Starting a business in Malta
Starting a business can be a rewarding and challenging experience. It provides the opportunity to turn a dream into a reality and make a positive impact.
As a business owner, you have the freedom to pursue your passion and work on projects that you find personally fulfilling. The feeling of creating something from scratch and seeing it grow and develop can be incredibly satisfying.
However, starting a business is not without its challenges. It requires hard work, dedication, and a willingness to take risks. As an entrepreneur, you must be willing to step outside of your comfort zone and push yourself to new heights. You must also be able to adapt to change, learn from your mistakes, and persist through setbacks and failures. Despite the challenges, starting a business can be incredibly rewarding. It provides the opportunity to make a positive impact in your community, create jobs, and contribute to the economy. It can also provide financial independence and the potential for high earnings. Beyond financial rewards, starting a business can lead to personal growth and development, providing opportunities to learn new skills, meet new people, and broaden your perspective.
Here are some general pros and cons to consider:
- Autonomy: As a business owner, you have control over your work and the direction of your business.
- Flexibility: You have the flexibility to set your own schedule and work on projects that interest you.
- Financial potential: Starting a successful business can lead to financial independence and the potential for high earnings.
- Personal growth: Starting and running a business can provide opportunities for personal growth and development.
- Risk: Starting a business comes with inherent risks such as financial loss, failure, and personal liability.
- Uncertainty: There is no guarantee of success, and the future of the business may be uncertain, thus creating stress.
- Time commitment: Starting a business can require a significant time commitment, which may affect your personal life.
- Financial strain: Starting a business can be expensive, and it may take time to turn a profit.
Opening a business in Malta
Are you considering starting a business in Malta but unsure about the registration process? There are two main options: self-employment or forming a limited liability company. The choice you make depends on your business model and risk tolerance.
If you opt for self-employment, you’ll have less paperwork in terms of accounting, corporate tax, auditing, and accounting obligations. However, you still need to submit VAT returns, prepare an income statement, file for personal tax returns, and pay National Insurance Contributions. Hiring an accountant can help keep your expenses low. But, as a self-employed individual, you’ll carry unlimited liability, which means you’ll be personally responsible for any problems that arise.
On the other hand, forming a Malta company is considered more professional and shows a level of seriousness and structure. A company is a separate legal entity that can carry out trading activities in its own name. As the director, you’ll have full powers and responsibilities, and the liability is limited to the company only. This means your personal assets are protected from any issues related to the business.
However, forming a company comes with mandatory statutory reporting obligations, such as submitting an annual return with the Malta Business Registry, VAT returns, annual audited financial statements, and an annual corporate tax return. These obligations apply whether or not your company is operational. Closing a company involves a liquidation process, which can be expensive. Ultimately, the decision to choose between self-employment and forming a Malta company depends on your business needs and risk tolerance.
Article written for Fairwinds Management Limited by Ms Charlene Sciberras, B.A. (Hons), guest writer, a marketing and business administration specialist with a special focus on corporate, accounting, and legal matters.