The classic question that those who want to start a business begin with, but also the uncertainty with which freelancers and entrepreneurs step into the new year after the fiscal changes we’ve already gotten used to at the end of December, every year. So, let’s talk about what to choose for your business if you want to start one in 2025 or if you already have one, starting from how the conditions and taxation systems have changed for these two legal forms.
Brief reminder about the main differences between SRL / LLC and Sole Proprietorship
SRL
– Limited liability to social capital
– Suitable for businesses with high growth prospects
– Easy to hire employees
– Possibilities to access non-refundable funds
– Can have an unlimited number of CAEN codes, which don’t require certifications (with some exceptions and restrictions)
– Advantageous taxation system (1 or 3% of income for micro-enterprises, respectively 16% for profit tax payers)
– But also many declarations to submit, including SAF-T
– Higher establishment and administration costs
– Mandatory to have an accountant
Sole Proprietorship
– Suitable for small businesses, liberal professions, or independent activities
– Lower initial costs and quick establishment procedure
– Simplified accounting, no obligation to have an accountant (except when you become VAT registered or have employees)
– Taxes are easier to calculate but can be higher (10% income tax, mandatory health insurance regardless of income, social security contributions)
– You only need to submit the single declaration (except when you become VAT registered or have employees)
– No need to submit SAF-T or annual financial statements
– But you have unlimited liability (you’re liable with personal assets)
– Limitations regarding CAEN codes and number of employees
– Need certifications to operate as a Sole Proprietorship
– And no possibilities to access non-refundable funds
What To Choose For Your Business In 2025?
To answer this question, I propose we look at what changes exist from January 1, 2025. Let’s take them one by one:
Micro-enterprise threshold
Until now, the most attractive form for a new business would have been a micro SRL. The threshold was 500,000 euros for the 3% income tax rate. Moreover, if you obtained income up to 60,000 euros, you could pay only 1% (excluding certain domains like HoReCa, IT, dentistry).
From January 1, 2025, the data has changed radically, and this affects not only newly established companies but also old ones. The turnover threshold for micro-enterprise classification has dropped dramatically from 500,000 euros to 250,000 euros. Specifically, a company that had 250,000 euros on December 31 now moves to profit tax.
Additionally, from January 1, 2026, there will be a new maximum threshold of only 100,000 euros. This means companies that remain micro this year, and those that will be established, must be careful not to exceed the threshold of 100,000 euros by December 31, 2025.
Social contributions
From January 1, 2025, the minimum wage has been increased to 4,050 lei. This means that social security and health insurance contributions have also increased, therefore affecting the thresholds for:
– dividends distributed by SRLs
– taxes paid by Sole Proprietorships
Digitalization of fiscal relationship
e-Invoice
From January 1, 2025, all businesses (whether SRL or Sole Proprietorship) are required to transmit issued invoices in e-Invoice and also download received invoices. The obligation to transmit in e-Invoice applies to both B2B and B2C relationships.
SAF-T
Also, from January 1, 2025, a new obligation is imposed on companies, namely SAF-T reporting. This obligation involves submitting declaration 406 to ANAF quarterly (by non-VAT paying companies) or monthly by VAT payers.
Note: Sole Proprietorships do not transmit SAF-T!
So, LLC / SRL or Sole Proprietorship in 2025?
How to choose the right form for your business? Simple, the decision depends on the nature of your business and your development plans. Therefore:
1. Choose SRL if you want to expand your business quickly, want to access credits or non-refundable funds, or if you want to hire employees. Also, if you want to clearly separate your personal assets from those of the business, SRL is suitable.
2. Choose PFA if you work in a liberal profession, prefer a simple structure with minimal administration costs, or want to avoid the stress of company-specific fiscal declarations.
The choice between SRL and Sole Proprietorship in 2025 largely depends on your long-term objectives and the specifics of your activity. If you’re not sure what to choose, at MBV you can find an accounting or legal specialist to help you make a well-informed decision.
Which option do you choose? Tell us in the comments or contact us for more information!