Have you been working in a main job up to now, but feel it’s time to start a business for yourself? The following article will help you to make a simple and smooth transition.
A trade license is a must for anyone who wants to start earning money legally in their own name. Anyone who has reached the age of majority in the Czech Republic, is of good character, has legal capacity, has no tax arrears with the tax office or social and health insurance arrears and meets the qualification requirements for the type of business can set up a business.
A trade is defined as a continuous business activity in the field of trade, production and the provision of services, which is carried out independently, in one’s own name and on one’s own responsibility. The aim is to make a profit. Self-employed persons may carry out several trades at the same time without complications, but they must hold a different trade licence for each of them. The trade or trade business is regulated by Act No. 455/1991 Coll. on Trade Business.
Times are changing and unlike in the past, when printed trade certificates were issued, which we could see in small shops, now the business license can be found online (www.rzp.cz) from the extract of the trade register or you need to print the page.
As mentioned earlier, the following conditions must be met in order to set up a trade and issue a trade certificate:
- Age of majority – only a person who has already reached the age of 18 years can run a business in the Czech Republic,
- Integrity – legal integrity and a clean criminal record are required to establish a business,
- Legal capacity – proven by a valid ID card,
- Indebtedness – the applicant must not have tax arrears with the tax office or arrears for social and health insurance
- Qualification – if the applicant chooses a trade other than a free trade, it is also necessary to prove the qualification in the field.
If all the conditions are met, the question arises, which activity to choose?
There are currently four types of trades to choose from:
- Free trade – only the general conditions need to be met.
- Bound trade – the requirement is to demonstrate professional competence (e.g. opticianry, provision or mediation of consumer credit).
- Craft trades – the requirement is a high school diploma in the trade, an apprenticeship certificate, a diploma in the trade or six years’ experience in the trade (e.g. barber, hairdresser, butcher).
- Licensed trade – the condition is proof of professional competence and also a positive statement from the competent state administration (e.g. taxi service, travel agency)
If the applicant does not have the necessary experience or training, a responsible representative may be appointed who is responsible for the proper operation of the trade and for compliance with the regulations.
The moment we have established that we meet all the conditions and have chosen a trade, we can go to the Trade Licensing Office. We need to take with us
- a valid ID card,
- 1000 CZK,
- if we have a degree and we want it to be listed on our business license, a notarized copy of the diploma or the diploma itself,
- a completed uniform registration form (here). In our experience, the clerk assigned to you will go through the entire form step-by-step on the spot, so rather take it as a guide for what information the trade office will ask for.
The office will obtain the criminal record extract themselves.
A list of available trades can be found here. For free trades, it is up to you how many you choose. The price (1000 CZK) will always remain the same. In case of changes in the trade license, such as adding a trade or title, we will pay 100Kč to the trade office.
It takes around one to two weeks to process a trade license. During this time you will receive an extract from the trade register and an eight-digit identification number. Once you have received the identification number, be sure to inform the District Social Security Administration (some trade offices let them know themselves, check with their clerk) and the health insurance company about the change to an ID number. You must register with these institutions to pay your monthly advance payments. Again, you will be assigned a clerk who will be fully available to you in all respects.
It may be a lot on your mind right now with questions about tax returns, depreciation and more. Integra offers free accounting and tax services to its specialists. So you don’t have to worry about ever being on your own to deal with the paperwork. If you choose to work with us, our finance department will be fully available at any time to help you with anything that might cross your path.
