Investing and doing business in the republic is one of the best decisions a foreign investor can make. As an EU member country, it offers better opportunities than most countries in Europe. Aside from the availability of materials, and skilled and abundant labor, doing business within the territory comes with benefits such as a wider market, easy access to the European market, free access to several countries of the Schengen Agreement, etc. The Latvian chamber of commerce regulates business entities and economic activities carried out within the territory. In the country, at least five types of legal entities are allowed to operate. They include a Limited liability company, stock company, foreign representative office, Branch office, Sole trader, et cetera. A sole trader is also known as a sole proprietor or entrepreneur. Although, not a common type of entity, the sole trader is becoming more popular among company owners recently.
If you are interested in running a sole business here or considering setting up a sole company, this guide provides information on everything you need to know about sole traders in the republic.
Sole trader explained
Just as with other types of entities, an individual is allowed to register him or herself as a sole trader, provided he or she operates a business within the territory. The business has to be registered with the Latvian commercial Register depending on the economic activity it involves. Although registering a business is mandatory, an individual can only register the business if such a business has an annual turnover exceeding 200, 000 eur or the business is run under the form of a commercial agent or broker. You have to register with the Trade Register if your business employs at least five workers. Despite its liability extending to the owner’s properties, the trader also benefits from the profits incurred by the business.
Registering a sole trader
To incorporate a company, one has to register with the Commercial Register in the country where it is located. Sole traders within the country have to register in the city they conduct business in. Aside from that, they have to register with the local administration of the Enterprise Register by filling out an application form and submitting all required documents. After this, the trader must register for taxes with the tax authorities to pay the social security services and other taxes. Registration for social security is made with the local state revenue service in the country and must be completed within five days after the month of commencement of business.
The trader must open a corporate bank account with any commercial bank in the city and register a legal address with the trade register. As the name implies, it takes at least one person to set up this type of entity. The name of the company has to be unique and distinct from other business names already registered with the trade register.
Other than as a sole trader, a business owner can register as self-employed if he or she engages in a commercial activity within the country. A Latvian self-employed person may provide services, management of properties, and agricultural activities on his or her farmland. The activities carried out by a self-employed individual are independent, that is, such a person is not gainfully employed by a Latvian company. There is a difference between a sole trader and a self-employed person; the former has a business that offers commercial services to the public and incurs profit leading to a turnover exceeding 200, 000 eur, while the latter carries out activities with little profit and smaller turnovers.