Comparison of self-employed person, sole trader and limited liability company (LLC)

  Self-employed person Sole Trader LLC
Registration State Revenue Service (SRS) Company register (CR)and State Revenue Service (SRS) CR and SRS
SRS documents Copy of document, that proves the commercial acitvity, should be submitted in SRS Copy of passport and documents from CR should be submitted to SRS. The application should be fullfiled
Costs of foundation No costs State taxes State taxes
Share capital No share capital No share capital Starting from 2000 LVL
Liability against third parties Liability - all personal property. The same as self-employed person Liability - all company's property. Company is not responsible for obligations of the shareholder. The shareholder is not responsible for company's obligations.
Social tax for yourself From monthly income that exceeds 1/12 from the miminum, determined by Cabinet of Ministry. The same as self-employed person Report for social tax, income tax and risk tax.
Social tax for employee Rates of social tax in 2010 - CM regulations nr.1577. The same as self-employed person The same as for yourself.
Personal income tax 26% 26% 26%
Organization of accountancy
  1. Organize accountancy as an independant structure of the company;
  2. Use services of other companies, based on the contract;
  3. Organize accountancy yourself.
The same as for self-employed persons The same as for self-employed persons
Book-keeping If turnover from business operations in previous year do not exceed 200 000 lats, single entry bookkeeping can be practised. Regulations of CM nr.188. The same as for self-employed persons. Double entry. Regulations of CM nr.585 u.c.


Summary

Pros of self-employed person and sole trader Pros of LLC
  1. Zero initial costs and simple registration
  2. Little amount of reports about yourself
  3. Accountancy can be quite easily practiced by yourself
  1. Liability - limited
  2. Dividends
  3. Possibility to define your wage
Cons of self-employed person and sole trader Cons of LLC
  1. Liability - all personal property
  2. Reports of VAT and employees - the same as for companies
  1. Foundation expenses
  2. More complicated book-keeping