Company formation and accounting in Latvia
In Latvia, to engage in economic activities (activities related to business), the activities must be registered with Latvian governmental institutions.

Therefore, one of the first decisions after the decision to establish a business in Latvia, is the choice of legal form of business. However it should be noted that the most common form is a limited liability company (Ltd). And in most cases, Ltd is a more appropriate legal form. But for more complete picture I will describe also other forms of business.

Business types can be distinguished depending on the legal status of an economic entity. For example, a natural person, legal person with registered capital, a partnership or other form of registration. The main institution of registration is the Register of Enterprises of the Republic of Latvia. Individual, doing economic activities can register only in the State revenue service (no obligation to register in the Register of Enterprises).

An individual (natural person):


A natural person doing economic activities is a private person (i.e., the owner of the business and the person involved in the transactions is the same person). Registration in the governmental institutions gives the right to do business activities.
An individual can register as:
- Sole trader (ST) - Individuālais komersants (IK)
- An individual who has registered his business with the State Revenue Service. Registration with the State Revenue Service the simplest in comparison with other forms. And no obligation to pay state fee if to register with State Revenue Service.

A legal person with entity capital (company with capital):


- Limited liability company (Ltd) - Sabiedrība ar ierobežotu atbildību (SIA)
- Joint Stock Company (JSC) - Akciju sabiedrība (AS)
A legal entity is a separate virtual person with certain rights and obligations. The status of legal person is obtained from the date of registration in the Register of Enterprises. Legal person involved in the transactions, and the owner of the business - these are different persons.

Personal society (or Partnership):


- Limited partnership (LP) - Komandītsabiedrība (KS)
- General partnership - Pilnsabiedrība (PS)
The Commercial Law of Latvia does not explicitly states that a partnership is a legal person. A partnership - it is society of two or more persons. But a partnership can sue and be sued in the court. Basis for a creation of a partnership is a partnership agreement.

Other forms of registration:


- A branch office
- Representation of a foreign merchant (businessman)

There also exists a meaning of the Association and the Foundation. But the purpose of the Association and the Foundation is not making a profit (i.e. - possible profit is not available for distribution among members of the organization). The Association and the Foundation are non-profit organizations and assets of the organization must use to achieve the goals set out in the articles of association.



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