How to Register a Sole Proprietorship (Sole Tradership) in Uganda

Becoming an independent contractor in Uganda is attractive because it allows you to launch quickly with minimal setup, enjoy complete control over your earnings, and work flexibly. While the process is relatively streamlined, you’ll still need to navigate several bureaucratic steps, including name reservation, registration, and obtaining a Tax Identification Number.

The main challenges are small fees, some document requirements, and limited liability protection. On the plus side, once registered, you gain legitimacy, access to tenders, and simplified taxation.

Disclaimer: This article is for informational purposes only and does not replace legal advice. Always consult official sources or professional advisors before acting.

What is a sole proprietorship in Uganda?

In Uganda, a sole proprietorship is commonly referred to as a sole tradership. It's also known as a sole trader, self‑employed worker, or independent contractor—all terms describing a business owned and run by one person, where there's no separate legal entity.

How does a sole proprietorship (sole tradership) work in Uganda?

Sole tradership vs limited company in Uganda

When deciding how to formalize a business in Uganda, the main choice is usually between registering as a sole tradership or forming a limited company. A sole tradership is quick, affordable, and ideal for small-scale or independent operators, while a limited company offers stronger liability protection and better opportunities for scaling.

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

Step 1: Check eligibility

To register as a sole proprietor in Uganda, you must be at least 18 years old and legally capable of running a business. Ugandan citizens can register with their National ID, while foreign nationals will typically use a valid passport.

Non–East African residents may also need to provide an investment license or additional approvals from the Uganda Investment Authority. It’s important to confirm your immigration status and work permits if you’re not a citizen, since URSB and the Uganda Revenue Authority (URA) will request documentation during the process.

Step 2: Choose your business name

Your business name must be unique, memorable, and appropriate. URSB does not allow names that are misleading, too similar to existing businesses, or that use restricted words such as “Bank,” “University,” or “Uganda” without special clearance. You can propose up to three different names to increase your chances of approval. Once submitted, URSB searches and issues a Name Reservation Certificate if approved. This reservation is valid for 30 days, and you must complete your registration before it expires; otherwise, you will have to renew it by paying an additional fee.

Step 3: Gather required documents

• Completed Form A1 (application for business name registration)
• Two recent passport-sized photographs of the proprietor
• Copy of your National ID or Passport (for Ugandans or foreign nationals respectively)
• Payment receipt for the business registration fees
• Optional supporting documents such as a lease agreement or proof of premises, which may be required if your local municipality asks for them when you apply for a trading license

Ensuring that all copies are clear, up to date, and certified (where needed) avoids delays, as URSB rejects incomplete or incorrect submissions.

Step 4: Register with URSB

With your documents prepared, you must submit them to the Uganda Registration Services Bureau. Registration can be completed:

• Online via the URSB e-Citizen portal: Create an account, upload documents, and pay fees electronically.
• In person at a URSB office: Offices are located in Kampala and across regional centers.

Once accepted, URSB issues a Certificate of Registration confirming that your sole proprietorship is legally recognized. This certificate is often required later to open a business bank account or apply for a trading license.

Step 5: Obtain TIN from URA

Every sole proprietor must register with the Uganda Revenue Authority (URA) to obtain a TIN. The TIN is your official tax identifier and is required for filing tax returns and paying income tax.

The process involves completing an online application through the URA e-Services portal. You’ll need to upload your ID and Certificate of Registration. Approval typically takes a few business days, though it can stretch up to two weeks during busy periods. Once issued, your TIN enables you to comply with tax obligations, including registering for VAT if your annual turnover exceeds UGX 150 million.

Step 6: Apply for a trading license

Finally, you must obtain a trading license from your local municipal authority or the Kampala Capital City Authority (KCCA) if operating in Kampala. The license confirms that you are allowed to trade in your chosen location. The fee depends on your business sector and location—for example, a small retail shop pays less than a mid-sized consultancy. Applications require your Certificate of Registration, TIN, proof of premises (like a rental agreement), and the applicable fee.

Trading licenses are renewed annually, so remember to budget for this recurring cost. Without a valid license, local authorities can fine or close your business.

Step 7: Finalise post-registration obligations

After registration, sole proprietors must:

• Keep accurate financial records for all income and expenses
• Issue proper invoices and receipts to clients
• File annual tax returns through URA, even if your business income is below the taxable threshold
• Renew your trading license each year with your municipality
• Update URSB if your business name, address, or activities change
• Following these obligations keeps your business compliant and avoids penalties from URSB or URA.

Financial and tax obligations for sole proprietors in Uganda

Sole proprietors in Uganda pay taxes under their own name using a Tax Identification Number (TIN) issued by the Uganda Revenue Authority (URA).

• Income Tax: Uganda’s progressive rates exempt income up to UGX 2.82m/year. Earnings above UGX 4.92m/year are taxed at 30% on the excess. Tax returns are filed annually via URA’s e-Services portal, with provisional payments made quarterly.

• VAT: Registration is mandatory if annual turnover exceeds UGX 150m; the rate is 18%.

• Trading License: Issued annually by local authorities such as KCCA. Fees typically range from UGX 78,750 to 498,750, depending on business type.

• Social Security: Contributions to NSSF apply only if you employ staff (15% of salary, split between employer and employee).

• Record-Keeping: URA requires accurate invoices, receipts, and expense records for compliance and audits.

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?
There’s no set minimum capital—just the low registration fees around UGX 24,000.

Do sole traderships need to register for VAT?
Only if annual turnover exceeds UGX 150 million; otherwise, it's optional.

How much are monthly or annual contributions?
Main costs include name reservation (~UGX 24,000), URSB registration (~UGX 24,000), and trading license fees (typically UGX 78,750–498,750).

Can a sole tradership hire employees?
Yes—though then you must register for PAYE and NSSF for employees.

How long does registration take?
Name reservation: 1–3 days. Full registration and TIN: around one month total.

Can foreign nationals register?
Yes—with a passport and possibly investment clearance (especially non–East Africans).

Do I need a separate business bank account?
Not mandatory, but highly recommended for clarity in accounting and tax filing.

What happens if I stop working?
You should deregister with URSB and URA and settle any final tax returns or fees.

Any incentives for new sole traderships?
Not widely publicized, though business formalization offers access to financing and tenders through URSB.

Can I use Deel?
Yes. Deel enables sole traderships to receive payments globally in multiple currencies, with low fees and transparent exchange rates.

Does Deel generate compliant invoices?
Absolutely. Deel generates tax-compliant invoices tailored to Uganda’s regulations.

Can Deel help with taxes?
Yes—Deel provides downloadable tax reports and payment records. It doesn’t replace your accountant, but it simplifies compliance.

Does Deel offer contracts?
Yes—Deel includes locally compliant contract templates for freelancers and independent contractors.

Can I access benefits through Deel?
Yes. Deel offers optional perks such as health insurance and retirement savings to independent contractors, adding an extra layer of security.