Business Types in Czech Republic
There are several businesstypes to choose from, the most common ones are listed here:
- tradelicence (= živnostenský list , "živ list", "zivno"), for freelancers, independent contractors.
- limited liability company (LLC, LTD) (= s.r.o.), for: entrepreneurs with liability
- branch office (of a foreign mothercompany)
- joint stock company (= a.s.), for: holding with multiple s.r.o's, public shares
- partnership, - not very common for foreigners
- co-operation ("drustvo"), - typical for buildings with multiple owners
Private Individuals (employee, živnostenský list, s.r.o.)For 95% of the foreigners there are 3 possibilities:
being employee, being freelancer (using a živnostenský list) or having an s.r.o.
If an employer offers a position as employee, you may also consider working freelance.
There are significant tax benefits and eliminates the need for a wrok permit (in case you are not an EU citizen).
In case you wish to be a 'free man / woman' and start your own business, the choice is between a trade license and an s.r.o. - for the typical one-man business we recommend the trade license.
Some arguments to help you to decide:
Legal entities, Companies (branchoffice, s.r.o, a.s.)For (foreign) companies wishing to open a branch or daughter here there are 2 possibilities:
a branch office (organizční složka) or an s.r.o.
A branchoffice is almost the same as an s.r.o., minus the liability (it lies with the parent).
The founding process is about the same (comparable time spent, comparable costs), especially if the shares of the s.r.o. are owned for 100% by the parent, so Alexio recommends starting an s.r.o.: Taxwise there are more possibilities and should take things a turn for the worse, because of it's own liability, it doesn't affect the parent.
An a.s. requires a starting capital of minimum 2.000.000 CZK, a board of directors a board of supervisors and annual audits. These are usually enough reasons to chose and ordinary s.r.o. (in 99% of the cases it is the right choise) - unless the intention is to give out public shares (rare) or there is a need to form a holding structure.