Individual enterprise or MB — is an IĮ still worth choosing?

In short: for most people an MB (small partnership) is a better choice than an individual enterprise (IĮ). The key reason is liability — the owner of an IĮ is liable for the company's debts with all of their personal assets, while a member of an MB only risks what they contributed. An MB requires no share capital, can be founded by up to 10 individuals, and the tax treatment is essentially the same for both. In 2026 the individual enterprise remains a niche form, worth choosing only in a few specific situations we cover below.

In this article we compare the IĮ and the MB across four key criteria — liability, setup, capital and taxes — and say clearly when an individual enterprise can still make sense. All rates, deadlines and amounts here are indicative (2026); always verify the current figures on the Registrų centras, VMI and „Sodra" websites, as they are reviewed every year. If you are only starting out and have not yet chosen a form, first read our guide on how to start a business in Lithuania in 2026.

An IĮ owner is liable with all personal assets; an MB member only with what they contributed. That is usually the entire answer to the "IĮ or MB" question.

IĮ and MB: how the two forms differ at the core

Both the individual enterprise and the small partnership are legal entities — separate from you as a private person. But that is where the similarity ends:

• Individual enterprise (IĮ) — a single-owner company with unlimited liability. There can be only one owner (a natural person), and they are liable for the company's obligations with their personal assets too.
• Small partnership (MB) — a limited-liability legal entity that can be founded by 1 to 10 individuals. Its assets are separate from personal ones, there is no share-capital requirement, and profit is taxed with corporate income tax (CIT) and later, when profit is withdrawn, as dividends.

In practice an MB gives you almost all the advantages of an IĮ (simple setup, light administration, the option to work alone) but without the IĮ's biggest drawback — personal risk. That is why fewer and fewer new IĮs are registered in Lithuania.

Liability: why the IĮ's unlimited liability is the biggest difference

Imagine the business fails: debts remain to suppliers, the bank or the tax authority. With an MB, creditors can only go after the partnership's own assets — your flat, car or savings stay protected (unless you personally guaranteed the debt). With an IĮ there is practically no line between the company and your personal assets: you may have to answer for the company's debts with whatever is in your name.

That very line between "the company's money" and "my money" is decisive for most entrepreneurs. To understand how personal-asset protection works and where it ends, read our article on limited versus unlimited liability and personal assets. The short rule: the larger the potential debts or risk, the less sense it makes to choose an unlimited-liability form.

Setup and capital: what each form requires

In terms of registration, MB and IĮ are similarly simple, especially if you register electronically and use standard template articles (which usually avoids the notary). Indicative (2026) setup elements:

• Share capital. An MB has no capital requirement — members' contributions are nominal. For comparison, a UAB would need EUR 1,000 of share capital (at least 25% = EUR 250 before registration). This is one reason an MB is often more convenient than a UAB for small businesses.
• Electronic registration at Registrų centras — about EUR 30.
• Name reservation (JAR-5), if you want to secure it in advance — about EUR 16 (valid for up to 6 months).
• Notary (if needed for non-standard articles or capital) — about EUR 85–338 depending on the transaction value.
• Timing — about 3 business days at Registrų centras, realistically more like 5–10 days with all documents.

The full step-by-step MB setup flow (members, articles, account, registration) is covered separately — see how to set up an MB in 2026, step by step to see the whole process with documents.

Taxes: MB corporate income tax, dividends and „Sodra"

For tax purposes an MB behaves like a classic legal entity, so the key number is corporate income tax (CIT):

• Standard CIT — 17% (up from 16% in 2026).
• For small companies — 7% (up from 6%), if you meet the size conditions.
• For new small companies in years 1–2 — 0%, if there are fewer than 10 employees, annual income is below EUR 300,000, and the company is not part of a group.

When you withdraw profit for yourself, dividends are taxed at 15% GPM (personal income tax). MB members also pay „Sodra" as self-employed persons: from July 2026 the „Sodra" base for the self-employed rises to 90% of taxable income (previously 50%), the PSD (compulsory health insurance) minimum is about 80.48 EUR per month, and the VSD (state social insurance) part is calculated on the same base. Calculate the exact contributions on „Sodra". The same goes for PVM (value-added tax): both forms are subject to the same EUR 45,000 registration threshold over the last 12 months.

Importantly, the choice between IĮ and MB is usually not driven by tax — the tax logic is similar; what really differs is liability and management.

Members and management: one owner or a team

Here the MB is again more flexible. An IĮ can have only one owner — to take on a partner you would have to reorganise the company. An MB can have 1 to 10 members, but all of them must be individuals. Members can work under a civil (services) contract and split profit in proportion to their contributions.

If you expect legal entities or outside investors to participate, or more than 10 members, an MB no longer fits and you should consider a UAB (whose shareholders can be both individuals and legal entities, up to 249). When a larger form is worth choosing is compared in our article MB or UAB — what to choose in 2026.

Example: how much CIT an MB earning EUR 30,000 would pay

Suppose an MB earns EUR 30,000 of taxable profit per year. Here is how corporate income tax (CIT) would change in different cases:

• A new small MB (years 1–2) that meets the conditions (fewer than 10 employees, income up to EUR 300,000, not part of a group): CIT 0% → tax of EUR 0.
• Later, as a small company: CIT 7% → EUR 2,100. After tax, EUR 27,900 remains; if you withdrew the whole amount as dividends (15% GPM), you would pay another EUR 4,185, leaving about EUR 23,715 in hand.
• At the standard rate: CIT 17% → EUR 5,100.

The figures are illustrative only: the real burden depends on salary, „Sodra" contributions, costs and how much profit you leave in the company. For an individual enterprise the profit-withdrawal logic differs, so always check specific numbers with an accountant or VMI.

When an IĮ is still chosen

Despite all the MB's advantages, an individual enterprise can still make sense in a few cases:

• You already have an operating IĮ with history, contracts and reputation — converting would cost more than it is worth.
• A family or very small, low-risk business where the chance of debt is minimal and the owner wants the simplest possible cash-flow logic.
• A specific activity or tradition where partners or suppliers have historically worked with an IĮ.

But if your activity is small and you are still deciding whether you even need a legal entity, it is worth assessing simpler forms too — individual activity under a certificate or a business licence. We compared all of them with the MB in the article individual activity, business licence or MB; for a beginner it is often cheapest to start with individual activity and move to an MB only as you grow.

Check the numbers with a calculator and VMI

Choose a form only after calculating your real situation, not by a general rule. A practical sequence:

1. Estimate your annual income and cost share — the higher the profit and risk, the more an MB pays off.
2. Calculate what you would keep in hand after CIT, dividend GPM and „Sodra". For a quick orientation, use our salary and tax calculator.
3. Verify the current rates and thresholds on the VMI and „Sodra" websites — they are indexed every year.
4. Do not forget the deadlines: the annual report to Registrų centras is due by 30 June, and the CIT return to VMI by 15 June (for calendar years).

Disclaimer: all rates, deadlines and amounts in this article are indicative (2026) and for general understanding only — this is not tax or legal advice. Always verify the current figures in official VMI and „Sodra" sources or consult an accountant.

Choosing between an IĮ and an MB and want a clean start without the paperwork chaos? web1o helps small businesses build a website, organise their client flow and automate invoices and reminders — so you can focus on the business, not the admin. Start with our salary and tax calculator and, if you need a concrete plan, book a consultation.