It’s time to go for it, it’s time to start a business… but how should that be done? How should I register my business in Malta? Self-Employment or a Limited Liability Company? These are two of the possibilities to operate a business. Each of these come with a set of pros and cons and the decision solely depends on you, your business model and your risk appetite.

Let’s start with a self-employed scenario. The pros here are that it involves less and less paperwork in terms of accounting corporate, tax, auditing and accounting obligations. Of course, being a self-employed individual one still needs to submit VAT returns, prepare a yearly income statement (profit and loss), file for personal tax returns and pay NI Contributions. Here the costs to hire an accountant are on the lower side so this will help you keep your business running expenses low. The cons on the other hand is that one is operating under his/her own name, which means they carry unlimited liability, so any problems are to be resolved on a personal level and furthermore there is no limits to the liability that can be brought against the individual.

If on the other hand, you choose to form a Malta company, the pros are that it is generally deemed to be more professional to trade under a company as it shows a level of seriousness and a proper structure for your business.  Moreover, a company is a separate legal entity that is set to carry trading activities in its own name. The company provides full powers and responsibilities to the director. The liability of the company is limited to the company only and not oneself as an individual, as we have seen when it comes of the self-employed scenario.

Furthermore, the company is subject to an audit done by qualified third parties on a yearly basis and this is a positive situation when it comes to securing big clients and suppliers and dealing with banks. The cons on the other hand are the following mandatory statutory reporting obligations and an annual return with the Malta Business Registry, VAT returns, annual audited financial statement and an annual corporate tax return (Commissioner For Revenue) obviously over and above your personal tax return. Whether your company is in operation or not, you are still obliged to submit these reports. Closing off a company (striking it off the Malta Business Registry) involves a process called company liquidation where a third party is appointed a liquidator. Obviously, the expenses here tally up.

If you are looking to set up your new business in Malta and require consultation and a service provider, please do not hesitate to contact us on of our Directors, Conrad Meli, FCCA, MIA, CPA on cmeli@accountingservices.com.mt. Further details about self-employment can also be found here