According to the World Bank's (WB) Doing Business 2017 rating, Latvia recently has risen from 22nd place to 14th by improving its business regulations as it was captured by the Doing Business indexes. In the past year substantive improvements were implemented in such areas as credit information access, less complicated paying taxes procedure, online systems optimization for filing labor contributions and tax returns.

Following mentioned reforms, opening a Latvian company has become easier than in the past few years and even decades. A traditional Limited Liability Company (LLC or SIA in Latvian) remains the most widely used company format for businesses of small and medium scale. Of course, there are more options available when it comes to company incorporation in Latvia – Individual Merchant (or Sole Trader ST), Joint-Stock Company (JSC), Legal Partnerships and Branch or Representative Offices. However, LLC takes the lead due to several rather convenient advantages it offers to Latvian businessmen.

As it is well known, LLC companies' incorporation usually requires a share capital which can be divided into shares which belong to shareholders who have no legal liabilities for the company's obligations because a company is liable for its obligations with its total assets. Usually a Latvian LLC must have share capital which varies from 1 up to 2,800 euros, meaning that minimum share capital for company incorporation can be only 1 euro (€). This type of a company is becoming more and more popular today as it is perfect way of doing business in Latvia with minimum investment. There are also several obligatory requirements for such company format.

Legal requirements for company incorporation in Latvia
There are a few obligatory requirements for company incorporation in Latvia. Main requirement is that such company can be incorporated by up to five members. The second requirement is that such LLC must make an annual investment equal to 25% of the company's total income in order to be able to make the share capital approach of 2,800 €. It also means that LLC's shareholders are personally liable for the lacking share capital which is set to be 2,800 €. One more important requirement is that company's shareholders should simultaneously be board members too. Additional criteria include shareholders to be individuals, rather than companies, articles of association must have a standard model provided by Latvian law as well as company's accounts to be filed annually.

Company formation procedure
Incorporation procedure includes: arranging articles of association and memorandum of association; executing articles of association; registering for VAT; obtaining Latvian tax code; filing with the Registrar of Companies as well as opening a bank account. When a LLC company is registered for VAT, it is assigned a VAT registration number, which is an EU-compliant and has the same number as company's registry number with the additional LV in front of it.

The fees which shall be paid include registry fee of 20 €, a fee of 0 € - 15 € for setting up a bank account , a notary fee of 7.11 € for verifying documents (per signature) and a publishing fee of 14.23 € as well. These are the associated costs necessary to establish a company in Latvia.