How to Register a Sole Proprietorship (Samostalni preduzetnik) in Bosnia and Herzegovina

Many people in Bosnia and Herzegovina choose to work as independent contractors or sole proprietors because it gives them freedom over when, how, and for whom they work. Without needing to form a full company with shareholders, you can start offering services or products on your own.

However, the process is not without bureaucracy: you’ll need to navigate entity-level laws (in either the Federation of Bosnia and Herzegovina or Republika Srpska, and possibly Brčko District), register with multiple authorities, and meet tax & social security obligations.

The benefits include flexibility, lower administrative burden than a formal company, and sometimes simpler tax treatment. The main challenges are obtaining the necessary permits, ensuring compliance with municipal or entity‐level rules (which can vary), paying social contributions, and handling bookkeeping.

Here we’ll take you through everything you need to know to start your journey to sole proprietorship in Bosnia and Herzegovina.

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 (samostalni preduzetnik) in Bosnia and Herzegovina?

In Bosnia and Herzegovina, a sole proprietorship is most commonly referred to as samostalni preduzetnik (especially in Republika Srpska).

In the Federation of Bosnia and Herzegovina and Brčko District, the terms obrt or samostalna djelatnost are also used. All three describe the same business form — one individual running an independent activity without establishing a company.

How does a sole proprietorship work in Bosnia and Herzegovina?

Samostalni preduzetnik / samostalna djelatnost vs other business structures in Bosnia and Herzegovina

Here’s how being a sole proprietor compares to, e.g., forming a d.o.o. (limited liability company):

Step-by-step guide: How to register a sole proprietorship in Bosnia and Herzegovina

Step 1: Check if you are eligible

To register as a samostalni preduzetnik, you must be a natural person of legal age with full legal capacity. In most cases, Bosnian citizens can register without difficulty, while foreign nationals may need to present a valid residence or work permit, depending on the entity where they plan to operate. Your municipality may also ask for proof of identity and confirmation that you are not legally barred from performing business activities.

Step 2: Choose your business name

You can operate under your own name or register a trade name. If you decide on a trade name, it must be unique within your municipality and sometimes must include the words “samostalni preduzetnik” or “obrt” to indicate your business form. Before filing, it’s best to confirm availability with your local registration office.

Step 3: Gather required documents

Before you submit your application, you’ll need to prepare several documents. These typically include a certified copy of your ID or passport, a certificate of no outstanding tax obligations from the Tax Administration, and, in some cases, a certificate of good conduct from the local court.

If your planned activity requires a professional license or qualification, you will need to include proof of that as well. Certain municipalities also request a certificate of health insurance coverage.

Step 4: Register with the relevant authority

In the Federation of Bosnia and Herzegovina, you register with the municipal court where your sole proprietorship will be located (i.e., where you live). In Republika Srpska, registration is typically done at the local municipal office, often using the SP-1 form.

Some municipalities may require you to obtain an official business stamp (pečat). Once your application is filed, the authority issues a decision confirming your status as a sole proprietor.

Step 5: Pay registration fees and contributions

After submission, you’ll need to pay a modest registration fee, which in Republika Srpska is capped at 30 KM if your documents are complete. Once registered, you are also responsible for paying social contributions covering health and pension insurance.

These contributions are calculated based on your declared income and must be paid regularly. If your annual turnover exceeds BAM 50,000, you are obliged to register for VAT and begin charging it on your invoices.

Step 6: Complete post-registration obligations

Once you are officially registered, your obligations don’t end there. You must keep proper accounting records, issue invoices in compliance with local regulations, and submit periodic income tax returns.

Contributions to social and health insurance must be made on schedule. If you hire employees, you will need to register them with the authorities and handle payroll taxes and contributions on their behalf. In addition, you must keep your registration details up to date with the authorities if there are any changes to your activity or personal information.

Financial and tax obligations for sole proprietors in Bosnia and Herzegovina

Here are key financial/tax duties to watch out for:

• Personal Income Tax (PIT): For most self-employment income, a flat 10% is charged in Federation of BiH, and similar in Republika Srpska for self-employment.

• Reduced rate for small entrepreneurs: In RS, small entrepreneurs (i.e., those under certain thresholds) can use a reduced flat tax rate of 2% on total annual revenue.

• VAT: The standard VAT rate is 17%. Mandatory registration if turnover above threshold (≈ BAM 50,000 per year) or optionally if below.

• Social security/pension/health insurance contributions: You must contribute. The exact rates and bases depend on the entity and declared income; often, you pay both health and pension contributions.

• Record-keeping: Maintain invoices, receipts, and accounting records; possibly audit or certify depending on the scale of business.

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 Samostalni preduzetnik in Bosnia and Herzegovina?
None. There is no share capital requirement for sole proprietors, unlike for limited companies.

Do sole proprietors need to register for VAT?
Yes, if their annual turnover exceeds ≈ BAM 50,000. They may also voluntarily register below that threshold in some cases.

How much are standard monthly or annual contributions?
This depends on declared income and entity. Rates for health, pension, and social insurance are variable and assessed based on income brackets. If you have a specific income in mind, I can estimate.

Can a Samostalni preduzetnik hire employees?
Yes. You can hire employees. Then you must register them with the Tax/Social Security authorities, withhold tax contributions, etc.

How long does it take to register?
If all documentation is correct, the registration decision in Republika Srpska is often made in 2 days. In the Federation, it may take a few days to a couple of weeks, depending on the municipality.

Can foreign nationals register as sole proprietors?
Yes. Foreign nationals can register, though you may need additional documentation (residence/work permits), and in some cases, proof of permanent residence. Rules vary by entity.

Do sole proprietors need a separate business bank account?
Not always mandatory by law, but strongly recommended. Many business transactions are easier, more transparent, and better for bookkeeping when using a separate account.

What happens if I stop working as a Samostalni preduzetnik?
You’ll need to officially deregister or cease activity with the registration authority and inform tax / social security authorities. You’ll also have to file final tax returns and ensure any owed contributions or taxes are paid.

Are there government incentives or reduced rates for new sole proprietors?
Yes, especially in Republika Srpska there’s a special reduced flat tax rate for small entrepreneurs (2%). Some municipalities may have lower fees or simplified processes. But no widely publicized national subsidy or zero-tax first year for all sole proprietors as of 2025.

Can I use Deel as a sole proprietor in Bosnia and Herzegovina to get paid by international clients?
Yes. Deel supports freelancers and contractors in Bosnia and Herzegovina. You can receive payments in multiple currencies with transparent exchange/conversion, subject to bank / foreign exchange regulations.

Does Deel generate compliant invoices for sole proprietors?
Yes. Deel’s invoicing tools can help you produce invoices that satisfy local legal and tax requirements, including the details tax authorities expect.

Can Deel help me with taxes as a sole proprietor in Bosnia and Herzegovina?
Deel provides tools / downloadable tax reports, and payment history that you can use for tax filings. It does not replace an accountant or legal counsel, but makes record-keeping more straightforward.

Does Deel offer contracts for freelancers and sole proprietors?
Yes. Deel offers contract templates that are designed to be compliant with local law, helping protect you and your clients.