After registering an FOP, many entrepreneurs mistakenly believe that using the simplified tax system means they can forget about paperwork. After all, the tax declaration is submitted only once a year, and the business operates “officially.” However, this is merely a false sense of security.
Documents are the foundation of protection during tax audits. If you cannot verify your income and expenses, even honestly filed declarations won’t help — the tax authorities will recalculate your taxes and issue penalties.
This is especially important for entrepreneurs who:
- work with legal entities;
- receive payments from foreign clients in foreign currency;
- sell goods or services through marketplaces and online platforms.
At Finevolution, we understand all the nuances and help entrepreneurs organize document storage and bookkeeping so they can work confidently even during inspections. Our goal is to let you focus on growing your business, not worrying about tax risks.
Why FOPs must store their documents
Many entrepreneurs on the simplified tax system think: “I pay my taxes honestly, so there shouldn’t be any problems.”
But tax inspections work differently. For the authorities, it’s not enough to see your declarations, they must also verify your income and expenses with primary source documents.
- The tax office may reject your declared expenses and will recalculate the tax due.
- You may be fined for violating bookkeeping regulations.
- In the worst-case scenario, your FOP account may be blocked until the situation is clarified.
Even if you don’t hire employees and only have a few clients, proper document storage is your insurance policy.
What documents must an FOP keep?
An FOP using the simplified tax system is not required to maintain full accounting records, but that does not mean documents can be ignored. On the contrary, it is the primary documents that confirm the legality of your income and expenses in the event of a tax audit.
Here is a list of documents that must be kept:
Tax Declarations. These are the main documents confirming that you have declared your income on time.
- Keep copies of all submitted declarations for the entire period of activity.
- Be sure to store the confirmation receipts from the tax authority (they prove that the declaration was received and accepted by the system).
- Even if the declaration was submitted through Diia, you should archive copies and download the PDF confirmation of submission.
Primary Documents. These are documents that confirm the receipt of income or the incurrence of expenses.
This includes сontracts with clients or contractors, acts of completed work or delivery notes (for goods), invoices and other supporting documents.
If the tax office asks: “Where did the funds in your account come from?” — only primary documents can provide the correct answer.
Banking Documents. An FOP is required to use a separate account for business activities.
- Keep bank statements for the entire period of operation
- For cash transactions — receipts, payment slips, and cash expense orders
Documents for Foreign Currency Receipts. If you work with foreign clients, it is essential to keep:
- Foreign trade invoices, which act as both payment requests and service confirmation documents
- Bilingual acts of completed work
Without these, the tax authority may classify the incoming funds as “unlawful enrichment.”
Documents for cash registers (RRO/PRRO), if applicable. If you use a cash register or software-based PRRO, keep Z-reports and fiscal receipts and registration documents for your RRO/PRRO
How long should an FOP keep documents?
Many entrepreneurs believe that they can discard documents right after submitting their tax declaration. However, the law sets specific retention periods, and if you fail to provide the necessary papers during an audit, the tax authority may:
- Reject your expense claims (especially important for those on the general taxation system);
- Reassess taxes and apply penalties (fines for missing primary documents can reach up to UAH 1,020 per violation, under Article 121 of the Tax Code of Ukraine);
- Block your account until the situation is clarified.
Document retention periods for FOPs
|
Type of Documents |
Retention Period |
Comments |
|
Tax Declarations |
At least 3 years |
Standard period for most tax audits. |
|
Primary Documents (contracts, acts) |
3–7 years |
7 years if there were losses or VAT refunds. |
|
Bank Statements |
3 years |
Confirm the FOP’s income and expenses. |
|
Documents on Foreign Currency Receipts |
3 years |
We recommend keeping them longer to avoid foreign currency issues. |
|
Documents for RRO/PRRO |
3 years |
Includes Z-reports, receipts, etc. |
|
Documents for Legal Disputes/Audits |
Until case ends + 3 years |
Must be retained until a final decision is reached. |
We recommend storing all documents for at least 3 years, especially if you do not have any employees. This helps reduce risks during unscheduled or repeat audits.
Mini Audit: are your FOP documents in order?
Before you breathe easy, check whether all key documents are properly saved and organized:
- Have all tax declarations been submitted on time, with confirmation of receipt saved?
- Do you have primary documents (contracts, acts, invoices) for all income received?
- Are bank statements for your entire FOP activity period available?
- If you receive foreign currency – are foreign trade contracts and invoices archived?
- Are RRO/PRRO documents (Z-reports, receipts) stored?
- Is your archive maintained either in paper or digital format?
- Are document retention periods followed (at least 3–7 years)?
What if your answer to some of these questions is “No”?
It means that during a tax audit, the authorities may reassess taxes or block your account.
Finevolution can help you conduct a full audit of your documentation, restore the archive, and organize your records in a way that gives you peace of mind, even during inspections. Book a mini-audit of your documents – we will identify the risks and provide solutions.
We are available Monday to Friday, 9:00–19:00. To request a consultation, submit a request using the form below or contact us via Telegram, Viber, or WhatsApp.
