Individual enterprise (IĮ)
Individual enterprise (IĮ) is a private legal entity with unlimited liability. This means that the owner is liable for his outstanding obligations with his own property. Only one natural person may be the founder and owner of an individual enterprise, who may not be the owner of another individual enterprise.
Advantages:
- There is no need to deposit funds for the authorized capital (for comparison – the minimum authorized capital of UAB is 1 000 EUR);
- It is easy to take out a profit – the owner of an IT can take money or other property for his personal needs at any time (this cannot be done by a UAB (Private limited liability company));
- The owner can work alone in their company without a contract of employment, so lower taxes are required. Other people can be hired if needed;
- IĮ can be transformed into UAB;
- IĮ tax benefits: if the average number of employees does not exceed 10 people and the income for the tax period does not exceed 300 000 EUR can be applied 5% income tax rate instead of the usual 15%. tariff. Is a private legal entity with unlimited liability. This means that the owner is liable for his outstanding obligations with his own property. Only one natural person may be the founder and owner of an IP, who may not be the owner of another IP.
Disadvantages:
- If the business is unprofitable, the IĮ may go bankrupt, but the owner is liable for the default of the IĮ;
- Only one person can own an IĮ, he cannot set up an IĮ together with partners;
- No new shares can be issued, thus raising funds;
- In many cases, the accounting of a private limited company is not simpler than in the case of a limited liability company.