Running a sole proprietorship
There are no laws which govern how you should organise and run a sole proprietorship. As the owner of a sole proprietorship, you represent the business externally, and no distinction is made between the sole proprietorship's finances and your own personal finances.
Good economic management
The successful, well-organised running of a sole proprietorship requires sound financial management, and it is important that you separate the enterprise's finances from your personal finances, for example, that you have a separate account in which all transactions involving the sole proprietorship are conducted. When running a sole proprietorship, you normally have an obligation to report to the authorities, for example, in the form of a tax return, VAT return and "A-melding", if you have employees.
In a sole proprietorship, you can have employees, but you cannot employ yourself. As the owner of a sole proprietorship, you will have more limited rights than if you are an employee. The owner is considered to be self-employed you will be personally liable for ensuring that tax (advance tax) is paid on the profits generated by the business.
Expanding the enterprise
It is possible to run a number of business activities under a single sole proprietorship. You must notify the Brønnøysund Register Centre if you intend to do so using the Coordinated register notificationform.
In the description, you should start by stating what you consider to be the main activity, and then list the other things that you are involved in. The description of your main activity forms the basis for the enterprise´s industrial code (NAICS code).
You can also register several sole proprietorships. In order to register several sole proprietorships, each of the proprietorships must carry on independent commercial activity, and activity must be carried on in different geographical locations or in different sectors.
Changing the owner of a sole proprietorship
A sole proprietorship cannot be transferred from one owner to another, but you can transfer the activity that the enterprise is carrying on to another enterprise.
Switching to a private limited company
Subject to certain rules, you can establish and register a new private limited company and continue to run your sole proprietorship business through the new limited company. This means that the company will continue to operate under a new organisation number. If you meet certain conditions, you will be able to carry out a tax conversion.
In a sole proprietorship, as owner, you will always have signature right alone. A signature right is an authority to act on behalf of the enterprise in any situation. You cannot assign signature rights to others, but you can assign power of procuration.
Power of procuration
Power of procuration is a limited authority to act and sign on behalf of an enterprise in the day-to-day running of the business. A person who is assigned procuration cannot mortgage or sell the enterprise's real property. As the owner of a sole proprietorship, you can grant power of procuration to one or more people, either individually or jointly.
Notification of the registration or alteration of a power of procuration is given via the Coordinated register notification. To find out who has power of procuration within a company, you can search the key information in the Register of Legal Entities.