Starting a business in Cyprus involves important decisions, and one of the first important decisions you’ll face in Cyprus is whether to set up a company or register a trade name. While both options can serve different needs, it’s essential to understand what each involves so you can choose what’s right for you and your goals.
Legal Status and Personal Liability
A company is considered a separate legal entity, which means it stands on its own — it has its own rights, responsibilities, and liabilities. One of the biggest advantages here is limited liability: your personal assets are protected if the business runs into financial trouble.
On the other hand, a trade name is simply the business name you operate under. If you’re a sole trader, this means there’s no legal separation between you and the business, and you’re personally responsible for any debts or obligations the business takes on.
Business Structure and Growth Potential
Forming a company gives you a solid, formal structure that’s perfect if you plan to have business partners, shareholders, or want to attract investors in the future. It also gives you the flexibility to run multiple trade names under one company, letting you branch out into different areas without setting up new legal entities each time.
A trade name, meanwhile, works well for individuals or small partnerships looking for a simple, cost-effective way to operate under a brand name without the added responsibilities of running a company.
Regulatory and Reporting Requirements
Companies in Cyprus have certain legal and reporting duties they need to meet, including:
- Filing annual returns and audited financial statements
- Registering Ultimate Beneficial Owners (UBOs)
- Notifying the Registrar about any changes to company details
In comparison, trade names come with fewer obligations. The main responsibilities involve registering the name, keeping records up to date, and notifying authorities if the business closes.
Tax Considerations
When it comes to tax, companies in Cyprus pay corporate tax on their profits. If you’re operating under a trade name as a sole trader, any income you make is treated as personal income and taxed according to your individual tax rate. This can influence your decision, depending on your expected earnings and personal financial situation.
Your choice between a company and a trade name should reflect your business goals, how much risk you’re comfortable with, and how much regulation you’re prepared to handle. A company offers structure, protection, and potential for growth, while a trade name keeps things simple and affordable.
If you’d like guidance on company registration, trade name filings, or staying on top of legal requirements in Cyprus, we’d be happy to help.
Disclaimer
Disclaimer
This guide contains information for general guidance only and does not substitute professional advice, which must be sought before taking any actions.
