After adopting the idea of starting a business in Latvia, there are different decisions you have to make. Please keep in mind that there are different types of corporate commercial enterprises you can set up depending on the type and size of your venture. Choosing the appropriate one directly affects whether your business will be successful or not. Therefore, you need to have full knowledge of this issue.
The first step before starting a business is to choose the commercial enterprise type. This choice will determine what income tax you will be subject to. The most common types of businesses in Latvia;
- Sole Proprietorships
- Limited Liability companies
- Joint-stock companies
Apart from these types of enterprises mentioned, there are also special options that entrepreneurs can benefit from. These can be regarded as a special incentive given by the Latvian government. Latvia offers advantages for entrepreneurs.
How many types of corporate commercial business are there in Latvia? Which type of company is the best for your business? All the details are in our article.
1. Limited Liability Company (LLC)
One of the most effective options for starters is a Limited Liability Company. Also known as LLC, the equity capital in this option must be higher than € 2.800. There is no restriction on the team within the company. This is an important advantage compared to the LLC with reduced equity, which will be discussed below. If you choose LLC as your business type, any number of founders and board members can be identified. [1]
The setup cost for the LLC is set at 177.03€ + 4€. For more detailed information about the application process and required documents, you can contact the Latvian Company Registry from this link.
2. Limited Liability Company (LLC) with Reduced Equity
As the name suggests, the equity of this type of business has been reduced. If you prefer LLC with reduced equity as your business type, it is possible to set equity capital between € 1 and € 2,799. This is an important advantage. However, there is a restriction on the number of founders and board members. Here you are allowed to specify a maximum of 5 founders and board members. Also, a person is only allowed to own one LLC with reduced equity. A person cannot open a new LLC on himself with reduced equity. [2]
LLC with reduced equity has extremely favorable conditions for business starters. The cost required for the application of this business type is only 34.23 € + 4 €. The low set up cost can be expressed as a separate advantage.
LLC with reduced equity has some limitations. These limitations can be overwhelming after establishing your business. That’s when you can change your business type as you wish. This is an important advantage.
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CONCLUSION
The average set-up time for both types of commercial enterprises mentioned here is 1-3 business days. Although the set-up costs are stated above, please keep in mind that these can change. Therefore, contact the Company Registry to get the most up-to-date information at the decision stage.
If you need professional consultancy for all these stages, you can examine the services we offer on our services page, and you can contact us directly from this page for your special requirements.
Igors Krumins continues his activities as a commercial and international lawyer within the body of “Jurmala Invest”. He has more than 10 years of experience, especially in the investment sector, and has provided consultancy services to numerous companies with his legal expertise. He successfully completed his undergraduate studies at Baltic International Academy and graduate studies at Latvijas Universitate. Apart from his native Latvian language, he can also speak Russian and English fluently.
