5 key steps to register business in Azerbaijan
- Emil Khudiyev (Lawyer)
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Choose your business structure: Decide between an LLC, JSC, or registering as an individual entrepreneur.
• LLCs have no minimum capital requirement.
• JSCs need AZN 2,000.
• Individual entrepreneurs are ideal for sole proprietors with full personal liability.
Note: All forms should be provided in Azerbaijani. Don’t forget to legalize or apostille documents according to international standards (if you are a foreign investor in Azerbaijan).
Once everything is ready, move on to submitting your application.
3. Submit your Application: File your registration application with the State Tax Service. The process takes about 2–3 business days, after which you’ll receive a TIN (Tax Identification Number), registration Certificate, and Company Charter.
3. Set Up ASAN Imza: Obtain a digital e-signature via ASAN Imza for secure access to over 2,000 e-services.
4. Open a bank account: Use your registration documents to open a bank account and deposit any required charter capital.
Types of Business Entities in Azerbaijan
In Azerbaijan, entrepreneurs can choose between operating as a Legal Entity or as an Individual Entrepreneur.
Limited Liability Company (LLC): Offers protection for owners, meaning they are only responsible for company debts up to the amount of their contributions. LLCs also allow for flexible management structures.
Joint Stock Companies (JSCs): These come in two types:
Open Joint Stock Company (OJSC): Designed for larger businesses that plan to publicly trade shares.
Closed Joint Stock Company (CJSC): Suitable for businesses with a smaller group of shareholders.
Individual Entrepreneurship: Best suited for sole proprietors who prefer running their business independently.
Below is a table highlighting the main differences among these business structures:
Feature | LLC | JSC | Individual Entrepreneur |
|---|---|---|---|
Minimum Capital | None | AZN 2,000 | None |
Liability Protection | Limited to contributions | Limited to shareholding | Full personal liability |
Tax Options | Simplified or profit tax | Simplified or profit tax | Simplified or income tax |
Ownership Transfer | Simple | Through share transfer | Not transferable |
FAQ
What is the difference between an LLC and a JSC when choosing a business structure ?
When deciding between a Limited Liability Company (LLC) and a Joint Stock Company (JSC) in Azerbaijan, the key differences lie in liability, capital requirements, and suitability for different business sizes.
In an LLC, the founders’ liability is limited to their contributions to the charter capital, making it a popular choice for small to medium-sized businesses. There is no minimum charter capital requirement for LLC registration. In contrast, a JSC requires a minimum charter capital of 2,000 AZN and is more suitable for larger businesses, particularly those planning to issue shares or attract investors.
Additionally, JSCs can be either Open (publicly traded) or Closed (privately held), offering flexibility depending on the company’s goals. Entrepreneurs often prefer LLCs for simplicity, while JSCs are ideal for businesses with growth and investment ambitions.
What steps can foreign entrepreneurs take to easily register a business in Azerbaijan?
In Azerbaijan, certain industries require special permits or licenses beyond standard business registration. These industries include, but are not limited to:
Toxic waste management
Private medical services
Pharmaceutical activities
Educational services
Telecommunication services
These permits are issued by the relevant state authorities, and applications can typically be submitted either online or in person. It’s important to check the specific requirements for your industry to ensure compliance with local regulations.
What additional permits or licenses are required for specific industries in Azerbaijan?
In Azerbaijan, certain industries require special permits or licenses beyond standard business registration. These industries include, but are not limited to:
Toxic waste management
Private medical services
Pharmaceutical activities
Educational services
Telecommunication services
These permits are issued by the relevant state authorities, and applications can typically be submitted either online or in person. It’s important to check the specific requirements for your industry to ensure compliance with local regulations.
What are the key considerations for choosing a business structure in Azerbaijan?
When deciding on the right structure, take these factors into account:
Capital Requirements: LLCs do not require a minimum capital investment, while JSCs must have at least AZN 2,000 in charter capital [1].
Taxation: Both legal entities and individual entrepreneurs can choose simplified tax options. However, legal entities are subject to an additional 5% tax on any distributed dividends [2].
Liability: LLCs and JSCs protect personal assets from business liabilities. In contrast, individual entrepreneurs are fully responsible for their business debts [2].
Expansion Opportunities: JSCs are often better suited for businesses aiming to raise funds through share issuance, making them a strong choice for companies planning to grow significantly [1].
Key points to keep in mind when setting up your business in Azerbaijan
You may need extra licenses or permits depending on your business activities.
After registration, focus on setting up accounting, ensuring compliance, and managing necessary licenses for smooth operations.
Consider seeking expert legal advice to simplify post-registration tasks.
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