Business type refers to the legal structure of an organization recognized in a jurisdiction. Before deciding on the legal structure, you should first consider business needs, goals, and shareholders. There are six main forms of business structures in the Czech Republic; general partnership, limited partnership, limited liability company, joint stock company, cooperative, and branch.
- General Partnership
- Limited Partnership
- Limited Liability Company
- Joint Stock Company
3 other legal forms of business are legally compulsory for all EU Member States
- European Company
- European Cooperative Society
- European Economic Interest Group
Czech limited liability company (s.r.o.) – in Czech Společnost s ručením omezeným– is the most typical legal form for a business entity in the Czech Republic. The limited liability company exists independently and can be established by 1 or more natural or legal persons and provides personal liability protection. You can attend 1 or more managing directors, with or without a salary.
Table of contents
- 1 Company name and address
- 2 Shareholders and capital
- 3 Notarial Deed of Incorporation and Memorandum of Association
- 4 Trade License registration in the Czech Republic
- 5 Commercial registration
- 6 Corporate Income Tax (CIT) registration
- 7 Databox (Datové schránky) application
- 8 Turnkey Limited Liability Company incorporation service
Company name and address
Every limited liability company ends with s.r.o. in the Czech Republic. S.r.o. is a short form of Společnost s ručením omezeným the Czech and Slovak legal structure for a private limited company. You must find a suitable name for your company, you can check company names on this website of the Ministry of Justice of the Czech Republic, you are permitted to register a company name only if it does not match the name of an existing company. After deciding on your company name, the next step is to find a registered business address.
A registered business address is an official postal address that every limited liability company must legally provide during the incorporation process and its existence. The purpose of a registered business address is to provide official bodies with a contact address where statutory communications and legal notices can be securely delivered.
A registered office address must be in the Czech Republic; you may use our virtual office address service and reduce your costs. As the official address of your company, only statutory mail from government agencies is delivered to the registered business address. On the other hand, a business address is used as a contact point for clients, suppliers, and other third parties.
Capital is the amount invested in launching your new business. One or more shareholders may provide starting capital. The limited liability company requires at least one shareholder, a director, and minimum share capital of 1 CZK. This amount is one of the smallest requirements for setting up a business among European Union countries. However, it is recommended that the founders agree on an amount higher than the minimum amount of the company’s authorized capital. Before the company applies for registration in the Trade Registry, the entire contribution in kind, if any, the minimum contribution premium and 30% of each monetary contribution must be paid.
If the total starting capital is less than 20.000 CZK, there is no need to deposit it into a bank account; the deposit manager can prove it during the incorporation process. In cases where the capital exceeds 20.000 CZK, opening a deposit account at the bank at the establishment stage is obligatory. As soon as you have deposited the capital into the account, the bank will issue you a confirmation of the deposit of funds.
Notarial Deed of Incorporation and Memorandum of Association
Notarial Deed or Deed of Foundation is any written narration of facts drawn up by a notary public and verified by the notary’s signature and official seal detailing a procedure.
Memorandum of Association is a legal document prepared in a limited liability company’s formation and registration process by the notary to define its relationship with shareholders.
The most important step that precedes the establishment of a limited liability company is the drawing up of a Notarial Deed or Memorandum of Association. A notarial deed is intended for limited liability companies with a single partner, while the articles of association deal with establishing limited liability companies with multiple partners. However, both documents are linked by the fact that a notary must draw them up by law and that they must contain several mandatory data. In a simplified way, they include in particular:
- Company name
- Registered office address
- Names and addresses of partners and executives
- Scope of business
- The amount of the share capital and the contribution of each partner
- Identification of the deposit manager
Trade License registration in the Czech Republic
A business license is your company’s legal registration that enables you to work within your industry and jurisdiction. When starting a business, it can be hard to comply with confounding government regulations. Your business industry will determine which licenses and permits you need.
Business licenses in the Czech Republic
- Free* (unqualified trades)
- Professional (requires a diploma or any proof of qualification)
- Concession (is issued based on a special permit from the Ministry)
*According to the Czech Trade Licensing Act (Act No. 455/1991 Coll.), there are 80 activities to obtain free trade licenses in the Czech Republic.
Depending on your business type you may need to apply for one or more business licenses. For example, transport license (Over 3.5 tons) registration is mandatory for freight forwarders.
If you want to start doing business in the Czech Republic, under the Czech Trade Licensing Act you must submit a trade registration which will issue an extract from the Trade Licensing Register (výpis z živnostenského rejstříku).
You can search for business subjects of the companies in the Czech Republic on the Register of Business Enterprises. RŽP inquires for business entities in the public part of the trade register (ŽR) and obtains current and historical data on business entities kept in the trade register. These data include the name and surname, personal identification number, domicile, place of residence, scope of business, business premises address, period of validity of a trade license, and more.
Once you have organized all the required documents, you can finally apply for the company’s entry into the commercial register kept by an applicable court. Companies that have their registered business address in Prague and the Central Bohemian Region are registered in the commercial register maintained by the Municipal Court in Prague.
Corporate Income Tax (CIT) registration
After the legal incorporation process of your company, as a new taxpayer, you must register for Corporate Income Tax (DPP). Taxpayers are tax residents of the Czech Republic if they have their registered office or place of management on the territory of the Czech Republic. It is obliged to apply for corporate income tax registration to the relevant tax administrator within 15 days of its establishment and the corporate income tax rate is 19% in the Czech Republic.
Databox (Datové schránky) application
It is an electronic storage website used for the delivery of official documents and communication with Czech public authorities.
The information system of data boxes is operated by the Czech Post. It facilitates communication of public authorities because it’s faster and cheaper, on the other side it provides the secure delivery of the messages
Creating a data box is required for all Czech legal entities. The manager of the company will apply for a data box number and receive it in a couple of weeks.
Turnkey Limited Liability Company incorporation service
We offer turnkey Czech limited liability company incorporation service under the power of attorney. Our Czech company registration package includes everything that you need to start your business in the Czech Republic. You can contact us here for more information.
- Preparation of Powers of Attorney (Plná moc)
- Preparation of Affidavit of the Executive (Čestné prohlášení jednatele)
- Preparation of the Notarial Deed of Incorporation (Notářský zápis)
- Trade License registration (výpis z živnostenského rejstříku)
- Commercial Register submission
- Corporate Income Tax registration
- Databox registration
Related service: Establish Your Czech Limited Liability Company without Paperwork