An individual business (개인사업자) is a sole proprietorship operated by a natural person. It can engage in most lawful economic activities—such as retail, food and beverage, professional services, e-commerce, and light manufacturing—subject to any sector-specific approvals. Most individual businesses are VAT-taxable; those operating strictly in VAT-exempt fields are treated as tax-exempt for those specific supplies.
What individual business type can do
Individual businesses commonly sell goods and provide services directly to consumers and businesses. They may hire employees, lease premises, operate online stores, and issue business evidence such as cash receipts or tax invoices when applicable. Activity scope is determined by the registered business fields and any separate industry regulations.
What to be aware of when contracting
- Confirm the VAT position (general, simplified, or exempt) because it affects invoicing and price.
- Check that the declared business scope matches the services/products actually supplied.
- For higher-risk activities (for example, food handling or hazardous materials), ask for proof of relevant licenses/permits.
- Ensure the signatory has authority (owner or an authorized delegate).
Licenses and permits
Licensing is activity-dependent. Examples include food hygiene permits for restaurants, private academy registration for education providers, and specialized approvals for healthcare or finance. The sole-proprietor form itself does not grant any special permission; approvals are obtained per industry rules.
Accounting and income-tax requirements
Sole proprietors maintain books appropriate to their size and industry. Many small operators may qualify for simplified bookkeeping, while others are subject to double-entry obligations. VAT-taxable proprietors file VAT returns on schedule. Regardless of VAT status, proprietors file Comprehensive Income Tax annually based on business income, with penalties possible for poor or missing records.