About Authorized Natural Persons (Persoană Fizică Autorizată - PFA)
“I would like to start a sole proprietorship as an authorized natural person. What is the procedure in this case?” asks our reader.
The establishment and authorization of an authorized natural person (PFA) are regulated by Emergency Government Ordinance No. 44 of 2008, alongside two other forms of business entities: individual and family businesses.
Any type of economic activity can be carried out in this form, except for liberal professions and other activities regulated by special laws that require different business forms.
An authorized natural person can be any individual with full legal capacity and a registered office, who has not committed acts punishable under financial, accounting, customs, or tax laws, and who declares that they meet the legal requirements regarding health, veterinary, environmental, and occupational safety regulations.
This type of business does not have legal personality but its registration and authorization, similar to companies, fall under the jurisdiction of the Trade Register corresponding to the location of the registered office.
The registration application must include:
- A copy of the applicant’s identity card or passport,
- The document authorizing the use of the property as a registered office,
- A self-declaration stating compliance with the legal requirements mentioned above,
- Where applicable, documents proving qualifications or professional experience.
If the legal requirements are met, the appointed judge will authorize the establishment of the sole proprietorship within 3 days of the application and will order its registration in the Trade Register, issuing a registration certificate.
Legal provisions effective since January 17, 2017, limit the number of activity codes, allowing an authorized natural person to conduct up to 5 types of economic activities listed under CAEN (Classification of Economic Activities).
The authorized person cannot own another sole proprietorship but can collaborate or contract with any private or legal entity, other authorized natural persons, or individual or family businesses. They are required to pay taxes, social security contributions, and health insurance based on their income.
According to the latest legal amendments, a person operating under this business form has the option to work individually or employ up to three workers.
The advantages of this business form include simplified accounting and the possibility to experiment with entrepreneurship as a side activity without quitting a full-time job.
However, a significant disadvantage is the unlimited liability, meaning the sole proprietor is responsible not only with the business assets but also with their personal property for any claims or damages. Therefore, once the business is stable, it may be more prudent to transition to a limited liability company.
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