More About Establishing a Small Partnership (MB)

A Small Partnership (MB) is one of the most popular forms of economic activity in Lithuania due to its limited liability and favorable tax system. MB members are not personally liable with their own assets for the company’s obligations, so the business risk is significantly reduced. Only natural persons can be founders, and the number of members is limited to 10. However, there is no restriction on the number of employees, so you can hire as many as needed.One of the greatest advantages of an MB is that there’s no requirement for a minimum authorized capital, allowing you to start a business without significant investments. An MB can engage in any activity that doesn’t contradict the laws of the Republic of Lithuania, providing entrepreneurs with the flexibility to choose their desired field.The tax advantages are also significant: members can withdraw funds through a civil management contract, paying only 15% personal income tax (PIT) on the withdrawn amount. Social insurance contributions are voluntary (except for the mandatory health insurance – PSD), which is often already paid through another workplace or covered by the state. Additionally, an MB isn’t required to hire an accountant, reducing expenses; however, as the business grows, it’s recommended to seek professional accounting assistance. For all these reasons, an MB is an optimal solution for entrepreneurs, offering flexibility, financial advantages, and minimizing risk.