The following review covers the sole proprietorship (“Sole Trader”) business status in Grenada, including legal structure, registration obligations, personal liability, and the applicable tax rates for the year 2025.
Overview of Sole Trader Status in Grenada
Grenada recognizes the “Sole Trader” (also called “Sole Proprietorship”) status, which is straightforward for individuals seeking to conduct business. This format is widely used in Grenada for its simplicity and ease of access, and is available to all regular citizens.
Legal and Business Structure
A sole trader in Grenada is not considered a separate legal entity from its owner. This structure means all business obligations, debts, and liabilities are the direct responsibility of the individual operating the business.
Sole traders have the flexibility to invoice clients in their own name, providing a seamless route for small-scale commercial activities without the complexity of corporate formalities.
Registration Requirements
Business name registration is required only if trading under a name other than the individual’s personal name. Registration is handled through the Corporate Affairs and Intellectual Property Office (CAIPO). This step adds formality but remains relatively straightforward compared to incorporation processes for more complex entities.
| Requirement | Details |
|---|---|
| Business Name Registration | Mandatory only if trading under a business name (i.e., not personal name) |
| Authority | Corporate Affairs and Intellectual Property Office (CAIPO) |
| Who Can Apply? | Any regular citizen |
Taxation of Sole Proprietors in Grenada (2025)
Sole traders are liable to pay personal income tax on business earnings, and—if exceeding the relevant threshold—Value Added Tax (VAT). The key rates and rules for 2025 are summarized below:
| Tax Type | Rate / Threshold | Currency (XCD/USD) |
|---|---|---|
| Personal Income Tax (on profits) | 10%–30% (progressive, depending on income bracket) | XCD (East Caribbean Dollar); 1 XCD ≈ 0.37 USD (2025) |
| VAT (Value Added Tax) | 15% if annual turnover exceeds EC$300,000 ($111,000 USD) | XCD/USD |
Personal income tax is paid by the sole proprietor after calculating net business profits. The progressive tax regime means rates increase from 10% to 30% as taxable income rises. If gross receipts for the year cross the EC$300,000 threshold, VAT registration is compulsory, and 15% VAT must then be charged on eligible sales.
Asset and Liability Implications
It is important to note for asset protection considerations: in this sole proprietor structure, business and personal assets are not legally separated. Creditors of the business can claim against personal assets in the event of debts or legal actions arising from the business.
Summary Table of Key Features
| Feature | Details |
|---|---|
| Status Name | Sole Trader / Sole Proprietorship |
| Legal Distinction | No separation between owner and business |
| Owner Liability | Unlimited personal liability |
| Registration Body | CAIPO |
| Taxation | Personal Income Tax (10%–30%), VAT (15% if above threshold) |
| VAT Threshold | EC$300,000/year (approx. $111,000 USD) |
Pro Tips for Operating as a Sole Trader in Grenada
- Always assess your need for a registered business name. If your business uses your own name, registration with CAIPO is not required, saving both time and cost.
- Monitor your annual turnover closely. If you approach the EC$300,000 threshold, get professional guidance on VAT registration obligations to remain compliant and avoid penalties.
- Keep business and personal records meticulously separated. While the law treats your business and personal assets as one, maintaining clear records helps in tax filings and protects you during audits.
- Understand your personal risk exposure. Unlimited liability means all personal assets are at risk for business debts—consider insurance or alternative structures for higher-risk operations.
- Consult official government resources regularly. For up-to-date forms and guidance, refer to the CAIPO (https://caipo.gov.gd/) and Inland Revenue Department (https://www.ird.gd/).
Where To Find Official Information
- Corporate Affairs and Intellectual Property Office (CAIPO) – Business Registration
- Inland Revenue Department – Taxation Authority
Sole proprietorship in Grenada continues to offer an accessible and practical option for those seeking the most direct route to operating a small business. With personal liability and straightforward registration being notable factors, it’s crucial to weigh the simplicity against potential risks. For 2025, the main tax rates and VAT rule remain unchanged, and the system stays approachable for most individuals considering independent commercial activity on the island.