How to Register a Sole Proprietorship (Nombre de Persona Natural / Negocio Individual) in Ecuador

If you’re aiming to offer services or sell goods as an individual in Ecuador, a sole proprietorship (persona natural con negocio individual) is often the leanest, most flexible path forward. You’ll skip the formalities of creating a full-blown company, yet gain the ability to operate legally, invoice clients, and access the formal economy.

The process is relatively smooth, thanks to Ecuador’s digital tax and registration infrastructure (especially via the Servicio de Rentas Internas (SRI)). That said, you’ll need to manage the right registrations, submit paperwork, and stay current on tax rules, especially regarding whether you qualify for simplified regimes or standard tax status.

You’re in a good spot: low setup cost, control from day one, and the ability to onboard both local and global clients..

Disclaimer: This article is for informational purposes only and is not a substitute for legal or tax advice. Always check with official sources or consult professional guidance before taking action.

What a sole proprietorship looks like in Ecuador

In Ecuador, a sole proprietor generally operates as a persona natural con negocio individual (or simply under one’s name or trade name). The local equivalent terms include negocio individual, empresa individual, or persona natural comerciante. Essentially, you run your business in your own name without forming a separate legal entity.

How a sole proprietorship works in Ecuador

Below is a snapshot of the main features of this model in Ecuador:

Persona natural vs limited company in Ecuador

Let’s compare doing business individually versus forming a company (e.g., a Compañía de Responsabilidad Limitada):

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

Step 1: Check eligibility

You must be an individual (persona natural), resident or with lawful presence in Ecuador if foreign, and able to present a valid ID. Foreign nationals typically need to ensure visa or residency compliance.

Step 2: Choose a business name

Decide whether to operate under your given name or a distinct trade name. If using a trade name, check availability through the Superintendencia de Compañías or related registries. You may need to reserve or register that name.

Step 3: Gather required documents

You’ll need things like:

• Official identity document (cédula for Ecuadorians, passport + valid visa/residency for foreigners)

• Proof of address (utility bill, lease contract, etc.)

• Completed forms for RUC registration via SRI

• In some local jurisdictions, there may be municipal permits or local registration forms

Step 4: Register with SRI for RUC

You go to the SRI (Servicio de Rentas Internas) or use its online portal to register for your RUC (Registro Único de Contribuyentes). This is the key tax identifier for conducting legal business, invoicing, and filing taxes.

Step 5: Pay registration fees & activate your tax status

The registration of the RUC is not typically charged as a separate “registration fee” beyond administrative processes. What matters is selecting the correct tax regime (see next section).

If you qualify, you may enroll in a simplified regime (formerly RISE) or otherwise operate under the general regime.

Step 6: Post-registration obligations

After registration, you must:

• Issue invoices or sales vouchers compliant with SRI rules

• File tax returns (income tax, VAT, etc.) on schedule

• If you hire employees, register them with social security (IESS), and comply with payroll withholding

• Maintain accounting records as required

• Renew or update registration if your business changes (address, trade name, etc.)

Financial and tax obligations for sole proprietors in Ecuador

Income tax & regimes

Previously, small businesses could opt into RISE (Régimen Impositivo Simplificado), which replaced VAT and income tax declarations with fixed monthly quotas. However, RISE was eliminated in 2022. Now, similar taxpayers must operate under RIMPE (Régimen Simplificado para Emprendedores y Negocios Populares) or under the general regime. Under RIMPE, small taxpayers pay a fixed rate based on gross income (1–2 %) and must file an annual income tax declaration.

Under the general regime, income tax is applied to net profit (revenue minus costs and deductions). The progressive personal income tax scale applies to individuals.

Value-added tax (IVA)

You must charge 12% IVA (VAT) on most goods and services, unless your business falls into an exempt or reduced category. You file monthly IVA returns via SRI.

Social security and payroll

If you hire staff, you must register with IESS (Instituto Ecuatoriano de Seguridad Social) and withhold social security and income tax (PAYE) from wages.

Municipality / local patents

Most municipalities require you to register for a business license or municipal patent tax (“patente municipal”) based on your economic activity and assets

Record-keeping

You’re required to maintain invoices, receipts, accounting records (depending on regime), and file timely tax declarations.

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 as a sole proprietor?
None. You don’t need any minimum capital.

Do sole proprietors need to register for VAT (IVA)?
Yes if your operations are subject to IVA; most goods and services are taxed at 12%.

How much are standard registration fees?
There is no specific fee for RUC registration beyond administrative costs. Municipal licensing or patent taxes vary by city.

Can a sole proprietor hire employees?
Yes. You must register employees with IESS and withhold required taxes/social security.

How long does registration take?
Getting your RUC via SRI can take only a few hours or days (especially via online processes) if all documents are in order.

Can foreigners register as sole proprietors?
Yes, provided you meet immigration and local permitting requirements.

Do I need a separate business bank account?
It’s not strictly required by all laws, but it’s strongly recommended for accounting clarity and credibility.

What happens if I stop my business?
You’ll want to cancel your RUC (or mark it inactive via SRI), settle outstanding taxes, and stop issuing invoices.

Are there incentives or reduced rates for new businesses?
Ecuador previously used RISE to ease tax burdens for small traders. With its removal, eligibility in RIMPE offers simplified rates for small entrepreneurs.

Can I use Deel as a sole proprietor to get paid by international clients?
Yes. Deel allows sole proprietors and freelancers to receive payments from clients worldwide, in multiple currencies, with low fees and transparent exchange rates.

Does Deel generate compliant invoices for sole proprietors
Absolutely. Deel automatically generates invoices that meet legal and tax requirements, helping you stay compliant with Ecuadorian regulations and beyond.

Can Deel help me with taxes as a sole proprietor in Ecuador?
Yes. Deel provides downloadable tax reports and payment records you can use when filing returns. While Deel doesn’t replace your accountant, it simplifies your record-keeping and compliance.

Does Deel offer contracts for freelancers and sole proprietors?
Yes. Deel includes contract templates that are compliant with local laws, so you can work with clients safely and professionally.

Can I access benefits through Deel as a sole proprietor?
Yes. Deel offers optional perks like health insurance, retirement savings plans, and other benefits that are usually only available to employees—giving freelancers more security.