The most popular business types

If you're starting up your own company, you'll need to make a business plan to help you better outline your goals before doing to one of the business types below.

One of the first challenges new business people face is choosing what type of business they want to register. Although there are several different types of companies, choosing one doesn't need to be difficult. Here are the seven most commonly-used business types and some questions to help you pick which company type is right for your startup:


Business types

• Sole Proprietorship is the easiest type of business. Sole proprietorships are held and operated by a single person and are easy to set up.
• Partnership: A company held by two or more people who share responsibilities and earnings.
• Limited Partnership is a business partnership, often between business directors and investors.
• The corporation is a type of fully-independent company with shareholders. One of the most difficult business models.
• Limited Liability Company (LLC) is a mix of a partnership and a corporation, created to make it easier to begin small businesses. One of the most popular company types for startups.
• Nonprofit Organization is a type of company that uses its profits for charitable goals. Tax-exempt, but must match particular rules.
• Cooperative (Co-op) is a business controlled and operated for the benefit of the members of the company that use its services.

Picking the best kind of business
A startup's selection of business structure can have long-lasting effects on the way the company is run and works, including how it files taxes and whether it can hire workers.

Taxes in Lithuania

The Republic of Lithuania has a business-friendly tax policy and the tax system is aligned with EU legislation. The Lithuanian tax system has changed dramatically since 1990 to support foreign investment and the development of the labour market.

Taxes and other dues shall be charged to the budget on the order of the Supreme Council; however, regional and city councils deal with tax issues separately. In Lithuania, the basic principles of tax payment and their regulation are governed by the Law on Tax Administration, which defines the rights and obligations of the tax administrator and the taxpayer, as well as the procedure of tax calculation and the amounts to be collected.

Corporate income tax
Corporate income taxpayers are businesses that carry on business and are also taxed by non-profit organizations that make a profit from their commercial activities.

Personal income tax
The gradual reduction of personal income tax was started in 2006. Nowadays, every natural person is obliged to pay a personal income tax of 15% if he is employed or self-employed.

Real Estate tax
The real estate tax in Lithuania ranges from 0.3% to 3%. Private real estate is generally taxed at 1% of the value of the property above € 220,000. This threshold is raised to € 286,000 for families with three or more minor children (under 18 years) or children with disabilities requiring special care

Value Added Tax (VAT)
VAT is not calculated and paid to persons whose income from the sale of goods and provision of services (excluding long-term investment) is of public interest, such as food, postal services, etc.

Land tax
In Lithuania, land tax covers only land taxes, and the rules for calculating and paying this tax are set by city and district councils. Land subject to land tax is privately owned, with an annual rate ranging from 0.01% to 4% of the value of the land.

Taxes in Estonia

The Baltic Sea Region is the fastest growing business region in Europe. Trade flows between countries in the region have steadily increased every year. The Estonian tax system is considered to be one of the most liberal tax systems in the world. Estonia implemented a comprehensive tax reform in 2000 to create the simplest, most understandable and convenient tax system possible. The main advantage of Estonia is the low tax system, which can be described as a simple system with no hidden surprises and was designed to promote entrepreneurship and increase profits.

Corporate income tax
As a result of the reforms, the main benefit for entrepreneurs was the exemption from corporation tax on reinvested profits. Thus, Estonian companies are subject to income tax only on distributed profits, ie dividends. The corporation tax (tax on distributed profits) is 21% of the gross dividend.

Value Added Tax (VAT)
VAT payers are businesses whose taxable supply (excluding imports) does not exceed EUR 16 000 per the calendar year. The tax is levied on transactions in goods and services in Estonia and on imports of goods. The tax rate is 20% of the taxable amount.

Personal income tax
The tax rate for 2010 is 21% of taxable income, and residents are required to pay tax on their income earned both inside and outside Estonia. Taxable income includes income from employment (salary, wages, bonuses and other benefits), business income, interest, royalties, rent, capital gains, maintenance benefits, pensions, scholarships.

Social tax
This tax is levied to provide state pension and health insurance. It is paid by legal persons, natural persons and non-residents with regular income. The tax rate is 33% of the taxable amount. The tax must be calculated every month and the amount due must be paid no later than the tenth day of each month.

Land tax
The tax rate is between 0.1% and 2.5% of the taxable amount. The tax on land restricted to economic activities is set by the Estonian Government at 25%, 50% or 75% of the tax rate. Land tax is paid three times a year, through April 15, July 15, and October 15.