Decisions when choosing a business type

Debt and Liability
Most of the small businesses and startups accept the personal liability associated with a sole proprietorship or partnership as a significant risk of doing business. If you're in a high-risk industry, such as selling CBD or firearms online, or simply want to keep your business and personal circumstances private, you can limit personal liability by filing for a more formal company structure. The downside is that this commonly takes more paperwork, costs more to register, and may have greater reporting or maintenance demands than simpler business models.

Filing taxes
You have two choices when it gets to filing your business taxes. You can record business profits/expenses on your tax returns, or you can hold your business file taxes separately as its entity. Most of the small business owners prefer the simplicity of filing taxes on their returns, but filing business taxes separately can help you keep your private and company finances separate.

Partners or Investors
If you're starting your business with a partner or private investor, you won't be able to create a sole proprietorship. You can pick between a partnership, a limited partnership, or an LLC.

Hiring employees
Some of the easiest business types like sole proprietorships can make it hard to hire workers down the road. While it's likely to change your business type to grow with your company, if you already have workers or plan to hire them, it may be better to future-proof by a more formal business structure like an LLC or corporation.

Are you beginning your company for-profit or non-profit cause? If you're just concerned with helping others and aren't going for profit, establishing a nonprofit can grant you tax-exempt status—although there's a lot of paperwork needed.

Will your business be held and operated democratically by its members with no particular owner? Known as a "Co-op", this type of company is very rare.

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.

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.