Accounting for sole proprietors in Serbia

A sole proprietorship (preduzetnik) is the most common way to start working independently in Serbia: it is quick to register, needs no share capital, and you can use the money in the account without extra tax. What affects your bill most is the tax regime, and that is where a good accountant helps most. Still deciding on the legal form? See LLC or sole proprietor.

Three ways a proprietor can be taxed

See right away what flat-rate tax would cost for your activity in the flat-rate tax calculator. Comparing it with books and a personal salary needs your numbers, and we work that out together.

What we do for sole proprietors

• Choosing the regime: we calculate flat-rate, books and personal salary with your income and costs before you commit.
• Flat-rate taxpayers: KPO ledger, tracking the RSD 6 and 8 million limits, checking the tax decision and reminders for monthly payments.
• Keeping books: booking invoices and bank statements, monthly advances, the annual PPDG-1S return and tax balance.
• Personal salary: monthly calculation and return, as with payroll for employees.
• Employees: payroll, social-insurance registration and sick leave.
• VAT: tracking the RSD 8 million threshold, then returns and e-invoices once registered (when VAT registration is mandatory).
• Foreign clients: foreign-currency income, invoices in English and the rules for services abroad (working with clients abroad).
• Annual income tax: checking whether you are liable and filing by 15 May (calculator and explanation).

When is it time to change regime?

• You are approaching the RSD 6 million limit: flat-rate status ends, so it is better to prepare the switch to books in advance.
• You have significant costs: equipment, premises or contractors. Flat-rate tax ignores them; with books they reduce your tax.
• You work mainly for one client: the independence test applies to all proprietors, so an LLC is worth considering.

The deadline to opt for a personal salary is 15 December for the following year, so the end of the year is the right time for this conversation.

FAQ: sole proprietors

Is flat-rate tax or keeping books better for me?

Flat-rate tax is the simplest and usually the cheapest while income is moderate and costs are low. When income grows or you have significant costs (equipment, premises, contractors), keeping books with a personal salary often comes out cheaper, because the 10% tax applies only to actual profit. We calculate both options with your numbers before you decide.

When is the annual return due for a proprietor who keeps books?

The PPDG-1S tax return and the PB-2 tax balance for the previous year are filed electronically on the ePorezi portal by 15 April at the latest. During the year, monthly advance payments of tax and contributions are made.

Can I switch from flat-rate tax to keeping books during the year?

The switch is usually planned for the start of the next year, but it becomes mandatory earlier if you stop meeting the flat-rate conditions, for example by exceeding the RSD 6 million limit. That is why we track your income all year and warn you in time as you approach the threshold.

Can a sole proprietor withdraw money freely?

Yes. Unlike an LLC, money in a sole proprietorship's account can be withdrawn without additional tax, because tax is charged on income or profit, not on the withdrawal. Both flat-rate taxpayers and proprietors who keep books can use the money once taxes and contributions are paid.

Do you work with proprietors outside Novi Sad and in English?

Yes. Our office is in Novi Sad, but we receive documents electronically and work with proprietors across Serbia, including foreigners and anyone working for clients abroad, in English.

Note: this page is informational and does not constitute tax or legal advice.