Individual Entrepreneur (IK) Registration in Latvia

Most people assume that starting a business in Latvia means registering a SIA. But roughly 3,000 entrepreneurs each year choose a different path: the IK (Individuālais komersants), or individual entrepreneur. At about EUR 20 in state fees — compared to EUR 150–250 for a SIA — it's the cheapest way to get a formally registered business entity in Latvia.

The simplicity comes at a price, though. And that price is personal liability with no ceiling.

What an IK Actually Is

An IK is not a separate legal entity. Unlike a SIA, which exists as its own "person" under the law, an IK is simply you — operating under a registered business name. Your personal assets and your business assets are legally indistinguishable.

This means you can sign contracts, issue invoices, hire employees, and conduct business under your IK name. It also means that if your business accumulates debt, creditors can pursue your personal bank account, your car, your apartment. There's no corporate veil.

That's the fundamental trade-off. Everything else — the simpler accounting, the lower fees, the faster registration — flows from this single fact.

The Registration Process

Registering an IK is straightforward and fast.

Step 1: Prepare your application. You'll need a completed application form for the Register of Enterprises (Uzņēmumu reģistrs). The form asks for your personal details, chosen business name, registered address, and planned economic activities (NACE codes).

Step 2: Choose a business name. The name must include your surname or be clearly distinguishable from existing registered businesses. Check availability through the Register's online database. Unlike SIA names, IK names have slightly more flexibility — you can use your own name (e.g., "Jānis Bērziņš IK") or a commercial name.

Step 3: Determine your registered address. An IK needs a business address registered with the Commercial Register. This can be your home address (common for IKs) or a rented office. Virtual office services work too, though they're less common for individual entrepreneurs.

Step 4: Submit and pay. File your application at the Register of Enterprises — in person, by mail, or electronically with an e-signature. The state fee is approximately EUR 20. Processing takes 1–3 business days.

That's it. No share capital to deposit. No articles of association to draft. No notary in most cases. The entire process can be completed in a single morning if your documents are ready.

Who Should (and Shouldn't) Register an IK

The IK structure works best in a narrow set of circumstances.

Good fit:

Solo tradespeople — carpenters, electricians, plumbers
Small-scale retailers with limited inventory
Freelancers who want a registered business name but don't need limited liability
Low-risk service providers with predictable, manageable obligations

Poor fit:

Any business with significant liability exposure (consulting that could lead to malpractice claims, construction, medical services)
Businesses planning to take on employees beyond one or two
Anyone who needs bank financing — banks strongly prefer lending to SIAs
Businesses dealing with large contracts or corporate clients who require suppliers to be limited liability entities

In our experience, the tipping point usually comes when annual revenue crosses EUR 30,000–40,000, or when the business takes on its first employee. At that scale, the risk-reward calculation shifts decisively toward a SIA.

IK vs. SIA: The Practical Differences

Beyond liability, several day-to-day differences affect how you run the business.

Accounting. IKs with annual turnover under EUR 300,000 can use single-entry bookkeeping — significantly simpler than the double-entry system required for all SIAs. This translates to lower accountant fees (often EUR 50–100 per month versus EUR 100–300 for a SIA).

Tax treatment. IK income is taxed as personal income (IIN) at progressive rates: 25.5% on income up to EUR 105,300 annually, and 33% above that (as of 2026). A non-taxable minimum of EUR 550/month applies. Social contributions (VSAOI) apply on top. A SIA, by contrast, pays 0% corporate tax on reinvested profits and 20/80 on distributions. For higher-income businesses, the SIA structure often produces significant tax savings.

Profit access. As an IK, all business profit is your money — take it whenever you want. A SIA requires formal dividend distributions, board decisions, and (for micro-capital companies) compliance with retention rules.

Credibility. Rightly or wrongly, an IK carries less weight with banks, large suppliers, and institutional clients. The letters "SIA" in front of your company name signal a level of structure and commitment that "IK" does not.

Converting from IK to SIA

If you start as an IK and outgrow it, conversion is possible but involves several steps. You'll need to register a new SIA, transfer contracts and assets, close the IK, and handle the tax implications of the transition. Plan for 2–4 weeks and budget EUR 500–1,000 for the full conversion process (including accounting and legal support).

The smarter approach, honestly, is to start with the right structure. If there's any chance your business will scale beyond solo operations within two years, the EUR 130 difference in registration fees between an IK and a SIA is trivial compared to the conversion costs later.

Considering an IK?

The choice between IK and SIA shapes your liability, taxes, and growth potential for years. Our team at Corvus Accounting & Tax can assess your specific situation and recommend the structure that protects you while keeping costs reasonable.

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