What Is a Mažoji Bendrija (MB)?

A Mažoji bendrija is a private legal entity with limited liability, designed for small businesses. It allows individuals to start a business with minimal financial obligations and no requirement for share capital. MBs are especially popular among startups, freelancers, and family businesses.

• Limited liability: Members are liable only with the MB’s assets, not personal property.
• No share capital required: Unlike UABs, MBs don’t need a minimum capital to start.
• Flexible management: No mandatory board or formal shareholder meetings.
• Tax benefits: Eligible for a reduced 5% corporate tax rate for small companies.
• Simplified accounting: Easier than UABs, especially with tools like Rivile ERP or MGAMA.
• Quick setup: Registration is fast and can be done online.

• Limited to 10 members: Not suitable for large-scale ventures.
• Potential internal conflicts: Shared decision-making can lead to disputes.
• Growth limitations: Less attractive to large investors.
• Tax and legal complexity: Members may need extra knowledge to avoid compliance issues.

Managing MB taxes is one of the key aspects that must be thoroughly understood before starting operations. Here are the main guidelines:

• Profit tax: The standard rate is 15%, but a reduced 5% rate may apply to small companies. MB members, having flexibility, can choose the tax model that best suits their needs.
• Social insurance contributions (PSD and VSD): If members are not insured elsewhere, they must pay these contributions independently. This provides the opportunity to accumulate for a pension and receive health insurance coverage.
• VAT obligations: If MB income exceeds 45,000 euros over 12 months, it must register as a VAT payer.

Establishing an MB in Lithuania is a simple and quick process:

• Prepare documents: A founding act or agreement is prepared, indicating the MB’s goals, members, and their contributions.
• Registration at the Register Center: Documents are submitted electronically or through a notary. Registration is much simpler than establishing a UAB.
• Opening a bank account: The MB must have an official account for financial transactions.
• Management structure: Members must agree on the distribution of responsibilities and the management model.

Management simplicity is one of the main advantages of an MB. A manager is not necessary if all members actively participate in the activity. However, appointing a manager can ease administration and responsibility distribution. It is also important to clearly define the profit distribution procedure.

• Inaccurate time tracking – Often caused by manual data entry.
• Incorrect bonuses or incentives – Due to lack of a clear calculation system.
• Mismatched declarations – Caused by incorrect data submission.
• Manual accounting errors – High error rate if processes are not automated.

Mistakes can be avoided by using modern accounting systems like Rivile ERP or Rivile MGAMA.

Automated payroll systems like Rivile MGAMA offer the following benefits:

• Accuracy – Automated calculation of salaries, taxes, and contributions.
• Efficiency – Reduced need for manual work saves time.
• Data analysis – Integrated tools help monitor expenses and plan future budgets.
• Legal compliance – Systems are automatically updated according to current laws.

These systems ensure efficient accounting and minimize the risk of errors.

How long does it take to register a small partnership? The registration process of a small partnership usually takes 2–5 business days from the submission of all required documents to the Register Center.

Can the number of small partnership members be changed after establishment? Yes, the number of small partnership members can be changed. New members can be admitted or existing members can withdraw if provided for in the partnership’s regulations.

What documents are necessary for the operation of a small partnership? The main documents are the founding agreement (act), regulations, meeting minutes of members, and financial statements.

Can a small partnership change its business direction? Yes, a small partnership can change its business direction, but this change must be recorded in the founding documents and registered at the Register Center.

How can conflicts between small partnership members be avoided? Conflicts can be avoided by clearly defining responsibilities, profit distribution rules, and management principles in the small partnership’s regulations. It is also helpful to involve external consultants in resolving disagreements.

Can a small partnership participate in public procurement? Yes, a small partnership can participate in public procurement if it meets the requirements and has sufficient capacity to fulfill orders.

What is the difference between a small partnership and a private limited liability company (UAB)? The main differences are the share capital requirement (not required for establishing a small partnership), management structure (a small partnership does not require a mandatory manager), and the maximum number of members (a small partnership can have up to 10 members).

How is a small partnership liquidated? The liquidation process of a small partnership includes making a decision to liquidate, informing creditors, distributing assets, and officially registering the liquidation at the Register Center.

What financial statements must a small partnership prepare? A small partnership must prepare annual financial statements. If the partnership is a VAT payer, VAT declarations must also be submitted.

Can a small partnership change its name? Yes, a small partnership can change its name. This change must be registered at the Register Center and the founding documents