Business structures in cambodia
Table of content
- when should i choose sole proprietorship?
- when should i choose a private limited company?
- what are the liability differences?
- can foreigners own these business structures?
- taxation differences
- what about digital businesses and e-commerce?
- employee considerations
- banking differences
- compliance and ongoing costs
- summary comparison table
- still not sure which to choose?
sole proprietorship vs private limited company
what is a sole proprietorship?
a sole proprietorship is the simplest business structure in cambodia. you are the business – there is no separation between you and your company. you own 100% of the business, keep all profits, but are also personally liable for all debts and legal obligations.
key characteristics:
- owned and operated by one person only
- no shareholders or partners allowed
- your personal assets can be seized to pay business debts
- simpler registration process (no memorandum or articles of association required)
- lower registration costs ($550-$2,000 depending on services)
- must indicate “sole proprietorship” on your business name
what is a private limited company (ltd)?
a private limited company is a separate legal entity from its owners. it can have 1-30 shareholders and provides liability protection – your personal assets are generally protected from business debts.
key characteristics:
- separate legal entity with its own rights and obligations
- limited liability protection for shareholders
- can have 1-30 shareholders (single-member ltd possible)
- requires formal corporate documents (memorandum and articles of association)
- can be 100% foreign-owned
- higher registration costs ($1,650-$5,500 depending on package)
- professional corporate structure suitable for investors
when should i choose sole proprietorship?
choose a sole proprietorship if:
- you’re a freelancer, consultant, or small service provider
- your annual revenue is under $62,500
- you don’t plan to hire employees (or max 1-2)
- you don’t need investors or partners
- you’re comfortable with personal liability
- you want the lowest cost and simplest structure
- your business activities are low-risk
when should i choose a private limited company?
choose a private limited company if:
- you need liability protection for your personal assets
- your annual revenue will exceed $250,000
- you plan to raise investment or have multiple shareholders
- you’re in a regulated sector (finance, education, healthcare, telecom)
- you want to hire significant staff (5+ employees)
- you need formal banking relationships with multiple institutions
- you want a professional corporate structure
- you’re entering cambodia as part of a larger business strategy
required for: regulated industries, medium taxpayer status (over $250,000/year), businesses seeking institutional banking or venture capital
what are the liability differences?
sole proprietorship liability
you are personally liable for everything:
- if your business owes $50,000 and cannot pay, creditors can seize your house, car, and personal savings
- if someone sues your business, they’re suing you personally
- business debts = your personal debts
private limited company liability
the company is liable, not you personally:
- if the company owes $50,000, only company assets can be seized
- creditors cannot touch your personal house, car, or savings (except in cases of fraud or personal guarantees)
- business debts stay with the business
exception: if you personally guarantee a bank loan or commit fraud, you can still be held personally liable even with an ltd
can foreigners own these business structures?
sole proprietorship
yes, both cambodians and foreigners can own 100% of a sole proprietorship. however:
- your name must be translatable into khmer script
- you need a legal cambodian address (can use registered address service)
- you must have proper visa/work permit to operate in cambodia
- some activities restricted to cambodian nationals cannot be done even with a sole proprietorship
private limited company
yes, foreigners can own 100% of a cambodian private limited company without any local partner requirement (except for a few restricted sectors like land ownership). this makes ltd the preferred structure for foreign investors.
taxation differences
sole proprietorship
- under $5,000/month average ($60,000/year): no tax
- $5,000-$62,500/year: small taxpayer status, simplified tax regime
- over $62,500/year: must register for vat (10%), file monthly and annual tax returns, subject to audits
- personal income and business income are the same
private limited company
- all revenue levels: subject to corporate tax
- must file monthly vat returns if registered turnover threshold
- 20% profit tax (with various deductions and exemptions available)
- can claim more business expenses
- clearer separation of business and personal finances
what about digital businesses and e-commerce?
e-commerce licensing requirements
cambodia has specific e-commerce regulations since 2019. here’s what you need to know:
exempt from e-commerce license (but must notify ministry of commerce):
- sole proprietorships with annual turnover under $62,500
- individuals selling via social media with low revenue
- service bookings without payment processing
- advertising only (no direct sales)
requires e-commerce permit:
- sole proprietorships or individuals selling online with turnover over $62,500/year
- businesses selling goods or services via social media or electronic platforms
- must also obtain online service certificate from ministry of posts and telecommunications
requires full e-commerce license:
- e-commerce platforms (like marketplaces)
- payment gateways and intermediaries
- businesses operating e-commerce web services
- any structured online business with significant operations
penalty for non-compliance: operating without proper e-commerce licensing can result in fines of approximately $2,500 and forced business closure.
why sole proprietorships may not be suitable for digital businesses
- revenue threshold issues
online businesses often scale quickly. if you exceed $62,500/year:
- you need e-commerce permit
- you must register for vat (10%)
- you transition from “no tax” to “medium taxpayer” territory
- sole proprietor structure becomes administratively complex
- payment processing requirements
e-commerce businesses need licensed payment service providers. setting this up requires:
- online certificate from ministry of posts and telecommunications
- relationship with national bank of cambodia-approved payment processors
- consumer protection documentation
- these are easier to establish with ltd structure
- platform requirements
if you’re selling on international platforms (lazada, shopee, etc.) or accepting international payments, they often require:
- registered business entity (ltd preferred)
- business bank account with proper documentation
- formal tax registration
- liability exposure
online businesses face higher risks:
- customer disputes and refunds
- product liability issues
- data privacy concerns
- intellectual property issues
- with sole proprietorship, all these risks affect your personal assets
- scaling challenges
if your online business grows beyond $250,000/year, you’ll be forced to:
- convert to medium taxpayer status
- potentially restructure to ltd anyway
- better to start with proper structure if growth is expected
recommendation for digital businesses
- small online sellers (under $60k/year): sole proprietorship can work, but be aware of e-commerce notification requirements
- growing e-commerce (over $60k/year): strongly consider private limited company from the start
- platforms, marketplaces, saas: must use private limited company structure
- cross-border digital services: private limited company required for proper vat and licensing compliance
can i convert from sole proprietorship to ltd later?
yes, but it’s not a simple “upgrade.” you must:
- register a completely new private limited company
- transfer assets, contracts, and customers to the new entity
- close the old sole proprietorship
- potentially face tax implications on the transfer
- update all banking, vendor, and customer relationships
cost and time: 4-8 weeks, plus legal/accounting fees for asset transfer
better approach: if you expect growth beyond $100k/year or plan to hire staff, start with ltd from day one
employee considerations
sole proprietorship with employees
you can hire employees but:
- registration with ministry of labour (mlvt) more complex
- national social security fund (nssf) contributions required
- employment contracts must be in your personal name
- you’re personally liable for any labour disputes or unpaid wages
- most sole proprietors hire max 1-2 people
private limited company with employees
- proper corporate employment structure
- formal contracts under company name
- easier mlvt and nssf compliance
- liability protection for labour issues
- professional hr framework
- can scale to 10+ employees smoothly
banking differences
sole proprietorship banking
- business account in your personal name
- limited banking services available
- harder to get business loans
- some banks reluctant to work with sole proprietors
- cannot easily accept international payments
- mixing personal and business finances common issue
private limited company banking
- corporate bank account in company name
- access to business loans and credit lines
- multiple institutions willing to work with ltds
- easier international payment processing
- proper separation of business/personal finances
- can open accounts with multiple banks
compliance and ongoing costs
sole proprietorship annual costs
- business license renewal: ~$50-100
- tax filing (if over $62,500 revenue): accounting fees ~$500-1,000/year
- registered address (if used): $200-500/year
- minimal compliance requirements
private limited company annual costs
- business license renewal: ~$100-200
- annual corporate filing: ~$100
- accounting and tax filing: $1,000-3,000/year
- registered office/secretary: $500-1,500/year
- annual audit (for some companies): $1,000-5,000
- higher but provides structure and protection
summary comparison table
| factor | sole proprietorship | private limited company |
| liability | unlimited personal | limited to company assets |
| ownership | 1 person only | 1-30 shareholders |
| cost to setup | $550-2,000 | $1,650-5,500 |
| annual maintenance | $500-1,500 | $2,000-5,000 |
| tax under $60k/year | no tax | corporate tax applies |
| foreign ownership | yes, 100% | yes, 100% |
| suitable for investors | no | yes |
| employees | difficult after 2-3 | easily scales |
| banking | limited options | full business banking |
| liability protection | none | yes |
| e-commerce over $62k | complex | straightforward |
| regulated sectors | not allowed | required |
| registration time | 3 weeks | 7-14 days |
| legal documents | minimal | full corporate docs |
still not sure which to choose?
start with these questions:
- will your annual revenue exceed $100,000? → ltd
- do you need liability protection? → ltd
- are you in finance, education, healthcare, or regulated sector? → ltd (required)
- will you hire more than 2 employees? → ltd
- do you need investors or partners? → ltd
- is this a serious, scalable business? → ltd
- is this a small side business or freelance work under $60k/year? → sole proprietorship ok
- are you testing a business idea with minimal risk? → sole proprietorship ok
when in doubt: schedule a consultation with bmix consultant to discuss your specific situation, revenue projections, and business goals. we’ll help you choose the right structure and handle the entire registration process.
contact bmix consultant
phone/whatsapp/telegram: +855 92 564 416
email: info@bmixconsultant.com
office: betong road, tapol village, sangkat svaydongkum, siem reap city, cambodia
business hours:
monday-friday: 8:30am – 5:00pm
saturday: 8:30am – 12:30pm
note: this information is current as of september 2025. regulations may change. always consult with a professional advisor for your specific situation.
