Nowadays, many people in Armenia choose to register as sole proprietors (SP) to start a small business or offer professional services. However, a common question arises: Does a sole proprietor need to keep accounting records, or is it enough just to pay taxes? In this blog, we’ll explore why accounting is important for SPs, even when their turnover is low.
Accounting for Sole Proprietors
Sole proprietor accounting includes the following:
Recording income and expenses
Filing tax reports
Calculating social contributions
Accurately registering costs and revenue
Properly organizing and storing documentation
These practices help avoid financial confusion and tax penalties that can arise from incorrect or late reporting.
Is Accounting Mandatory for Sole Proprietors?
According to Armenian legislation, sole proprietors are required to keep accounting records, even if they have no employees. You are obligated to file:
Turnover tax or income tax declarations
Social contribution reports (if you employ others)
An annual report by April 20th each year
This means that accounting is mandatory for SPs, though it is more simplified compared to LLCs.
What Can Go Wrong Without an Accountant?
Lack of proper accounting can lead to:
Fines and penalties from the tax authorities
Problems with bank credit scoring
Risk of tax audits
Possible miscalculations and income loss
That’s why many sole proprietors opt to use accounting services for SPs, even with a small monthly turnover.
Benefits of Having an Accountant for SPs
Peace of mind — no fear of fines
Accurate calculations in full compliance with the law
Timely payments and reports
Legal ways to optimize and reduce tax burden
Professional support in tax-related matters
Should You Do It Yourself or Hire a Professional?
If you specialize in finance or accounting, you may consider managing it yourself. But if you’re unsure of your calculations or simply lack the time, it’s better to turn to an accounting firm or a private accountant.