Company Formation
Choosing the right business structure is often a challenging task for newly established companies - future success and growth potential depend heavily on this decision. For this reason, the decision to establish a company should be carefully considered.
All you need to do is come up with a company name, and we will help you with every other step:
- We will advise you on which business form to choose.
- We will compare the tax advantages of MB (small partnership) and UAB (private limited liability company).
- We will provide document templates and instructions.
- We will explain when it is worth becoming a VAT payer.
Establishing an MB (small partnership)
A Mažoji bendrija (MB) is an attractive legal form due to lower taxes and limited liability. It differs from a UAB in two main aspects: simpler and more affordable payouts to owners, and the requirement that owners must be natural persons only. MB members can withdraw funds under a Civil Management Agreement, applying only a 15% personal income tax (GPM) on the withdrawn amount. Social security contributions are voluntary, except for compulsory health insurance (PSD).
Advantages of a Small Partnership (MB)
- Limited civil liability.
- Lower establishment costs.
- It can be formed by a single person, with the option to add more members later - offering flexibility and room for team expansion.
- No minimum share capital requirement, allowing an easier start to your business.
- A member who wishes to leave the MB can withdraw their contribution or transfer their membership rights to others.
- Profit distribution to members is possible before the end of the financial year.
Documents required for MB formation
- Application for MB registration.
- MB establishment agreement (for more than one founder).
- MB establishment act (for one founder).
- MB articles of association.
Establishing a UAB (private limited liability company)
A Uždaroji akcinė bendrovė (UAB) is the most popular business form in Lithuania. Compared to an MB, it differs in two main aspects: a more complex and expensive procedure for paying out profits to owners, and the possibility for both natural and legal persons to become shareholders. In all other respects, its operating principles are very similar to those of an MB.
Advantages of a private limited liability company (UAB)
- In case of business failure, the personal assets of UAB shareholders are protected - only the assets contributed to the company are at risk.
- Additional funds can be raised for business expansion by issuing new shares, which can be sold to shareholders at a predefined price.
- Opportunity to apply a reduced corporate income tax rate of 6%.
Documents required for UAB formation
- UAB name reservation certificate.
- UAB establishment agreement (for more than one founder).
- UAB establishment act (for one founder).
- Bank statement confirming the share capital (minimum €1000).
- UAB articles of association, defining company activities, management, and other essential details.
- Written consent/confirmation from the property owner via the Register Centre, for premises registered as the official business address.
- Other Register Centre forms.
Successful company formation is the first step towards your business success
The professional team at "Germalita Accounting & Consulting," with many years of experience in company formation, is ready to provide all the necessary information to help you choose the most suitable business form and complete the formation process smoothly.
We will not only assist you in preparing all required documents but also offer the most optimal solution tailored to your business vision.
We invite you to contact us for a consultation, during which we can discuss your business needs and find the best solution.
