Running a business
In order for you to be able to register a sole proprietorship, you have to be running a business.
Business is activity going on over a period of time, and which might potentially yield a profit. You are solely responsible for the business activity in your sole proprietorship.
Am I running a business?
These questions can help you assess whether you are running a business activity or not:
- What kind of activity are you doing? Can you make an income from this?
- How much time do you spend doing this? If you do not spend much time doing this, it might be more of a hobby.
- How large is the turnover? If it is quite low, this might imply that you are not running a business.
Activities which are single occurrences or hobbies do not qualify as a business, and can therefore not lead to the registration of a sole proprietorship.
Examples of hobby activity
- Per works as a full-time teacher and builds birdcages on his spare time. He wants to sell these at the annual Christmas market to cover expenses.
- Liv is an active photographer and takes on some work which now and then generates a little income. She has no intention of starting a company, but rather doing an activity from which she can earn a small income.
When does this qualify as a business activity?
- The sale of the birdcages was a success, and Per has received a number of orders from far and near. He builds cages all year, and spends most of his spare time doing this. Now he wants to sell cages on several Christmas markets, and is looking into the possibility of carpentry to be an extra source of income. He would like to continue this activity several years in a row, and possibly expand it to other products. His long term plan is to be doing this full time.
- Liv is a skilled photographer, and she receives a lot of inquiries from both private individuals and companies. The time spent doing photography and managing the requests is increasing considerably. Liv is looking at the possibility of having photography as her main source of income.