en
3 essential rules for those who want to start a company
3 essential rules for those who want to start a company
According to statistical data, the number of taxpayers in the country increases every year. The State Tax Service under the Ministry of Economy reports that the number of individuals registered as taxpayers has risen by 4.8% over the past year. As of October 1, 2025, a total of 1,653,132 taxpayers have been registered in Azerbaijan. Of these, 86.9% are individuals, while 13.1% are legal entities and other organizations. Over the past year, the number of individual entrepreneurs has increased by 4.5%, and the number of institutions, enterprises, and organizations has grown by 7.2%.
So, what steps should be taken to become a successful taxpayer? Which tax regime and legal form should entrepreneurs choose? Expert Ilkin Lalayev provides clarification.
By examining the main challenges faced by many active entrepreneurs, we can draw certain conclusions. Based on these findings, we would like to highlight key points that those starting a business should pay attention to.
Choosing the organizational and legal form
One of the most important stages in the state registration of a business is the selection of the correct organizational and legal form. This choice affects factors such as legal responsibility and the entrepreneur’s credibility in the business environment. In this regard, an entrepreneur usually chooses between registering as an individual or as a legal entity (LLC, JSC, CJSC, etc.), each with its own characteristics.
Registration as an individual implies greater personal responsibility and less paperwork but also lower trust in the market. Registration as a legal entity, on the other hand, provides higher credibility but requires more documentation and compliance. From a taxation perspective, both forms have similarities and differences. Therefore, when choosing the appropriate form, factors such as the company’s field of activity, growth potential, and globalization plans should be considered.
Choosing the tax regime
In practice, there are cases where companies voluntarily register as VAT payers without being required to do so. This results in an additional tax burden since, according to the current tax legislation, there are specific turnover and time limits for deregistration from VAT. The correct choice of tax regime ensures a fair taxation mechanism that aligns with the company’s operations. Taking into account the restrictions and mandatory cases defined by law, an entrepreneur can choose any available taxation method.
According to the Tax Code, there are three main options:
- Simplified taxation of income (revenue);
- Profit (income) taxation after deducting expenses;
- Taxation of income under both VAT and profit (income) tax.
Making the right choice at the beginning of operations helps establish optimal tax obligations for the company.
Proper use of tax exemptions and incentives
Some entrepreneurs are unaware of how tax exemptions and incentives work, which prevents them from exercising their rights in time. Tax benefits and exemptions are provided within certain limits and conditions. When these conditions are not met, the business loses the right to these benefits.
Sometimes, while preparing a business plan, entrepreneurs expect to benefit from tax incentives. However, if the mechanism is not set up correctly, unexpected tax obligations may arise in the future, increasing financial pressure and potentially harming the company’s operations.
Therefore, entrepreneurs who wish to benefit from tax exemptions and incentives must first understand how the system functions and ensure that their business meets the required conditions.
According to statistical data, the number of taxpayers in the country increases every year. The State Tax Service under the Ministry of Economy reports that the number of individuals registered as taxpayers has risen by 4.8% over the past year. As of October 1, 2025, a total of 1,653,132 taxpayers have been registered in Azerbaijan. Of these, 86.9% are individuals, while 13.1% are legal entities and other organizations. Over the past year, the number of individual entrepreneurs has increased by 4.5%, and the number of institutions, enterprises, and organizations has grown by 7.2%.
So, what steps should be taken to become a successful taxpayer? Which tax regime and legal form should entrepreneurs choose? Expert Ilkin Lalayev provides clarification.
By examining the main challenges faced by many active entrepreneurs, we can draw certain conclusions. Based on these findings, we would like to highlight key points that those starting a business should pay attention to.
Choosing the organizational and legal form
One of the most important stages in the state registration of a business is the selection of the correct organizational and legal form. This choice affects factors such as legal responsibility and the entrepreneur’s credibility in the business environment. In this regard, an entrepreneur usually chooses between registering as an individual or as a legal entity (LLC, JSC, CJSC, etc.), each with its own characteristics.
Registration as an individual implies greater personal responsibility and less paperwork but also lower trust in the market. Registration as a legal entity, on the other hand, provides higher credibility but requires more documentation and compliance. From a taxation perspective, both forms have similarities and differences. Therefore, when choosing the appropriate form, factors such as the company’s field of activity, growth potential, and globalization plans should be considered.
Choosing the tax regime
In practice, there are cases where companies voluntarily register as VAT payers without being required to do so. This results in an additional tax burden since, according to the current tax legislation, there are specific turnover and time limits for deregistration from VAT. The correct choice of tax regime ensures a fair taxation mechanism that aligns with the company’s operations. Taking into account the restrictions and mandatory cases defined by law, an entrepreneur can choose any available taxation method.
According to the Tax Code, there are three main options:
- Simplified taxation of income (revenue);
- Profit (income) taxation after deducting expenses;
- Taxation of income under both VAT and profit (income) tax.
Making the right choice at the beginning of operations helps establish optimal tax obligations for the company.
Proper use of tax exemptions and incentives
Some entrepreneurs are unaware of how tax exemptions and incentives work, which prevents them from exercising their rights in time. Tax benefits and exemptions are provided within certain limits and conditions. When these conditions are not met, the business loses the right to these benefits.
Sometimes, while preparing a business plan, entrepreneurs expect to benefit from tax incentives. However, if the mechanism is not set up correctly, unexpected tax obligations may arise in the future, increasing financial pressure and potentially harming the company’s operations.
Therefore, entrepreneurs who wish to benefit from tax exemptions and incentives must first understand how the system functions and ensure that their business meets the required conditions.