Czech Accounting Basics for SRO Companies and Trade Licenses
Single-entry or Double-entryAccounting comes in two flavours: single-entry and double-entry.
Single-entry (Jednoduché úcetnictví) is basically one long list with all positive and negative sums listed, without precisely sub-dividing or specifying all details. It is only suitable for relatively simple bookkeeping.
Double-entry (Podvojné úcetnictví) is basically a table with 2 columns: credit (+) and debit (-). They should match at the bottom. Each column has several (many) internal accounts, each account represents a certain type of expense / revenue. This system allows easy checks and financial statements and accurate profit / loss calculations.
SRO Company accounting is always double-entry.
Both accounting systems are used for zivnos, although the majority use single-entry bookkeeping.
Double-entry bookkeeping used to be obligatory if the Trade License is registered at Commercial Court but that is no longer the case. See Živnostenský list
Depreciation of Goods / "write-off"In Czech Republic depreciation of goods, divided in 6 'write-off' groups, can vary from 36 to 600 months:
- group 1, 36 months: IT equipment, tools, "machinery"
- group 2, 54 months: cars, office equipment, "machinery"
- group 3, 114 months: "heavy machinery"
- group 4, 240 months: pipelines etc.
- group 5, 360 months: buildings
- group 6, 600 months: commercial and administrative buildings, department stores, hotels
For more information on special faster write-off in 2009 / 2010 (no longer possible now), see
VAT Registration and VAT ReturnsIf your expected turnover is higher than 1.000.000 CZK in 12 consecutive months, you are obligatory to register for VAT. This also means that you'll have to file a VAT report quarterly or even monthly if the turnover of your business is more than 10.000.000 CZK in 12 months.
Personnel, Employees and Temporary WorkersSooner or later most businesses will have employees or at least temporary workers.
Employing people / Payroll accounting is one of the most difficult parts of accounting in Czech Republic, due to the many regulations (that change practically every year) and is best left to an accountant with experience.
Hiring foreign employees is even more complicated, because of the Work Permits and Visas for 3rd-Country Nationals, and the labor-office registration for EU Citizens.
Another specialty is keeping foreign companies that want to employ people in Czech Republic, on czech payroll. This will require the company to be registered in Czech Republic as employer - Alexio does this, but the process can take a month before the foreign company has been registered at all authorities.
If you are thinking of hiring, we recommend contacting us first if you have no experience in this field, and please keep in mind that there is no such thing as hiring a 3rd-country national quickly, because since mid-2012 getting a work permit has become an excruciatingly slow process for most non-EU workers. If this person requires an employment visa then the entire procedure may take 6 months (!)
Free Business Training and Business SupportAt Alexio, we are very much dependent on the bookkeeping information you provide us.
The more correct that is, the better the accounting result will be.
Therefore, and especially for new entrepreneurs this is interesting, we will teach you how to do the paper side of your business. Since almost no business owner is also a full-time accountant, we have prepared free templates in Excel for Invoices, Expense Forms, Business Trips and Milage Registration and alike.
It is a proven fact that with a couple of hours of training our clients find starting and running their company far easier, because they have a basic understanding of accounting and Czech regulations.