How to Register a Sole Proprietorship (Sole Trader) in Malawi

Many people in Malawi choose to work as independent contractors—or run their business as sole proprietors—because it offers flexibility and independence. You can launch your business quickly, start small with minimal costs, and avoid many of the formalities that come with establishing a larger company.

That said, registering as a sole proprietor still requires you to follow the proper steps. You’ll need to register your business name, file the right forms, comply with tax and VAT rules, and keep accurate records. The main challenges are making sure the paperwork is correct and staying compliant with ongoing requirements.

This guide walks you through everything you need to know about setting up a sole proprietorship in Malawi—from eligibility and required documents to registration fees, tax obligations, and ongoing compliance—so you can get started with confidence.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Malawi?

In Malawi, a sole proprietorship is essentially a sole trader or self-employed person. There is no separate legal entity between you and your business. You are responsible for all profits, losses, and liabilities.

Depending on context, it may also be referred to as:

• Sole trader
• Self-employed worker
• Independent contractor

These terms all describe the same business model: one person legally running a business without forming a company.

How does a sole proprietorship (sole trader) work in Malawi?

Sole proprietorship vs. other business structures in Malawi

Sole proprietorship is the simplest way to start a business in Malawi, but there are other alternatives, such as forming a limited company, which differ in liability protection, tax treatment, and setup requirements.

Step-by-step guide: How to register a sole proprietorship in Malawi

Step 1: Check your eligibility

To qualify as a sole proprietor in Malawi, you must be an individual who is running or plans to run a business within the country and have a local business address. Both Malawian citizens and foreign nationals can register, although non-citizens may need to provide additional identification or immigration permits.

Step 2: Choose your business name

You may operate under your own name or choose a trade name. If choosing a business name, it must be unique (i.e., not already in use) and not misleading. Names implying government connection may need special approval. You can reserve a business name via the MBRS system.

Step 3: Gather required documents

You will generally need:

• Valid ID (National ID if citizen; passport if non-citizen)
• Business registration application form for sole business – “Application for Registration of a Business – Sole”
• Proof of address (e.g., utility bill or lease)
• Business name reservation/certificate if required

Step 4: Register with the Department of Registrar General via MBRS

You can use the MBRS online system, which is managed by the Department of the Registrar General. You submit your name reservation (if needed), fill out the sole proprietor registration form, provide the documents listed above, and pay the registration fee.

Step 5: Pay registration fees and related charges

The main registration fee is MK 10,000 under the Business Registration Act. Renewals also cost MK 10,000 if done within 30 days of expiry, though higher fees apply if you renew late. If you want to reserve or change a business name, the fee is MK 2,000. For example, registering a sole proprietorship with a unique business name generally costs about MK 10,000, with additional charges only if you make changes or renew late.

Step 6: Complete post-registration obligations

After registration, you must complete several ongoing obligations to remain compliant. First, you need to register for tax with the Malawi Revenue Authority (MRA) and obtain a Taxpayer Identification Number (TPIN). If your turnover reaches or exceeds the VAT threshold, you are required to register for VAT, issue compliant VAT invoices to your clients, and file VAT returns by the 25th of each month following the tax period. In addition, you must keep accurate accounts and records of all income and expenses, issue invoices for every business transaction, and submit annual tax returns to the MRA. Finally, you are required to renew your business registration periodically as set out under the Business Registration Act.

Financial and tax obligations for sole proprietors in Malawi

You are responsible for:

• Personal income tax: As a sole proprietor, your business profits are taxed as personal income. Malawi uses a progressive system ranging from 0% to 35% depending on annual earnings. Returns are filed annually with the MRA.
• VAT: The standard VAT rate is 16.5%. Registration is mandatory if your annual taxable turnover is MWK 25,000,000 or more. VAT returns are submitted monthly and must be filed by the 25th of the following month. More details are available from the MRA.
• Social security contributions: Malawi does not have mandatory social security contributions for sole proprietors. However, if you employ staff, you must register for PAYE (Pay As You Earn) and withhold and remit income tax on employees’ behalf to the MRA. You may also choose to make private pension or insurance contributions voluntarily.
• Record-keeping: You are required to keep complete and accurate financial records, including all invoices, receipts, and accounts, to support your tax filings. Records should be retained for at least five years**,** as the MRA may request them for audits.
• Invoicing: All invoices must include your business details, the client’s information, the date, a description of the goods or services provided, and the amount charged. If you are VAT-registered, your TPIN and VAT details must also appear. Invoices must be numbered sequentially and stored for your records.

Launch your contracting career and stay compliant with Deel

Registering as a sole proprietor gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
• Create, send, and sign localised work agreements
• Keep accurate records for tax season
• Access expert tax advice and compliance support
• Get paid through multiple payment and withdrawal methods
• Spend your earnings in USD with the Deel Card
• Access funds early with Deel Advance
• Enjoy contractor perks from 150+ partners

Stay independent, without the admin overload. Sign up to Deel for free today.

FAQs

What is the minimum capital required to start a sole trader business in Malawi?
None. You only need enough to operate.

Do sole proprietors need to register for VAT/GST?
Yes, if annual turnover reaches MWK 25,000,000 or above.

How much are the standard registration fees?
The main registration fee is MK 10,000.

Can a sole proprietor hire employees?
Yes, but you must comply with PAYE and labor regulations.

How long does it take to register as a sole proprietor in Malawi?
Usually, a few business days if your documents are complete.

Can foreign nationals register as sole proprietors in Malawi?
Yes, with a passport and relevant immigration permits.

Do sole proprietors need a separate business bank account?
Not mandatory, but strongly recommended for clarity.

What happens if I stop working as a sole proprietor?
Notify the Registrar, cancel VAT registration if applicable, and file final tax returns.

Are there incentives for new sole proprietors?
No broad tax breaks, though sector-specific incentives may apply.

Can I use Deel as a sole proprietor to get paid by international clients?
Yes, Deel supports compliant payments in multiple currencies.

Does Deel generate compliant invoices for sole proprietors?
Yes, Deel invoices meet Malawi’s legal requirements.

Can Deel help me with taxes as a sole proprietor in Malawi?
Yes, Deel provides tax records and reports, but it’s not a substitute for an accountant.

Does Deel offer contracts for freelancers and sole proprietors?
Yes, with locally compliant templates.