Starting is easy, surviving is hard: small businesses will not survive in 2025
9 May 2025 17:35
ANALYSIS FROM 
The first results of the new tax policy are in. About 82,000 new sole proprietorships have been opened, while almost 120,000 have closed since the beginning of 2025. For every newly created business, there are 1.5 closed ones, according to the Opendatabot portal. In total, 2,151,741 individual entrepreneurs are registered in Ukraine. How the situation will develop further, found out
Anti-record in January
The number of sole proprietorships opened in Ukraine is 9% less than in the same period last year – only 81,928. 119,895 entrepreneurs ceased operations this year, which is 44% more than in the same period in 2024. Before the full-scale invasion began, more were opened than closed – 89,537 / 86,797. Even in the difficult year of 2023, almost 3,000 more sole proprietorships were opened than ceased operations.
Overall, this year, 37,967 more sole proprietorships closed than opened. Last year, the situation was the opposite: over the same period, 7,166 more sole proprietorships were opened than closed.
A quarter of all new sole proprietorships are engaged in retail trade – 20,763 entrepreneurs. Another 7,129 chose IT and programming consulting. Wholesale trade closes the top three, with 6,216 new entrepreneurs, according to Opendatabot analysts. Not surprisingly, women are more active than men in starting a business this year: 61% of new sole proprietors were registered by women, while the share of men was only 39%.
Since the signing of the law on military duty, 2 new sole proprietorships have been closed for every 1 new one
After the law on the introduction of the military tax for small and medium-sized businesses was signed last December, there were 2 closed businesses for every 1 new one. Thus, 24,497 entrepreneurs ceased operations from the moment the law was signed until December 17. Over the same period, 2.2 times fewer were opened – 10,947. For comparison, in the same period last year, 4 new sole proprietorships accounted for only 1 closed one.
An anti-record was set in January 2025, when three times as many sole proprietorships closed as opened. This was attributed to the hacking of registers and the inability to officially cease operations since December 19. The situation has already stabilized, but the difference between new and closed sole proprietorships is still low. This raises a big question: if the government continues to “pluck the goose” (the sole proprietor), how will it react? After all, since 2022, individual entrepreneurs have paid a total of UAH 126 billion in taxes. The amount of the single tax is growing every year: last year it was 1.6 times higher than in 2021 – UAH 55.1 billion versus UAH 34.8 billion. In total, in 2024, individual entrepreneurs brought in $1.3 billion in profit.
Working legally is not profitable
Danylo Hetmantsev, chairman of the Committee on Finance, Taxation and Customs Policy, who previously stated that “it is an art to pluck a goose without it screaming,” said that nothing terrible is happening. The dormant sole proprietorships of the 1st and 2nd groups, which have to pay the unified social tax from January 1, are being closed. The unified social contribution was also set at the minimum wage for 2025, which is UAH 800 per month, regardless of whether the business is running or not. To avoid paying, people are closing down. He does not see anything critical in this. Moreover, according to him, the number of individual entrepreneurs is growing because “it is widely used to minimize taxes or avoid mobilization. An example is the popular scheme of using individual entrepreneurs instead of hired workers.”
The problem is not in the “sleepers” but in the economic reality
Economic expert Yuriy Havrylechko believes that the problem is not in “dormant” sole proprietorships, but in the fact that, according to statistics, 15% of new sole proprietorships close within a year. Few of them work longer. And some “dormant” ones still exist, especially among those who have gone abroad but have not yet decided whether to return and whether to continue their activities. The tax burden is growing every year.
As soon as they start extracting money from a self-employed person by any means necessary, their business becomes unprofitable. Excessive taxation of individual entrepreneurs makes it unprofitable to work legally. Therefore, it is not surprising that when the 1st and 2nd groups are also burdened with the unified social tax, and they do not have extra money, they close down,” commented Yuriy Havrylechko for
[Kommersant] .
Risks and tax pressure have increased
Economic analyst Valeriy Syrota notes that more than half of individual entrepreneurs are shutting down because of the tax burden.
Secondly, there is a shortage of personnel, especially men, who cannot get to work due to mobilization measures.
Third, the low purchasing power of the population, especially in remote regions. Today, only those who have a stable income, regular customers and do not face risks such as “arrivals” or visits from the TCC feel good.
And one more point that people don’t like to talk about, but it exists: One-day sole proprietorships for tenders that are created for specific lots, registered for students or pensioners, both opened and closed. They also affect the statistics,” explains Syrota.
According to the expert, there will always be an imbalance between open and closed sole proprietorships. There are periods when more are created than liquidated, and vice versa. It is worth assessing only at the end of the year. In general, the situation will depend on the duration of hostilities and the economic situation in the country. Yuriy Havrylechko adds that after the war is over, the number of new sole proprietors may increase dramatically, as demobilized soldiers will want to do something. And they will be able to count on government benefits to start their own business.
Author – Alla Dunina
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