Company Creation
Choosing the right business model is often a daunting task for start-ups, as it determines the company's future success and growth opportunities. For this reason, the decision to set up a company should be carefully considered.
All you need to do is to come up with a name for your company and we will help you with all the other steps:
- We'll advise you on the right form of business.
- We will compare the tax advantages of an MB and an UAB.
- We will provide templates and instructions for documents.
- We will explain when it is worth becoming a VAT payer.
Setting up an MB
A small partnership (MB) is an attractive form of business due to its lower taxes and limited civil liability. It differs from an LLC in two respects: simpler and cheaper payment of money to the owners, and the requirement that the owners must be natural persons only. Members of an MB can withdraw money through a Civil Management Agreement, subject to only 15% VAT on the amount paid. Social security contributions are voluntary, except for PSD (compulsory health insurance).
Advantages of the MB:
- Limited civil liability
- Lower set-up costs
- It is possible to set up a small partnership (LP) for one person and bring in the other members at a later stage, which gives flexibility and the possibility to expand the team as required.
- It is important to note that there is no minimum amount of share capital, which makes it easier to start a business.
- If a member wishes to withdraw from the activities of the MB, he/she can withdraw his/her contribution or transfer his/her membership rights to other persons, which offers additional possibilities.
- Distribution of the profits of the Small Community to the members is possible before the end of the financial year.
Documents required for the establishment of an MB:
- Application for the registration of an MB
- Memorandum of Association of the LLP (more than one founder)
- Deed of incorporation of an LLP (founder is one person)
- Memorandum and Articles of Association of the MB
- Licence
Creation of an UAB
A private limited company (UAB) is the most popular form of activity in Lithuania. It differs from a small partnership (LLP) only in two main respects: a more complicated and expensive procedure for paying profits to the owners, and the possibility for legal persons to be owners of the company. In all other respects, its principles of operation are very similar to those of a small partnership (MB).
Advantages of a UAB:
- In the event of failure, the personal assets of the members of the limited liability company are protected - only the assets contributed to the company are at risk.
- Additional funds can be raised for business development by issuing new shares, which are sold to shareholders at a certain price.
Documents required for setting up a limited liability company:
- Certificate of registration of the name of the LLC
- Memorandum of Association (more than one founder)
- Deed of Incorporation of the LLC (founder - one person)
- Bank statement of authorised capital (minimum of EUR 2 500)
- Articles of association of the LLC, defining: the company's activities, its management, etc.
- Written consent/confirmation from the owner of the premises (which will be registered as the official registered office of the company) via the Centre of Registers.
- Other forms from the Registry Centre.
Successful company formation is the first step towards the success of your business. "Germalita's team of professionals, with many years of experience in the field of company formation, is ready to provide all the necessary information for choosing the most suitable business form and implementing the establishment process.
We will not only help you with all the necessary paperwork, but we will also offer you the most optimal solution to realise your business vision. We invite you to contact us for a consultation - together we can discuss your business needs and find the best solution.
