Company formation and accounting in Latvia
Last updated: 2015-07-09
Here is review of some circumstances in case if you register new company or buy already registered company.

Time that is necessary to get company

The Register of Enterprises of the Republic of Latvia examines the document during 3-4 working days. It does not matter if you register a new company or change owners, directors etc. of already registered company. Time is the same. Difference is regarding valued added tax (VAT) registration. If you buy already registered company that has the VAT number, then the company keeps the VAT number after change of shareholders. If you register a new company and apply for VAT number, then the State Revenue Service of the Republic of Latvia examines VAT application during 5 working days.

Expenses related to registration and buying of company

Total expenses are higher in case of buying already registered company. It is because you need to pay previous shareholder the price for shares. Additionally you must pay state fee for registration and other necessary expenses. Need to note if to register new “small capital” company, then state fee for registration is less than making changes in case of buying already registered company.

Security of shareholders

In case of registration of new company, the company has no history. So such company is clear and secure. In case of buying already registered company, the company may have done some business. So there may be tax debts and debts to suppliers. As all transactions must be recorded in accounting registers, in these you should see all information about debts. But, unfortunately there is no guaranty that all transactions are recorded in accounting registers. For example, company does not recognize debt to some supplier, but the supplier may require payment of the not recognized debt. In contract about selling – buying shares can write that previous shareholder is personally responsible for all company’s debts incurred during time when he was owner. But such article in contract unfortunately does not guaranty that the previous shareholder will pay possible debts. With such contract the new shareholder will only get rights to demand execution of the contract (for example in court).

Other circumstances that are related to registered company

Already registered and working company has working history. It means certain turnover, amount of paid taxes, license for certain business, and type of business activities. If for your planned activities is necessary company with certain history, then it may be reasonably to buy already registered company.

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