What you can do with a trade license
- Have customers abroad, invoice in foreign currencies and even use foreign bank accounts.
- Set up a business that is much easier, cheaper and faster than an s.r.o. (a Czech limited company).
- Pay a lot less tax than an employee, than with an s.r.o., and usually even than with a foreign Ltd.
- Combine it with other work: be an employee, own an s.r.o. or have a business abroad at the same time.
- Keep accounting to a minimum with the 60/40 method or the flat-tax method.
- Use a business name other than your own, without registering it anywhere.
- Pause or stop it relatively easily. Closing an s.r.o. is far more complicated and expensive.
- Enrol in public health care as an EU citizen (and as a few other nationalities).
- Pay other freelancers, and even hire official employees (possible, but not recommended).
95%+
of our clients don’t need an s.r.o. for the type of business they do.
A trade license is roughly comparable to a single-member US LLC, and often more attractive than “Hong Kong-type” structures.
Compare with a US LLC →Limitations: what it is not
- It is not a company. A company is an independent legal entity with one or more directors and shareholders. A trade license is a business, run by you as a person: an important difference.
- It belongs to one person. A couple can’t share one trade license, and it can’t be transferred to someone else (opening one for them is easy, though).
- You are 100% personally liable. In practice this is more or less the case with an s.r.o. too.
- You are expected to live in Czech Republic. Expected, not strictly required: there are ways to stretch this.
Trade license or another business type?
If you are new to Czech Republic or to entrepreneurship, don’t complicate your life with an s.r.o. or a company registered abroad. If your finger is already on the order button, don’t click yet. Let us first explain why you probably don’t need one.
Keep it simple. Start as a self-employed person with a Živnostenský list (“Živno” for short). When you really are making millions, hopefully soon, we can always look at optimising and maybe add an s.r.o. or a company abroad. You won’t regret it.
Don’t take our word for it
See your own numbers before you decide.
Get an estimate in our free Trade License calculator. Or book a consultation for an exact calculation of how much income tax, social security and health insurance you would pay, even if you have multiple sources of (foreign) income. We go through it with you in an online consultation.
