The transition from entrepreneurial activities to commercial activities involves registration of the economic entity in the Register of Enterprises of the Republic of Latvia. Depending on the proposed activities, their size and complexity, it is necessary to choose the most appropriate form of incorporation:

Limited Liability Company;

Joint-stock Company;

Individual Merchant;

The most common form of incorporation for commercial activities is the Limited Liability Company (LLC). This type of registration means that a company must keep accounts using the double entry system, submit the company’s annual report within the period prescribed by the laws of the Republic of Latvia, as well as reports on social security payments and reports on the value added tax (if a limited liability company is registered as a VAT payer).

Registration of a limited liability company is done in the Register of Enterprises of the Republic of Latvia. The time required for the registration is about 4 to 5 business days. One-off costs of the registration of a limited liability company consist of:

Fee for registration of the company – LVL 100;

Fee for notification of the company’s registration – LVL 24;

Opening of a bank account – LVL 10;

Notarized certification of the signature: about LVL 35 if there are 2 to 3 people with signing powers and LVL 2.75 is there is one person with the signing powers (in the Register of Enterprises);

Cost of making the company’s stamp – about LVL 18;

Services of outside organizations for the registration of the company – from LVL 50 to LVL 80.

Subsequent monthly costs of keeping the company consist of:

Rent of the registered address – from LVL 25 to 100 Ls (depending on the package of the services included);

Accounting services provided for the company – from LVL 30 to 50 Ls for new businesses with a minimum number of operations.

You need to perform the following steps to register the company:

1. Determine the participants and persons with the signing powers in the company:

a) The founders of a limited liability company can be individual persons and legal entities. The company can be established by both residents of the Republic of Latvia and non-residents. On rare occasions, there may be restrictions for non-residents to own shares of Latvia’s companies. In this case, the founder of the company will not necessarily be the person with the signing powers.

b) There can be several individual persons or one individual person with the signing powers. Their right to represent the company will be enshrined in the Register of Enterprises of the Republic of Latvia. The person with the signing powers can simultaneously be the founder of the company.

2. Determine the registered address of the company:

The registered address of the company is the address where the company’s board is available. Typically, the company’s address is used by the State Revenue Service and other state control authorities to send correspondence in the form of registered letters. Therefore, it is important to make sure that the post at the address, which is specified as the registered office address, is checked regularly. The costs of rent of a registered address in Riga range from LVL 25 to LVL 100. In some cases, the price includes the use of secretarial services, e-mail, telephone, fax and conference room. Before proceeding with registration, the Register of Enterprises verifies the specified address for existence in the Register of Addresses of the Republic of Latvia, thus eliminating the possibility of the company’s registration at non-existent or incorrect addresses.

3. Prepare the foundation documents:

The minimum package of foundation documents includes:

Notification by the company’s management of the registered address;

The company’s articles of association;

The deed of incorporation or decision of incorporation if the company has more than one founder.

4. Open a temporary account with a commercial bank and pay in the share capital:

a) The minimum share capital of a limited liability company in the Republic of Latvia is set at LVL 2,000 (the amount of the share capital is regulated by the Commercial Law of the Republic of Latvia). When establishing a limited liability company, the share capital or part thereof (not less than 50 percent) must be paid into the company’s bank account or cash account. The remaining part of the share capital must be paid in within one year from the date of the company’s registration in the Register of Enterprises).

b) To pay funds into a bank account, you should select the bank to open the account with, present the foundation documents (the signed articles of association and deed of incorporation) and enter into the contract on opening a temporary account. The temporary account will have to be converted into the permanent account after the company has been registered. For example, opening an account with AS SWEDBANK costs LVL 10.

c) The receipt of the contribution of the capital should be included in the list of enclosures when submitting the documents for registration of the company.

5. Certify the signatures of persons authorized to represent the company (those with the signing powers):

a) When submitting the documents, the signatures on the form for registration of a limited liability company must be notarized. For this purpose, the company’s registration form should be signed before a notary public. The cost of notary’s services for two persons with the signing powers is about LVL 35.

b) The Register of Enterprises of the Republic of Latvia offers the possibility to certify the signing powers on the spot for LVL 2.75, provided that there will be only one person with the signing powers in the company.

6. Submit documents to the Register of Enterprises:

At the time of submitting the documents to the Register of Enterprises, use this check list to make sure that you have all the required documents:

Notification of the registered address by the company’s management;

The company’s articles of association;

The deed of incorporation or decision of incorporation;

The receipt of the contribution of the capital to a temporary bank account;

The receipt of payment of the fee for registration of the company – LVL 100;

The receipt of payment of the fee for notification of the company’s registration – LVL 24.

The fees for registration of the company and notification of the company’s registration can be paid at the bank branch in the building of the Register of Enterprises.

7. After registration in the Register of Enterprises you should:

a) Register the company in the Electronic Declaration System of the State Revenue Service: Registration and connection to the Electronic Declaration System. The company’s reports to the State Revenue Service of the Republic of Latvia must be submitted electronically via the Electronic Declaration System. For this purpose, the authorized person must enter into the contract on the use of this system. The contract can be signed at the Department of State Revenue Service, assigned to the company. After registration in the Electronic Declaration System, the user receives the ID number, password and digital signature (in the form of a file sent to the e-mail address specified at the time of the registration.)

b) Register the company as a VAT payer in the State Revenue Service (if applicable):

Registration of the company as a VAT payer is mandatory if the company's turnover for the last 12 months has exceeded LVL 35,000 or there has been a purchase of goods from any European Union country in an amount equal to or greater than LVL 7,000. It is important to remember that the registration must be done within 30 days after one of the scenarios. If neither of the above scenarios sets in during the company’s operations (excess of the turnover over LVL 35,000 Ls for the past 12 months or purchase of goods from any European Union country in an amount equal to or greater than LVL 7,000), registration of the company as a VAT payer is not mandatory, but possible.

c) Change the status of the bank account from temporary to permanent: In order to be able to use the company’s bank account, you must get it registered as a settlement account. For this purpose, you must enter into a contract with the bank regarding the company’s settlement account, by presenting the following documents obtained from the Register of Enterprises to the bank: the Registration Certificate, the Decision of the Register of Enterprises and the company’s Articles of Association with the stamp of the Register of Enterprises. Once the bank account becomes the settlement account, you can use the share capital of the company paid in before.

The specialists of IT & FINANCE will provide advice at any stage of the process of the company’s registration or help you with the registration from the outset, including the subsequent maintenance of accounting records of the established company.

Should you have any questions about the registration of a company or need advice regarding registration, please call +371 2-725-000-7 or send e-mail to info@itellfinance.com