- starting a business
- 2026
If you are starting a small business alone or with a few partners, have no spare capital, and want the simplest possible start, a small partnership (mažoji bendrija, MB) is usually the better fit. If you plan to attract investors, have companies as shareholders, retain profit, or later sell part of the business, a private limited company (uždaroji akcinė bendrovė, UAB) gives a firmer footing. Both are separate legal entities with limited liability — you risk only what you put into the company, not your personal assets — so the real choice comes down not to liability but to capital, ownership and management.
This article compares MB and UAB by share capital, members and shareholders, management, setup costs and taxes, and shows when each pays off. If you are only just deciding where to begin, our broader guide to starting a business in Lithuania in 2026 will help. All rates, amounts and deadlines here are illustrative (2026); always verify the current figures on the Centre of Registers (Registrų centras), State Tax Inspectorate (VMI) and Sodra websites, as they are reviewed every year.
MB and UAB differ not in liability — both limit it — but in capital, who can own them, and how easily you can bring in new investors.
MB and UAB: what they share and where they differ
Before comparing the details, let us set the overall picture. Both MB and UAB are legal entities, so their assets are separate from the owners', both pay corporate income tax (CIT), and both can distribute profit to owners as dividends. They differ as follows:
- Capital. MB has no minimum share capital requirement (nominal only), while a UAB must have at least EUR 1,000.
- Owners. An MB member can be only a natural person, and there can be no more than 10. A UAB may have both natural and legal persons as shareholders, up to 249.
- Management. A UAB must have a manager (director); an MB can operate without a director, with decisions made by the meeting of members or a sole member.
- Liability. Both are limited-liability forms, so as a rule you are not personally liable for the company's debts.
If you are still weighing a partnership against very different forms, it is worth reading our individual enterprise (II) vs MB comparison, or, for very small activity, the individual activity, business certificate and MB comparison.
Share capital: the difference shows at the start
The biggest practical difference appears before registration. A UAB has share capital of EUR 1,000, of which at least 25% (EUR 250) must be paid in before registration, and the rest within 12 months of incorporation. This money is not a tax: it stays in the company's account and can be used for operations.
An MB has no share capital requirement — members' contributions can be nominal or symbolic, so a partnership can be set up with virtually no starting capital. That is why MB is often chosen by those launching on a tight budget or wanting to test an idea first.
Members, shareholders and management: who can own it
An MB is built around people, not capital: only natural persons can be members, and there can be no more than 10. This suits a small team of partners, but it means a company (legal entity) or an investment fund cannot become an MB member.
A UAB is more flexible here: shareholders can be both natural and legal persons, up to 249 in total. So a UAB is the natural choice when you need to admit a corporate investor, share equity with partners, or sell part of the business later.
Management also differs: a UAB must have a director who represents the company and is responsible for its activity. An MB can operate without a director — the management function is then performed by the meeting of members or the sole member, which simplifies the admin of a small partnership.
Setup costs and timelines
The registration fees themselves are similar for both forms. Illustrative (2026) fees at the Centre of Registers:
- Name reservation (JAR-5) — about EUR 16, valid for up to 6 months.
- Electronic registration — about EUR 30 when set up remotely with standard documents.
- Notary (if standard documents do not fit) — about EUR 85–338, depending on capital.
- Timeline — the Centre of Registers registers within ~3 business days, though the whole process realistically takes 5–10 days.
The real difference for your wallet is not the registration fee but the capital: a UAB needs at least EUR 250 of share capital at the start, an MB EUR 0.
Taxes: corporate income tax, dividends and taking money out
In tax terms MB and UAB are treated similarly — both pay corporate income tax (CIT) and personal income tax (GPM) on dividends:
- Standard CIT — 17% (up from 16% in 2026).
- Small companies — 7% (up from 6%) when they meet the size conditions.
- New small companies, for their first 1–2 years — 0%, provided they have fewer than 10 employees, income not exceeding EUR 300,000, and are not part of a group.
- Dividends are taxed at 15% GPM.
Profit is usually declared in the annual CIT return to VMI by 15 June, and the annual financial statements are filed with the Centre of Registers by 30 June (for the calendar year). For detail, see what taxes a UAB pays in 2026 and what taxes an MB pays in 2026.
The key day-to-day question is how the owner takes money out. In both MB and UAB, funds can be paid as a salary (subject to GPM and Sodra — VSD (state social insurance) and PSD (compulsory health insurance) contributions) or as dividends (15% GPM). An MB member can additionally withdraw funds for personal needs under an MB member's (civil) service agreement; such payments are also linked to Sodra. The exact contribution rates depend on the type of payment and change every year, so check them on Sodra and model them with the salary calculator. Note: even when there is no income, an owner may have to pay the PSD minimum — about 80.48 EUR per month — if not insured on another basis.
Example: what it costs to set up an MB and a UAB
Say two partners (natural persons) set up a company remotely with standard documents.
- MB: no share capital required (EUR 0); name reservation ~EUR 16; electronic registration ~EUR 30. If standard documents suffice, a notary may not be needed. About EUR 46 in state fees in total.
- UAB: share capital of EUR 1,000, of which EUR 250 (25%) is paid before registration and the rest within 12 months; name reservation ~EUR 16; electronic registration ~EUR 30. If a notary is needed — ~EUR 85–338. State fees about EUR 46, plus at least EUR 250 of capital that stays in the company.
In both cases the Centre of Registers registers within ~3 business days (realistically 5–10). The registration fee itself barely differs — what differs is the capital requirement: with a UAB you "freeze" at least EUR 250 at the start, with an MB nothing.
When to choose MB, and when UAB
A short rule of thumb:
- MB fits when you start with 1–10 individual owners, have no spare capital, want simple management (possibly without a director), and do not yet plan outside investors.
- UAB fits when you need a corporate shareholder or an investor, plan for up to 249 shareholders, want to transfer shares easily, or seek more credibility with banks and larger partners.
What about the tax break-even point — from what level of profit does a UAB "pay off"? Since both forms pay the same CIT and 15% GPM on dividends, tax is rarely the deciding factor; capital, ownership and growth plans matter more. The concrete benefit depends on your profit and your share of costs, so there is no single "from this many euros" threshold — run the numbers for your own case. If an MB has outgrown itself and you need a corporate shareholder or investor, it can be converted — we describe how to convert an MB into a UAB.
Check your own numbers
Before choosing a form, it is worth seeing how much actually reaches your pocket when you take money out as salary or dividends. Model your scenario with the salary calculator, and check the applicable rates, thresholds and contributions on the VMI and Sodra websites. You will find registration fees and document requirements at the Centre of Registers.
Disclaimer: all rates, amounts and deadlines in this article are illustrative (2026) and may change; this is not tax or legal advice. Before deciding, verify the current figures with VMI, Sodra and the Centre of Registers, or consult an accountant or lawyer.
web1o helps not only to choose the right legal form but also to build the website, processes and automations that get a new business off the ground faster. Want a clear answer based on your own numbers? Model your payouts with the salary calculator and book a free chat via our consultation page.