Company formation and accounting in Latvia
Last updated: 2012-07-10
According to the Latvian Commercial Law a merchant (in Latvian - komersants) is natural person (sole trader / individual merchant) or a commercial company (partnership or capital company) that is registered in the commercial register.

The partnership is:
• A general partnership (or general partnership / general partnership), and
• Limited partnership.

Capital company is a joint stock company and limited liability company.

Choosing the type of merchant for planned activities, need to get information about legislation requirements for planned activities. For example, only joint stock company can be a bank (credit institution). For some activities a license is necessary and some kind of licenses can issue only to legal persons. So a sole trader can not receive all kind of licenses (need to register either limited liability company or joint stock company).

In Latvia, the commercial register is managed by the Register of Enterprises. The main legislation applicable to traders / merchants is the Commercial Law (special law with respect to, for example, the Civil Law).

In real life instead of the word 'merchant / komersants' most widespread is the word 'businessman / uzņēmējs'.
According to Latvian legislation the word 'businessman' includes wider meaning than the word 'merchant'. A businessman invests capital in long-term or systematic economic activities. And the direct aim of a businessman may not be a profit-making (for example, municipal enterprise).
Economic activities of merchants are focused on profit-making (the main aim of a merchant is profit-making). Meaning of a merchant is closely related to process of sale of goods and services. Provisions of the Commercial law applies mainly to merchants.
Any merchant is a businessman but not every businessman is a merchant.

All merchants must (can) be registered (incorporated) only according to the Commercial law. A businessman that is not a merchant may be registered according to other laws (for example, law About individual (family) enterprise and farmer or fisherman farm).

A merchant independently decides how to earn money, prepares plan of activities and executes (carries out) the activities.

Some of usual requirements for a merchant (representative of a merchant) are:
  • Knowledge of a market economy fundamentals;
  • Knowledge of the organization of commercial work in enterprises (companies);
  • Basic knowledge of market pricing, marketing and management;
  • Basic knowledge of the advanced techniques of merchandising, organization of supply of goods and advertising;
  • Knowledge of modern methods of financial and economic activities in a company;
  • Basic knowledge of the legislation.

The word 'merchant' is derived (originated) from Latin word 'mercari' (to trade/to purchase).

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