The type of activity refers to the sector in which the business operates. It can be the provision of services, trade, or production. An activity code is assigned when a business is formally registered, and the relevant data is entered into the state register.

A business may engage in more than one type of activity.

The type of activity determines the legal form of business registration (individual entrepreneur or legal entity) and the choice of tax system.

It also determines the need for licenses or permits, the possibility of using tax benefits, and access to state support programs.

You can find the types of business activities and their corresponding codes on the "Classifier of Types of Economic Activities" (use browser translation for English version) page.

Enter keywords describing your business activity in the search field and select the appropriate one from the list of suggested options.

During state registration of your business, you will submit the code of your primary business activity.

You can engage in more than one type of activity during your business operations. You will need to indicate in the appropriate field in the reports submitted to the tax authority the types of activities you engaged in during the given period.

It is not necessary to register as an individual entrepreneur or legal entity if you are engaged in the following types of activities

• Language courses, private preparatory or other professional courses
• Dancing, singing courses
• Performing arts and other related auxiliary activities
• Creative activities
• Entertainment activities
• Educational activities, extracurricular activities in the field of gymnastics and sports
• Hostel (tourist house) services
• Household services
• Blacksmith services
• Repair services for watches, chronometers, and musical instruments

Without registering as an individual entrepreneur or legal entity, you can also perform the following work for individuals

• Production and repair of shoes, leather, and other similar products
• Production and repair of clothing and hats
• Production and repair of carpets and rugs
• Manufacturing of wooden products, repair of furniture and home furnishings
• Production and repair of non-precious jewelry
• Repair of computer equipment, televisions, washing machines, air conditioners, and other household appliances, software maintenance
• Production of bicycles and wheelchairs, repair of personal and household products
• Production of household and ceramic and other porcelain products
• Tinware activities

A legal form is a type of business organization that is registered with the State Register. This registration grants the business specific rights and obligations. Common legal forms include sole proprietorships, LLCs, CJSCs, OJSCs, and more.

Each type has its own characteristics, which you can learn about to choose the most suitable form for your business.

In Armenia, you can register a business as an individual entrepreneur (IEP) or a legal entity (there are more than 34 types of legal entities).

The most common types of business registration are:

Individual Entrepreneur (IEP)

• An IEP is advisable if you have decided to operate alone and do not expect a large annual turnover.
• Keep in mind that the resources of an IEP will not be separated from your personal property; that is, you will be fully liable for the obligations arising from the business activities with your personal property.

Limited Liability Company (LLC)

• If you plan to involve co-founders in the business, you can register an LLC (it can have one or more founders).
• The property, expenses, and income of an LLC will be separated from the personal property of the founders; it will be necessary to hire employees and keep accounting records.

Joint Stock Company (JSC)

• A joint stock company is also preferable if you plan to carry out economic activities with other investors (shareholders). Moreover, shareholders can be both individuals and legal entities.

This form of organization has two types:

• In the case of an open joint stock company, an unlimited number of shareholders can be involved.
• In the case of a closed joint stock company, a maximum of 49 shareholders can be involved.

You can also familiarize yourself with the features of other types of legal entities to make the right decision.

To choose the right type of organization for your business, try answering these questions:

Are you starting a business alone or with co-founders or investors?

• If you are starting a business alone, consider registering a sole proprietorship, as in this case, you will be able to operate as an individual with the rights of a legal entity.
• If you have co-founders, it is more appropriate to establish a limited liability company, which can have 1 to 49 members. Depending on the size of their investments, they can participate in decision-making and bear responsibility for the activities of the LLC.
• A joint-stock company is advisable when attracting investments from a large number of shareholders whose participation in decision-making needs to be coordinated.

Do you have the capital to invest in starting a business?

• Authorized capital is the minimum amount formed from the founders' investments to cover the company's expenses.
• Commercial organizations generally have no minimum capital threshold (with exceptions for certain activities, such as those in the financial, insurance, and investment sectors).
• In the case of a sole proprietorship, no authorized capital is required as the founder of a sole proprietorship is personally liable for the organization's activities with all their personal property.
• In the case of an LLC and a JSC, the authorized capital is formed from the founders' contributions. It is divided into shares in the amounts established by the charter, which guarantee the fulfillment of the company's obligations.
• It is more reliable for partners and investors to conclude contracts with an LLC, JSC, or other organizations operating on the basis of authorized capital.

Do you plan to hire employees?

• Regardless of the legal form of business organization you choose, you can conclude both labor and service contracts.
• Registering an LLC or JSC to pay salaries and fulfill tax obligations is more expedient because they have a certain amount of capital.

What volume of turnover do you expect in the first years of operation?

• If you do not expect a large turnover, it is preferable to register a private enterprise, but from the point of view of large turnover, attracting international investors, and being a more reliable party to contracts, it would be more appropriate to register an LLC or JSC.

By becoming an individual entrepreneur, you will be able to:

• Carry out any business activity and make a profit
• Establish a commercial organization or become a member of it
• Collaborate with other individual entrepreneurs or commercial organizations
• Have a bank account and hire employees
• Have other rights defined by law

The rights of LLC members are determined by the legislation of the Republic of Armenia, the company's charter, the founders' agreement, and the decisions made.

The LLC members will be able to:

• Participate in the management of the company
• Receive information about the company's activities
• Receive a part of the profit from the company's activities
• Sell their share
• Withdraw from the company at any time
• Receive a share of the company's remaining property in the event of its liquidation
• Have other rights defined by law

The rights of shareholders of joint-stock companies are defined by the legislation of the Republic of Armenia, the company's charter, the shareholders' agreement, and the decisions made.

The rights of shareholders depend on the type of their shares: common (ordinary) and preferred.

A share is a security that defines the rights of its owner (shareholder) to receive dividends, participate in the company's management, and receive a part of the property after its liquidation.

The owner of a common (ordinary) share has at least the right to:

• Participate in the meeting with the right to vote on all issues within the latter's jurisdiction
• Participate in the management of the company
• Receive dividends from the company's profits, although the company does not guarantee them
• Have priority in acquiring shares placed by the company
• Be informed about the company's activities
• Authorize a third party to represent their rights at meetings
• Make proposals at meetings
• Vote at meetings in proportion to the votes of the shares owned
• Apply to court to appeal decisions adopted by the meeting that contradict current laws and other legal acts
• In the event of the company's liquidation, receive their due share of the company's property

Common (ordinary) shares of a certain company class give their owners the same rights.

The owner of a preferred share has the right to:

• Participate in meetings with voting rights if this is provided for by law and the company's charter.
• Receive guaranteed dividends from the profits generated by the company's activities.
• Be informed about the company's activities.
• Authorize a third party to represent their rights at meetings.
• Make proposals at meetings.
• Apply to court to appeal decisions adopted by the meeting that contradict current laws and other legal acts.
• In the event of the company's liquidation, receive their due share of the company's property.

Preferred shares of a certain class of the company provide their owners with the same rights.

• In Armenia, you can register a business both online and in person.
• Currently, you can only register a sole proprietorship and LLC online if you have an identification card and a digital signature.
• Anyone can register a business in person, including foreign citizens.

To register a business, you can apply to:

• State Register of Legal Entities Agency (Yerevan, Komitas 49)
• Regional offices of the State Register of Legal Entities Agency
• Banks operating in the Republic of Armenia (Before applying, it is necessary to check with the bank whether they offer this service.)
• Haypost branches

Please note: You must apply to the Central Bank of the Republic of Armenia to register a company in the financial, banking, credit, or insurance sectors.

Registration of legal entities takes:

• 1 business day if the founders are individuals and do not use the standard forms of documents provided by law.
• 2 business days if there is a legal entity among the founders and they do not use the standard forms of documents provided by law.
• Immediate registration is available if the registrant uses the standard forms of documents provided by law when submitting the documents to the State Register of Legal Entities Agency.

For additional information on registration and related services, please visit the website of the State Register of Legal Entities.

The information required from the founders may vary depending on their citizenship and whether they are an individual or a legal entity.

In case of being a citizen of the Republic of Armenia, the founder must submit:

• Passport or identification card
• Public services number

In case of not being a citizen of the Republic of Armenia, the founder must submit:

• A copy of the identity document notarized with an Armenian translation
  Public services number

If the founder is a legal entity registered in the Republic of Armenia, the following must be submitted:

• The relevant decision of the authorized body of the legal entity's management regarding establishing a new legal entity, as well as the name and state registration number of the founding legal entity.

If the founder is a foreign legal entity, the following must be submitted:

• The relevant decision of the authorized body of the legal entity’s management on establishing a new legal entity, as well as the legal entity's name and state registration number. All documents must be translated into Armenian with notarization.

A business name is the name under which a legal entity conducts business operations and is distinguishable from other legal entities.

The name must include words that reflect the legal form of organization of the legal entity, such as LLC, OJSC, etc., and at least one proper, common, or fictitious name.

It may also include other words that describe the location or nature of the legal entity's activities.

You can check the availability of a name on the website of the Register of Legal Entities using the search engine.

If the name is available, it can be reserved for a period of up to 6 months. During this period, you can prepare the registration documents and use the already reserved name when registering the business.

The registration of your preferred name may be rejected if:

• It is similar to the name of other legal entities or contains swear words or offensive language.
• It includes the names of state government bodies of the Republic of Armenia.
• It contains the full or abbreviated name of a historical or famous person of the Republic of Armenia and was submitted without permission to use that name.

The words “Armenia”, “Armenian”, and “Armenians” and their translations may be included in the company’s corporate name only upon application for registration of the corporate name.

• This application must be accompanied by a receipt for payment of the state duty set at 600,000 AMD per year or its 20-digit code and a corresponding certificate. The application for registration of the name and the first payment of the state duty is submitted at the time of business registration.

To use the given names during each subsequent year after registration, the state duty must be paid in advance, and the payment receipt or its 20-digit code must be submitted to the RA State Register of Legal Entities Agency by the end of that year.

The beginning of the year of granting permission to use the mentioned words is the day of registration of the corporate name or its change.

Using these words without payment of state duty is possible if they are part of the founder’s name.

In the case of using the name of a famous person in the company's corporate name:

• You must submit the written consent of that person when registering the business.
• In the event of the death of a person, consent must be given by all heirs who received his inheritance.
• If a person has died and has no heirs, his full or abbreviated name may be used in the corporate name upon obtaining a permit from the State Registration Agency. This applies if the person's reputation was acquired in a field that coincides with the main field of activity of the legal entity in question.

The names of settlements (administrative territorial units) of the Republic of Armenia are used based on the permission granted by the regional governor or community head, respectively.

Beneficial owners are considered to be:

• Members who own more than 20% of the voting shares or shares of the organization or who have a stake of more than 20% in the authorized capital.
• Officials who control the organization by actual or other means (for example, the director, deputy director of the organization, or any representative of the management staff who participates in the control of the organization but does not own shares).

The declaration of beneficial owners by organizations in the mining and financial sectors has some specific features, which you can familiarize yourself with in the video guides.

The beneficial ownership declaration allows for:

• Reducing the risks of de facto control and profiteering by others over the organization.
• Identifying persons attempting to commit legal violations by using a legal entity.

The declaration may be submitted by the executive head of the legal entity or their authorized representative.

A bank account is important for managing a company's finances. For legal entities, having a business account is mandatory.

Having a business bank account allows you to:

• Separate business cash flows, expenses, and income from personal funds.
• Easily track and pay taxes.

A cash register (known in Armenia as HDM) is also linked to a business bank account.

Apply to any bank operating in Armenia and submit the following documents:

For Legal Entities:

• A copy of the state registration of the legal entity (also known as the "State Register Certificate").
• The director's passport, social security card, or identification card.
• Copies of the passports and social security cards or identification cards of all founders.
• The original charter of the organization.

For Individual Entrepreneurs:

• The passport and social security card or identification card of the registered person.

Note: Other documents may also be required, depending on the specific requirements of the bank.

A cash register, also known in Armenia as HDM, is a device that records the sale of goods or services and transmits the sales information to the tax office, generating a receipt.

Regardless of the type of taxation or activity, all organizations, individual entrepreneurs, and notaries that receive cash payments must use a cash register.

Businesses providing services or trading through electronic platforms use an Electronic Cash Register.

The following should be considered: 

• The maximum amount of cash for each transaction is 300 thousand AMD (including VAT); for the total number of such transactions within a month, it is 3 million AMD (including VAT).
• The maximum amount of cash received from an individual in retail trade for each transaction is 3 million AMD (including VAT).
• If a VAT refund tax invoice is issued for the supply of goods in retail trade, the maximum cash acceptance limit does not apply to these transactions (a VAT refund tax invoice is issued when a foreign person submits a claim for a VAT refund from a taxpayer).

For the following types of activities, using a "Cash Register" is not mandatory when cash settlements are made:

• Remote sales through communication or television shops providing electronic communication.
• Providing public utilities with proof of payment required for cash transactions
• Sale of lottery tickets.
• Sale of tickets for passenger transportation, cargo transportation, and traffic by automobile, water, railway, and air transport.
• Sale of agricultural products and personal items owned by citizens at designated counters in places of trade.
• Sale of agricultural products carried out by means of transport.
• If the vehicle is equipped with a taximeter (meter) and transportation by passenger taxis
• Organization of casinos and (or) games of chance.
• Sale of religious paraphernalia and (or) provision of religious ritual services by religious organizations registered under the procedure established by law.
• Issuance of state postal payment stamps (postal stamps) confirming payment for postal services (stamps and other signs) at face value, as well as postal and courier activities.

A cash register can be purchased from a store or through various organizations.

On the tax authority website, (use browser translation for English version) you can find:

• Lists of organizations that provide technical services for new-generation cash registers.
• Lists of organizations that have received a Conformity Conclusion.
• Cash register models approved for purchase and maintenance. Note that monthly maintenance fees may vary by organization.

The website also provides:

• The electronic cash register web service integration guide (use browser translation for English version).
• The certificate necessary for integration.

Electronic cash registers operate online and accept both cash and non-cash payments. Receipts can be printed or sent electronically to the citizen.

After purchasing a cash register, you must submit an application for device registration to the tax authority.

The cash register must be installed in the area of a commercial facility, point of sale, workplace, or service provision location where payments are made.

Cash register users are obliged to:

• To ensure that information on the total amount of monetary settlements made during the day by each cash register is sent to the tax authority via network communication. This is done by registering and integrating the device with the tax authority.

The Central Bank of the Republic of Armenia, in coordination with the tax authority, shall issue a permit for the use of a cash register, computer equipment containing the appropriate software, and a computer program used in the context of foreign exchange or foreign exchange dealer-brokerage purchase and sale activities.

All trade and service points, with the exception of kiosks, are required to provide the ability to accept payments via payment cards at the customer's request.

A POS terminal (Point of Sale) or electronic cash register is a device or software that enables non-cash payments, allowing sales to be made just as with a traditional cash register

It can be purchased and installed at the point of sale, or the software can be activated on an existing cash register. The software can be activated at multiple addresses simultaneously.

The POS terminal facilitates product searches, including information on price, expiration date, and description. It also ensures the issuance of a fiscal receipt by calculating the total amount due and providing change.

In addition to recording sales, the POS terminal can also accumulate other data for further analysis.

Both individual entrepreneurs and legal entities have the right to hire employees.

Attention:
The data of the executive directors of legal entities (LLC, JSC, etc.) must be provided during the state registration of the organization, after which they must also be registered with the tax authority as employees by the established procedure.

It is very important to organize the hiring process according to the requirements of the law.

Before hiring a new employee:

• Determine the salary you can pay and ensure it meets or exceeds the minimum wage set by the Republic of Armenia.
• Confirm the candidate's legal right to work in the Republic of Armenia. If necessary, a criminal background check should also be conducted.
• Prepare an employment contract (use browser translation for English version) that outlines the rights and obligations of both employer and employee. It is advisable to consult with a lawyer during this process.
• Ensure compliance with all tax obligations related to employee hiring.

If a new employee is hired, an application for registration must be submitted to the tax authority no later than the end of the business day preceding the day the employee actually starts work.

The application must be submitted online through the tax authority's Electronic Reporting System.

The application includes personal information about the person being hired (full name, place of residence (registration), public services number (social card number), and other information as prescribed by law).

Upon successfully submitting the registration application, you will immediately receive registration confirmation.

If the legislation considers information regarding the hired person as subject to limited use, the registration application and income tax calculations for this individual must be submitted to the tax authority according to the procedure established by the Government of the Republic of Armenia.

By conducting licensed activities, you will be able to:

• Ensure your activities comply with the law of the Republic of Armenia and the international obligations undertaken.
• Increase the quality of goods and services provided by your business.
• Protect the rights of your consumers.
• Conduct business in accordance with the correct procedure if it is dangerous from the point of view of life, health, property, state, and public interests, protection of nature, or cultural heritage.

Legal entities, individual entrepreneurs, and individuals have the right to engage in activities subject to licensing.

Having received a license, an individual may carry out entrepreneurial activities in a given field only as an individual entrepreneur, except for cases prescribed by law.

Licenses can be both simple and complex, depending on the issuance procedure.

Key differences between these license types include:

Issuance Process:

• Simple Licenses: Issued without a decision from a licensing commission.
• Complex Licenses: Issued only after a decision from a licensing commission.

Issuance Timeline:

• Simple Licenses: Issued within 5 working days of application submission.
• Complex Licenses: Can take up to 30 working days to be issued. It may be issued through a tender process conducted according to established procedures.

Both types of licenses are issued indefinitely unless specified otherwise by law. 

Licenses for importing, exporting, or transiting military products, and those for intermediary activities in the military product trade, are complex and issued for 3 years. The validity of existing licenses for these activities can be extended for a period of 5 years.

The necessary types of licenses are issued by state bodies regulating the relevant sectors of economic activity.

You can obtain information about licenses through the Unified Electronic Registry of Licenses of the Republic of Armenia.

You can find a list of state bodies issuing licenses by sector of activity on the e-gov.am website.

You can familiarize yourself with the list of permitting documents and the departments issuing them on the website of the State Revenue Committee of the Republic of Armenia (use browser translation for English version).

The most frequently requested permits are:

• Construction permit
• Environmental permit
• Food safety requirements, permits, and business entity guidelines (use browser translation for English version).

A trademark is a letter, number, image, or hologram that can be represented graphically.

The purpose of registering a trademark is to distinguish the goods and services produced by a physical person or a legal entity from those of others.

By becoming the owner of a registered trademark:

• You will have the exclusive right to distinguish your goods and services from those of others and to grant others permission to use the mark in exchange for a fee.

• You will promote the development of your business by becoming recognizable among consumers and increasing business profitability.

• You will prevent unfair competition - the production and sale of counterfeit or very similar products by other manufacturers.

• You will be able to legally prohibit the sale of such a product and demand and receive monetary compensation for the damage suffered.

• Both individual entrepreneurs and legal entities can register a trademark.
• Citizens of other countries may acquire and dispose of a trademark in accordance with international treaties of the Republic of Armenia or on the principle of reciprocity and with equal rights to citizens of the Republic of Armenia.