What Are the Risks of Working Without Registering as an IE

Working without official business registration is a common practice among freelancers, consultants, IT specialists, authors and other professionals. At first glance, flexible work schedules and lack of bureaucracy seem to be clear advantages. However, this approach often hides serious risks for both contractors and their customers.

The lack of official entrepreneur status can lead to difficulties in receiving payments, loss of legal protection, problems with proof of income and risks when interacting with customers. Many experts underestimate these consequences, considering informal work simply as a way to “waste time” or avoid tax obligations.

In this article, we will consider the key risks associated with working without registering as an individual entrepreneur – from financial and legal problems to restrictions in career and business development. Understanding these risks will help you make informed decisions and choose the safest and most profitable model of cooperation in the long term.

Types of Activities That Require Mandatory IE Registration

In Belarus, there is an official list of activities that can be conducted by individual entrepreneurs. From October 1, 2024, state registration of IEs for activities not included in this list has been discontinued — meaning new IEs can no longer be registered for such activities.

In practice, this means: if you plan to engage professionally and systematically in an activity included in this list, performing it without IE registration becomes either impossible or extremely risky.

The list covers a wide range of areas traditionally considered entrepreneurial activities, including:

Employment-related services outside the Republic of Belarus.
Computer programming, consulting, and related services.
Vehicle trading.
Education, advertising, and communications services.
Leasing, rental, and property hire.
Transport and courier services.
Manufacturing and other production-related activities.

If the activity you plan to carry out is not included in the approved list, new IE registration is not permitted for this purpose. Those who were registered before the list came into effect had a transition period during which they could continue operating. After that, they must either cease activity or switch to another legal form (e.g., establish a legal entity).

This approach allows the state to formalize the scope of entrepreneurial activity while also protecting both contractors and clients: officially registered activities become transparent, and business relationships are legally documented and protected.

What Does It Mean to Work Without IE Registration?

Working without registering as an individual entrepreneur usually means providing services or performing work without formal legal status. This model is often chosen by freelancers, beginners, and those working with clients sporadically. However, it carries systemic risks.

Informal Agreements with Clients

In most cases, work without IE registration is based on verbal agreements or correspondence via messengers and email. Cooperation terms — scope of work, deadlines, payment — are either informally recorded or not fixed at all.

Under this model, specialists are effectively deprived of legal protection. If payment is delayed, requirements are changed, or a client refuses to accept the work, it becomes extremely difficult to defend one’s position. The absence of a formal contract also complicates dispute resolution and makes the contractor vulnerable.

Cash Payments or Transfers to Personal Accounts

Another common feature of working without IE registration is receiving payments in cash or via transfers to personal bank cards. While seemingly convenient, this creates additional risks.

Regular transfers from multiple clients can attract the attention of banks and tax authorities, potentially leading to temporary account blocking or requests to explain the origin of funds. In addition, such income is difficult to confirm officially, for example, when filing tax returns, renting housing, or interacting with banks and state institutions.

Common Freelance Scenarios Without IE Registration

Most often, the following categories work without registration:

IT freelancers, designers, marketers, and copywriters.
Specialists combining full-time employment with side projects.
Consultants and tutors working with private individuals.
Professionals working directly with foreign clients.

At the early stages, this model seems simple and safe. However, as income and the number of clients grow, working without IE registration ceases to be a temporary solution and turns into a source of legal and financial risks.

Financial Risks

Working without registering as an individual entrepreneur may seem profitable in the short term, but financial risks often become the main cause of serious problems. The lack of official status limits income management and legal protection.

Difficulties Receiving Payment and Proving Income

In informal work, the contractor fully depends on the client’s good faith. If payment is delayed or refused, proving the fact of services rendered and the agreed fee is extremely difficult.

Even if correspondence exists, it does not always provide sufficient legal leverage. Moreover, unofficial income cannot be documented, creating problems when dealing with banks, renting property, or interacting with government and commercial institutions.

Loss of Tax Benefits and Social Guarantees

Working without IE registration means no officially declared income and, therefore, no mandatory contributions. As a result, specialists lose access to social guarantees, including pension accrual and related benefits.

They also lose the opportunity to use tax deductions and other financial instruments available to registered entrepreneurs. In the long term, this significantly affects financial stability and social security.

Risk of Bank Account Blocking

Regular incoming payments from different persons to a personal bank account can be interpreted as signs of business activity. Banks are obliged to inform the tax authorities about a significant inflow. This can lead to requests for explanations, transaction restrictions or temporary account blocking.

For specialists, this may mean loss of access to funds and inability to manage earnings. This is especially important for those who are completely dependent on the income of a freelancer.

Social and Pension Aspects

Working without IE registration affects not only current income but also long-term social protection. These risks often remain unnoticed at the beginning but become significant over time.

Lack of Regular Social Contributions

Social contributions are not paid without the official status of work. As a result, the specialist actually goes beyond the social protection system, which provides support in cases of disability or difficult life circumstances.

Short-term savings on contributions often lead to the lack of basic guarantees in the long term.

Impact on Pension Rights and Work Experience

Pension rights directly depend on official work experience and contribution periods. Work without IE registration is not included in the employment history, which may reduce future pension payments or complicate pension registration.

For those who have been working as a freelancer for many years without registration, this risk becomes particularly significant as the lost experience cannot be recovered retroactively.

Risk of Being Classified as Economically Inactive

Without formal employment or registered business activity, a person may be officially considered economically inactive, despite actually earning income.

This may result in:

The obligation to pay higher rates for certain public and social services.
Difficulties interacting with state authorities.
Additional scrutiny from banks when verifying income sources.
Overall reduction in social protection.

Risks During Temporary Disability

In case of illness, injury or other temporary disability, unofficially hired specialists do not receive any financial support. Without compensation mechanisms, they rely solely on personal savings, which makes this model very vulnerable during long breaks.

Cooperation with Corporate Clients

For corporate clients, official contractor status is essential. Unlike private clients, companies operate under strict financial and compliance requirements, limiting cooperation with unregistered specialists.

Refusal to Cooperate Without Official Status

Most medium and large companies refuse to work with contractors that do not have official registration because they cannot legally conclude contracts or record expenses.

Even if cooperation begins informally, it often ends as soon as there is a need for official documentation.

Documentation and Reporting Requirements

Corporate clients require contracts, completion certificates, invoices, and other documents. Unregistered contractors cannot provide this package, making official payments impossible.

Reputational and Operational Limitations

The lack of official status limits professional growth and affects reputation. Companies consider such contractors as temporary and less reliable, especially for long-term projects.

In addition, the inability to participate in tenders, large-scale projects or international contracts significantly narrows business opportunities and income potential.

Administrative Liability for Operating Without IE Registration

Participation in business activities without state registration entails administrative liability. If the activity is systematic and profit-oriented, it can be recognized as a business activity regardless of the formal status.

When Liability Arises

Risk of liability appears when the following conditions exist simultaneously:

Regular provision of services or performance of work for remuneration.
Multiple clients or ongoing customer relationships.
Income not related to employment contracts.
Lack of IE registration or other legal business form.

Possible Consequences

If illegal business activity is identified, sanctions may include:

Administrative fines.
Confiscation of income obtained.
Additional inspections of financial transactions.

For example, conducting business activity without mandatory registration or license may result in a fine of up to 100 base units (approximately €1,300), confiscation of tools and income, and recovery of up to 100% of the illegally earned income.

Why This Risk Is Often Underestimated

Many specialists believe that small income, lack of advertising, or foreign clients reduce the likelihood of scrutiny. In practice, triggers for inspections include bank transactions, counterparty complaints, and indirect signs of business activity.

Conclusion

Working without IE registration may seem convenient, especially at the beginning or with irregular projects. However, as revenues and the number of customers grow, this model increasingly leads to financial, legal and social risks – from payment problems and lack of proof of income to administrative liability and restrictions on corporate cooperation.

For professionals, the lack of official status means the loss of legal protection, social guarantees and career opportunities. For companies, this creates compliance risks and documentation problems.

Recruitment.by helps companies and specialists to create transparent and legal models of cooperation. We help in choosing the optimal employment formats and ensure proper legal structuring, risk reduction and support for sustainable professional development.

Choosing an official and thoughtful approach to work is an investment in stability, reputation, and long-term growth — for both professionals and employers.