Sole proprietorship or ApS: which should you choose?

The key difference: liability

In a sole proprietorship you are personally and unlimitedly liable — if things go wrong, creditors can pursue your private assets. In an ApS you generally only risk the company's capital. Big contracts, inventory or employees all argue for an ApS.

Capital requirements and getting started

A sole proprietorship is free to register and needs no starting capital. An ApS requires DKK 20,000 in share capital (which the company can use for operations) plus formation costs. In return, an ApS often signals more solidity to customers and partners.

The tax

In a sole proprietorship the profit is taxed as your personal income — optionally under the business tax scheme (VSO), which allows retaining profit at a provisionally lower tax. In an ApS the company pays 22% corporate tax, and you're taxed on what you take out as salary or dividends.

For small profits the practical difference is modest — the ApS tax advantage typically appears once you earn substantially more than you spend privately.

The administration

• Sole proprietorship: bookkeeping duty and a tax return, but no public annual report
• ApS: bookkeeping duty, an annual report to the Business Authority every year, and a general meeting
• Both: digital bookkeeping in a registered system (companies now; sole proprietorships above DKK 300,000 from 2026)

You can switch later

Many start as a sole proprietorship and convert to an ApS later — possible as a tax-free business conversion if the conditions are met. So don't let the choice block you from starting: start simple, and switch when liability or tax argues for it.

Either way, Numina handles the bookkeeping: sole proprietorships and ApS companies pay the same fixed price, and we help with the practicalities of a later conversion.

The terms behind it, briefly explained

Finally a quick glossary of the terms from this article — brief and concrete, the way we explain them to our customers.

What is an enkeltmandsvirksomhed (sole proprietorship)?

An enkeltmandsvirksomhed is a sole proprietorship: one owner with personal, unlimited liability. It's free to register and needs no starting capital.

The profit is taxed as the owner's personal income, and there's no public annual report — but full bookkeeping duty. Many start here and convert to an ApS later.

What is an ApS (private limited company)?

An ApS (anpartsselskab) is a private limited company with limited liability and a DKK 20,000 capital requirement. Owners generally only risk their contribution.

In return come more duties: an annual report to the Business Authority, a general meeting and 22% corporate tax — and the owner is taxed only when taking out salary or dividends.

What is virksomhedsordningen (the business tax scheme)?

Virksomhedsordningen (VSO) is a tax scheme for personally owned businesses giving full deduction of interest costs and the option to retain profit at a provisional 22% tax.

VSO resembles company taxation without an ApS — but demands strict separation of private and business finances and more advanced bookkeeping. Get help with it.

What is skattefri virksomhedsomdannelse (tax-free incorporation)?

Skattefri virksomhedsomdannelse is a method for converting a personally owned business into a company (typically an ApS) without triggering tax right away.

Instead of selling the business to the company and paying tax on the gain now, the company inherits the tax position and the tax is deferred until the shares are one day sold. The conversion must happen by 30 June to take effect from 1 January — and calls for professional advice.