IK (Latvian sole proprietor)
In Latvian: IK (individuālais komersants)
An IK (individuālais komersants, individual merchant) is a natural person entered in the Latvian Commercial Register who trades under their own firm name. An IK is not a separate legal person, so the owner is liable for its obligations with all their property.
A natural person must register as an IK if annual turnover exceeds EUR 284,600, if they act as a commercial agent or broker, or if turnover exceeds EUR 28,500 while they employ more than five people at once. Anyone may register voluntarily even when none of this applies.
For social insurance the owner of an IK is self-employed. Business income is taxed with personal income tax, or the IK may opt for the micro-enterprise tax if it is not VAT-registered and its turnover stays within the VAT registration threshold.
Claims against an IK arising from its business become time-barred only three years after it is struck off the Commercial Register. That is the key difference from an SIA, whose members are not liable for the company's debts.
Example
Jānis, a carpenter, registers IK "Kalniņa darbnīca". If a EUR 3,000 invoice for materials goes unpaid, the supplier can recover the debt from Jānis's own property too, because an IK and its owner are not separate.
Legal basis
- Commercial Law, Section 75 likumi.lv
- Commercial Law, Section 76 likumi.lv
- Commercial Law, Section 1 likumi.lv
This explanation is for information and does not replace tax or legal advice. The law in its current consolidated text prevails.