The question everyone starting out asks: sole proprietorship (s.p.) or limited company (d.o.o.)? There is no universal answer – it depends on the risk of the activity, the level of profit and your plans for growth. Below is a fair comparison without the myths, and at the end a simple rule for deciding.
The key difference: liability
An s.p. is a natural person carrying out an activity – they are liable for obligations with all of their assets, including personal ones. A d.o.o. is a separate legal person: the shareholder generally risks only their contribution, while personal assets are protected (except in cases of abuse). If the activity carries greater contractual or liability risks, this is the weightiest argument for a d.o.o.
Formation and capital
You open an s.p. free of charge in a single step at a SPOT point. For a d.o.o. you need share capital of at least €7,500 (which can be in cash that you use for operations after formation); a simple single-member d.o.o. can likewise be established via SPOT without a notary, otherwise it is done at a notary with higher costs.
Taxes: the most commonly misunderstood difference
- S.p.: profit is taxed with income tax (progressively on a scale or via lump-sum expenses). After paying levies, you dispose of the money freely – you do not pay yourself a “salary.”
- D.o.o.: profit is taxed with corporate income tax (22 %), and the money belongs to the company. You access it through a salary (with full contributions) or a profit distribution, which is additionally taxed at 25 % dividend income tax.
The consequence: at lower and medium profits, an s.p. (especially the lump-sum scheme) is often more tax-favourable, while at high profits, reinvestment and multiple owners the advantages shift to the d.o.o. Check the calculation for your own case with an accountant.
Administration and management
An s.p. with lump-sum expenses is the administratively simplest form in Slovenia – you often keep the records yourself. A d.o.o. requires double-entry bookkeeping, annual reports for AJPES and generally an accounting service, which means higher fixed costs from the very first month.
Comparison at a glance
| Criterion | Sole proprietorship (s.p.) | Limited company (d.o.o.) |
|---|---|---|
| Liability | With all personal assets | Generally up to the amount of the contribution |
| Formation | Free, one step (SPOT) | Share capital of €7,500 |
| Taxation of profit | Income tax (progressive scale or lump-sum scheme) | 22 % corporate income tax + 25 % on profit distribution |
| Access to money | Freely, after paying levies | Salary or profit distribution |
| Bookkeeping | Simple (lump-sum scheme yourself) | Double-entry, accounting service |
| Reputation with large clients | Good | Often better (corporations, abroad) |
When to choose which form
- Choose an s.p. if you are starting out alone, offer services with manageable risk and want minimal administration and quick access to your earnings.
- Choose a d.o.o. if the activity’s risk is high, you plan to hire staff and attract investors, you have co-founders, or you work with large systems that require a legal person.
Can I start as an s.p. and switch later?
Yes – this is the most common path. You can convert an s.p. into a d.o.o. by status (transferring the business to a new company) and keep continuity of operations, contracts and references. So the dilemma at the start is not decisive: begin simply, then convert once the numbers and risks justify it.
Whatever the form: a place to work
Paperwork matters, but business is made at the desk. At makerSP_CE, both sole proprietors and d.o.o. directors sit side by side – all with the same price list, a meeting room for client meetings, and a community that has already walked both paths. By the way: membership is a tax-recognised expense in both forms.
Frequently asked questions
Which is cheaper per month?
At a small scale, the s.p.: lower fixed administration costs and simpler records. A d.o.o. needs an accounting service from the outset, which means an additional cost every month.
Does a d.o.o. mean I don’t pay contributions?
No. If you are employed in your own d.o.o. or are a shareholder-manager, you pay contributions on your salary or insurance base – social security is not free in any form.
Can I have both an s.p. and a d.o.o. at the same time?
Yes, this is legally possible and common in practice (different activities, a transition period). Just be careful to clearly separate the businesses and to observe non-compete provisions.
Conclusion
An s.p. is faster, cheaper and simpler; a d.o.o. is safer against risks and better suited to growth with a team. Most sole traders start with an s.p. and switch to a d.o.o. when the business demands it – more important than the perfect choice on paper is that you begin.
Reserve your spot at makerSP_CE
Coworking makerSP_CE, Pivovarniška ulica 6, Ljubljana (next to Tivoli Park). Fixed price, no notice period, 24/7 access and free parking.
Web: makerspace.si | Email: rezervacije@makerspace.si | Phone: +386 30 393 405