How do I establish a new company?
Starting a company is simpler than many think
Starting a business entity is simpler than many people believe, but what's truly complex is establishing a unique position in the market and ensuring the company's operational viability. Essentially, the process of starting a company can be divided into several parts.
Assessing business viability and planning
Deciding on business structure and framework
Establishing a company ID number
Financing
Operations
Practical information
If you have a business idea or are already operating under your personal ID number, there's nothing stopping you from establishing a company for your operations. Before taking the first steps, you need to consider the following:
You must be at least 18 years old and legally competent
You must not have requested or be in a payment moratorium
Your estate must not be undergoing bankruptcy proceedings
Assessing business viability and planning
Once all the above points are clear, the next step is to assess the business viability. This is done by researching the market and creating cost and revenue projections for your company. A business plan includes information about the product or service you intend to offer, the price at which you'll sell your product or service, and the costs associated with operations.
Choosing a business structure
After concluding that there's a foundation for your business, the next step is to choose the business structure that suits your operations. The most common business structure in Iceland is the private limited company (ehf.). We recommend consulting with a lawyer, certified accountant, or bookkeeper before choosing a business structure, as owner liability and taxation differ between business structures. Here we'll focus on private limited companies, but if you want to read more about different business structures, you can click here, and if you want to read more about operating under your personal ID number, you can click here.
Establishing a private limited company
Once you've decided which business structure suits your operations, the next step is to establish the company itself. The process for establishing private limited companies has been simplified, and it can now be completed electronically through the Tax Authority's service portal. Here you can watch an instructional video from the Tax Authority that guides you through the process. The company can have one or more owners, but during registration, you need to specify who the actual owners are and how the share capital is divided between them, if there's more than one.
When establishing a private limited company, there's a requirement for at least 500,000 ISK in share capital. This amount must be available when the company is established, but the company owners decide themselves how to use the share capital in the business. Additionally, you need to pay the registration costs, and here you can learn more about the fees associated with registration.
During registration, you also need to submit the following documents:
Founding document if there's one owner
Founding agreement, if there's more than one owner:
Founding act, if there's one owner
Minutes of the founding meeting, if there's more than one owner
Legal obligations of companies
It's important to thoroughly understand the legal obligations that come with running a company. Private limited companies must, among other things, maintain the company's accounting records, fulfill business-related taxes and fees, submit tax returns, and file annual financial statements.
We are here for your company
One of the cornerstones of good business operations is a good relationship with the company's commercial bank. Corporate advisors at Arion Bank are always available to answer questions or provide advice on various financial matters, whether it's liquidity management, financing, or cash flow. Here you can easily establish a corporate account with us and begin a successful long-term partnership.
On our website, you can also learn more about various aspects of business operations, such as business financing, liquidity management, annual financial statements, company credit ratings, and many other useful topics.
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