How to Register a Sole Proprietorship (Individual Business) in Nauru

Starting a sole proprietorship in Nauru can be an attractive choice for freelancers, contractors, and small business owners who want independence and flexibility. The government has simplified the process through the Business Names Registration Act 2018, allowing individuals to begin operating quickly under their own name or a registered business name.

A major advantage is the favorable tax system. Residents earning up to AUD 250,000 annually are exempt from Business Profit Tax (BPT). Above this threshold, businesses fall into either the Small Business Tax category at 2.5% or pay the standard 20% BPT. With no VAT or GST, compliance is lighter than in many other countries.

Challenges include Nauru’s very small domestic market, which may limit growth, and the fact that sole proprietors face unlimited liability for business debts. Even so, the low costs and straightforward setup make this structure well-suited for independent professionals and small operators.

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 Nauru?

In Nauru, a sole proprietorship is often referred to simply as an "individual business" or sole trader. In local registration guidance, the term “sole trader / individual business” is used when describing the business structure under the Business Names Registration Act 2018.

This model can also be called:

• Sole trader
• Self-employed contractor
• Individual business

These all refer to a person operating a business without forming a separate legal entity.

How does a sole proprietorship (individual business) work in Nauru?

Individual business vs. other structures in Nauru

There are alternatives to setting up as a sole proprietor in Nauru. Many entrepreneurs consider registering a company instead, particularly when they expect higher revenues or want liability protection. Below is a comparison between individual businesses and companies, showing the key differences in taxes, liability, costs, and suitability.

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

Step 1: Check your eligibility

To register as an individual business in Nauru, citizens must be natural persons and provide proof of identity, such as a national ID, birth certificate, or passport, along with a Tax Identification Number (TIN) from the Nauru Revenue Office. Residents who are not citizens may also register if they hold a valid residency status, present identification documents, and obtain a TIN. Foreign nationals can apply as well, though they may be required to provide additional documentation, such as a local address, residence permit, or local representative, in addition to securing a TIN.

Step 2: Choose your business name

You may operate under your personal name or adopt a trade name. If you use a trade name, you must register it using Form 1 (Business Names Registration Regulations 2018) via the Justice Department’s Business Registration Division.

Step 3: Gather required documents

You will typically need:

• A valid ID (passport or national ID)
• Your birth certificate or proof of identity
• Your TIN (issued by the Nauru Revenue Office)
• A passport-size photo
• Completed application forms (Form 1 for business name, Form 1 for business licence)

Step 4: Register with the Division of Business Registration & Licensing

Register by submitting your completed forms to the Business Registration, Business Licensing & Beneficial Ownership Division under the Department of Justice & Border Control. This can be done in person. They will issue a certificate of registration of the business name (if applicable) and process your licence application.

Step 5: Pay registration and licence fees

Once your application has been accepted, you must pay the registration and licence fees. Business name registration costs about $25. Payments are made via invoice to the Treasury Operating Account or directly at the Nauru Revenue Office (Civic Centre).

Step 6: Complete post-registration obligations

After registration, you must renew your business licence every year, as it expires 12 months from issue. You are also required to maintain accurate bookkeeping, issue compliant invoices, and file taxes according to your revenue level. Any changes, such as ceasing operations or altering your business name, must be reported to the Business Registration Division using the appropriate forms.

Financial and tax obligations for sole proprietors in Nauru

You are responsible for:

• Business profit tax (BPT): Under the Business Tax Act, resident individuals have a tax-free threshold of $250,000—they pay 0% on taxable income up to that amount, and 20% on any amount above it.
• VAT: Nauru does not currently impose a general VAT or GST system. Sole proprietors are not required to register for or collect consumption tax on sales.
• Social contributions: Nauru has no formal social security scheme. Sole proprietors are not required to make contributions but may wish to arrange private coverage.
• Record-keeping: You must keep accurate records of invoices, receipts, and accounts. Documentation should be retained for at least seven years, as authorities may request it during audits.
• Invoicing: Each invoice must include your business name, licence number, client details, date, and a description of goods or services. Invoices must be sequentially numbered and stored for compliance purposes.

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FAQs

What is the minimum capital required to start an individual business in Nauru?
There is no minimum capital requirement. You can register and operate without providing a starting fund.

Do individual businesses need to register for VAT/GST?
No. Nauru does not impose a VAT or GST system, so sole proprietors are not required to register or collect consumption taxes.

How much are the standard fees?
You will pay around $200 for business name registration.

Can a sole proprietor hire employees?
Yes, you may hire staff. However, you must comply with Nauru’s labour laws and provide contracts in line with employment standards.

How long does it take to register?
If your paperwork is in order, the process usually takes just a few days. This includes name registration, licence approval, and payment of fees.

Can foreign nationals register as individual businesses in Nauru?
Yes. Foreign individuals can register a business, though they may face additional requirements, such as providing a local address or representative, especially for licensing.

Do individual businesses need a separate business bank account?
It is not legally required, but it is strongly recommended to open a separate account for business use to keep personal and business finances clearly separated.

What happens if I stop working as an individual business?
You must submit a cessation form with the Business Registration Division and settle any outstanding taxes or fees before deregistration is confirmed.

Are there government incentives or reduced rates for new individual businesses?
Yes. Under the Nauru Small Business Enterprises Regulations 2025, certain small businesses may be eligible for funding support through a government committee if they meet the criteria.

Can I use Deel as an individual business to get paid by international clients?
Yes. Deel enables Nauruan freelancers and individual businesses to receive payments globally in multiple currencies, with low fees and transparent exchange rates.

Does Deel generate compliant invoices for individual businesses?
Absolutely. Deel automatically generates invoices that meet Nauruan compliance standards, including business name, licence details, and client information.

Can Deel help me with taxes as an individual business in Nauru?
Yes. Deel provides downloadable tax reports and payment summaries you can use when filing with the Nauru Revenue Office.

Does Deel offer contracts for freelancers and individual businesses?
Yes. Deel provides legally compliant contract templates tailored for Nauruan freelancers and contractors, so you can work safely with clients.

Can I access benefits through Deel as an individual business?
Yes. Deel offers access to optional benefits such as health insurance and retirement savings, typically unavailable to self-employed workers in Nauru.