔️ Yes | ✔️ Yes | ✔️ Yes |
| number of owner? | one | one | many | many |
| Responsibilityć | Full asset liability - you are responsible for the company's obligations with all your assets. | Full asset liability - you are responsible for the company's obligations with all your assets. | Full asset liability - you are responsible for the company's obligations with all your assets. | Liability limited to the company's capital and any guarantees. |
| Obligation to file an annual financial report? | ❌ No | ❌ No | ❌ Partial - if at least one partner is an individual, there is no obligation to file a report | ✔️ Yes, visible to the public |
| Obligation of bookkeeping? | ✔️ Yes | ✔️ Yes | ✔️ Yes | ✔️ Yes |
| VAT registration obligation? | ❌ No | ✔️ Partial - if turnover exceeds DKK 50,000 in 12 months | ✔️ Partial - if turnover exceeds DKK 50,000 in 12 months | ✔️ Partial - if turnover exceeds DKK 50,000 in 12 months |
| A turnover limit? | Maximum of DKK 50,000 per calendar year | No limit | No limit | No limit |
| Can employees be hired? | ❌ No | ✔️ Yes | ✔️ Yes | ✔️ Yes |
| Is it possible to trade across borders in the EU? | ❌ No | ✔️ Yes | ✔️ Yes | ✔️ Yes |
| Initial capital required? | ❌ No | ❌ No | ❌ No | ✔️ Yes - minimum DKK 20,000 |
Still wondering what form of business to choose? take a peek here: What form of business in Denmark will be best for you?
Not sure where to start? Need more information or advice?
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