Ukrainians closed a record number of sole proprietorships in 5 years in 2024
8 January 06:34
In 2024, almost 210 thousand individual entrepreneurs were closed in Ukraine. This is the highest rate of closures in the last 5 years. Most of them were closed in the retail and IT sectors. This is reported by YouControl, "Komersant Ukrainian" informs
Record number of closures of individual entrepreneurs over the past 5 years
According to analysts, last year Ukrainians closed almost 210 thousand individual entrepreneurs. The increase in closures compared to 2023 was more than 32%. In addition, the registration of new entrepreneurs decreased by 5% compared to 2023.
According to analysts, Ukrainians closed the largest number of sole proprietorships in October: more than 23.7 thousand. The number of closures in December was more than 22 thousand. However, due to the hacking of the registers, data is available only as of December 18, 2024.
The peak of closures occurs in the fall months. The largest number of sole proprietorships in 2024 was closed on September 30, 2024 – 2.9 thousand (1.4% of all closed sole proprietorships for the year). on November 29, 2024, more than 2.3 thousand (1.1%) closed. Almost 2.3 thousand (1.1%) more sole proprietorships were closed on December 18, 2024.
The largest number of openings occurred in the following months: 1.8 thousand (0.6%) on October 1, 2024, 1.7 thousand (0.6%) on April 29, 2024, and another 1.7 thousand (0.6%) on August 28, 2024.
“It is worth noting that the decline in business activity at the end of the year is traditional. The increase in closures in 2024 began from the first month of the year, so in February 2024 alone (14.5 thousand closed sole proprietorships) the increase in closures compared to 2023 (3.1 thousand) amounted to almost 270%,” YouControl states.
Where were most sole proprietorships closed?
According to YouControl, traditionally, the largest business activity of individuals is observed in Kyiv: more than 27 thousand sole proprietors closed in the capital and almost 40 thousand registered. Therefore, we decided to analyze the increase and compiled a corresponding regional ranking.
The largest increase in closures in 2024 compared to 2023 was observed in Poltava region – 57.2% (8.1 thousand in 2024 vs. 5.1 thousand in 2023). The closure of sole proprietorships in Kirovohrad region increased by almost 55% to 4.5 thousand in 2024. Vinnytsia region is also in the top three in terms of growth in closures, with an increase of almost 45% to 8.4 thousand in 2024.
Closures of individual entrepreneurs continue to grow in the IT sector
According to YouControl, the leading sectors in the number of closures of sole proprietorships in 2024 are retail (more than 65 thousand), IT (almost 39 thousand), and other services (more than 26 thousand).
The IT sector continues to see an intensive growth in closures. Thus, the increase in closed sole proprietorships in 2024 (38.7 thousand) was more than 29% compared to 2023 (29.9 thousand).
“Compared to 2021 (14.3 thousand), the increase in closures was almost 161%. The number of registrations of individual entrepreneurs in IT has also significantly decreased: 67.3 thousand in 2021, 39.2 thousand in 2023, and 36.8 thousand in 2024,” analysts emphasize.
6 out of 10 sole proprietorships were opened by women
According to analysts, women have opened significantly more sole proprietorships than men: more than 61% (173.7 thousand) of new sole proprietorships are owned by women, and 39% (111.2 thousand) were registered by men. This figure has increased compared to 2023, when the number of newly opened sole proprietorships by women was almost 58%.
At the same time, in 2024, men closed more sole proprietorships – almost 51% (106.2 thousand) of closed ones belonged to men, and another 49% (103.6 thousand) to women.
Reasons for closure
According to Roman Kornyliuk, a leading financial analyst at YouControl, the process of increasing the number of closures of sole proprietorships in 2024 is multifactorial.
According to him, the trend towards the realization of the demand for services both in the field of closure and registration of sole proprietorships, which was postponed during the first year of a full-scale war, continued. Migration and mobilization processes have only reinforced this trend of business closures. The growth in the number of closures was also influenced by economic policy and changes to tax legislation, and most importantly, the fact that starting from January 1, 2025, the payment of the unified social tax is now mandatory for sole proprietorships.
“As a result, it has become economically unprofitable for many individual entrepreneurs with irregular or no income to remain in the segment of ‘frozen sole proprietors’ because it will generate negative cash flow,” explains Kornyliuk.
According to Opendatabot, 27% of the 32,000 individual entrepreneurs surveyed plan to close in the near future. In particular, more than half of these businesses are shutting down due to a sharp increase in the tax burden.
As a reminder, in the first half of 2024, almost 92 thousand sole proprietorships were closed in Ukraine, which is 54% more than in the same period of 2023. The rate of company closures also increased by 15%, with more than 1.5 thousand companies ceasing operations in the first half of 2024.
