Setting Up a Company
Establishing a company is more difficult and more time consuming than obtaining a Trade Licence for a Self-employed person. Entrepreneurs make use of lawyers or specialised accounting companies. Here we shall just mention the main points to provide basic orientation.
In the Czech Republic, there are 4 types of companies:
- Public company (veřejná obchodní společnost);
- Limited liability company (společnost s ručením omezeným);
- Limited partnership company (komanditní společnost);
- Joint-stock company (akciová společnost).
Each of the above-mentioned types of companies have some advantages and disadvantages (eg. number of business partners, share capital, liabilities etc.). Before finally choosing the type of company, you might like to consult your decision with a consulting agency.
Limited liability company (= společnost ručením omezeným, s.r.o., OR společnost s ručením omezeným, spol. s r.o.) is still the most widespread and popular form of business in the Czech Republic. All rights and obligations are governed by the Civil Code and the Business Corporations Act. The main advantage is that the company partners are not liable for their liabilities with their entire property, but only up to the amount of the outstanding deposits. In practice, this means that if a company goes bankrupt there is a lower risk of execution of personal property. If bankruptcy happens to a self-employed person, the personal property could be seized, which is not the case in the case of s.r.o. However, liability cannot be waived by members of company bodies (executive directors) if it is proved that they breached the law and caused the company to fail due to the way the company was managed.
The right to establish a company in the Czech Republic belongs to all citizens regardless of whether they are from EU or non-EU countries. The right to be a partner/director is not subject to having a permanent/temporary residence or visa. You can also authorize Czech lawyers and tax advisers to do the paperwork with the Governmental Authorities for you.
From January 15, 2023, you can set up a limited liability company online. You no longer have to go to a notary, you just need to contact a notary via the Internet and verify your identity using a citizen’s identity (for example, via a bank identity, see more here).
Establishment of a company is also possible via the notary office where you will write up the notarial record of the Founding of the Company. Both, online and offline establishment must include:
- name of the company,
- company address,
- designation of shareholders,
- scope of business,
- the amount of registered capital and the amount of the contribution of each shareholder including the method and period of repayment of the contribution,
- the names and places of residence of the first executive director/s of the company (=jednatel/é společnosti) and the way they will act on behalf of the company,
- the names and residence of the members of the first Supervisory Board (if any),
- designation of the deposit manager,
- determining the amount of the reserve fund and the method of its creation.
- Opening a special bank account based on the registered capital (the bank requires the original of the Memorandum of Association to be consulted), and the bank then issues a written statement of the repayment of the deposit.
- Notifying the Licenced Trade at the Trade Licensing Office or applying for the License,
- Within ninety days of its establishment, an application for registration in the Commercial Register must be submitted. The proposal shall include the following attachments:
- Memorandum of Association in the form of a notarial deed,
- Declaration by the Deposit Administrator about the repayment of the company’s share capital (the Deposit Administrator is usually the company’s executive).
- proof of the deposit issued by the bank,
- certified copies of the Extract from the Trade Register,
- proof of the legal title of the use of the property,
- extract from the Land Register,
- Statutory Declaration of Executives and their sample signatures,
- stamp (=kolek) of CZK 6,000 value,
- verified signatures of all the first executives.
Within 30 days from the Entry in the Commercial Register, the newly formed company must register with the Tax Authority (=Finanční úřad). There are three Tax Authorities in Ostrava. From 2014 the minimum amount of registered capital for the Company has been CZK 1.
- More ideas, programmes and support for your business can be found on our website Support for your business.