A brief overview of the procedure for setting up a limited liability company:
1. Drawing up the founding deed at a notary
- 1 week (arranging the appointment; the notary visit itself will be approx. 1 hour)
- approx. 5,000 CZK
2. Obtaining a business certificate (and the IČO number)
- 1 day
- 1,000 CZK (per business certificate)
3. Lodging of the basic capital in the bank
- 1-2 days (if you deposit the basic capital in cash, or in a bank where you already have an account, and can make payments in real time, everything happens immediately)
- approx. 500 CZK (bank fee) + the chosen amount of basic capital
4. Obtaining an excerpt from the criminal register and verification of the statutory representative‘s signature on the affidavit.
- 1 day
- approx. 200 CZK
5. Entry into the commercial register – the statutory representative returns to the notary who drew up the deed of incorporation, submits the necessary documents (business certificate, bank confirmation of the basic capital lodging, excerpt from the criminal register, the affidavit statement of the statutory representative) and the notary performs the so-called first electronic company registration in the commercial register
- 1 day
- CZK 2,700 (fixed price set by the Court Fees Act, binding for all notaries)
6. The relevant “register” court will check the correctness and completeness of the submitted documents and, if everything is in order, will approve the company’s registration in the commercial register – there is a 15-day appeal period for this decision, following which the company is officially registered and visible in the commercial register.
Before setting up a limited liability company yourself, you need to clarify a few basic points:
- What will be the name of the company
- Where the company will have its headquarters
- Whether you will establish the company alone or with several partners
- What will be the company’s capital stock
- What will be the subject of the business
- Who will be the statutory representative of the company
Before starting a company, it’s worth spending some time thinking about a name. Although you can change it later, it will cost you additional time, money and effort as you rebuild your name on the market. You must also be careful that the name you have chosen (or a similar name) is not already in use by another company. You can easily verify this in the business register https://justice.cz/. The basic rules for creating a name are: the company must not be interchangeable with another business, the company must not appear deceptive, the company must clearly and definitely distinguish the entrepreneurs from other already established entrepreneurs (to definitely distinguish companies, use of a different legal form of the entrepreneur (which is part of the company, e.g. a.s. / s.r.o.), use of different location of the headquarters, use of a name differing only by a diacritical mark or a name differing by less than 3 letters, is not sufficient).
Even though the headquarters are only indicated by the name of the municipality in the articles of incorporation (see below), a complete address of your business is required for the registration of your company in the commercial register and for other actions. In the case of the headquarters being located in a building that is not your property (proven by an excerpt from the real estate register available from any CzechPoint), you require the owner’s written consent (their signature on the consent must be verified!) to use the property as your company’s headquarters.
You can also utilize the services of companies providing so-called virtual offices. In this way, for a certain fee, you can set up headquarters at a prestigious address relatively quickly.
You can establish the company by yourself (this is the most common case), with a partner that can be another physical person(s) or even another legal entity (another company).
The company is established on the basis of two types of founding documents:
- partnership agreements (in the case of a larger number of partners)
- article of incorporation (if you are founding the company by yourself)
In both cases, the law requires a notarized registration (any notary can make it for approx. 5,000-10,000 CZK) and, in addition, specifies exactly what must be included in the founding document:
1. Designation of partners
These can be physical persons or legal entities. In addition to names, the information must also include the place of residence, and in the case of legal entities, the company name and its headquarters.
2. The basic capital
Currently, the minimum capital is 1,- CZK. Nonetheless, we recommend choosing a higher amount, e.g. CZK 5,000, because it creates the feeling of greater formal credibility. The basic capital is usually deposited into a bank account set up specifically for this purpose, and the setting up bank issues a confirmation of the basic capital deposit. This confirmation serves as one of the founding documents and is put in evidence on submission of the proposal to register the company in the commercial register.
The deposit can also be made in cash with the so-called capital asset manager, who will then submit a statement of the capital asset deposit.
Upon founding the limited liability company and thus, its creation (entry in the commercial register), the deposit becomes its property, and the company can freely use them.
3. Scope of business
To establish a company, you will need to establish the subject of its business and obtain, for this subject of business, the relevant authorizations.
The division of trades is determined by the Act on Trade Business (Act No. 455/1991 Coll.).
The following business subject should probably not be missing from the scope of activities of an IT Freelancer company:
56. Provision of software, consulting in the field of information technology, data processing, hosting and related activities and web portals.
Provision of use (sale and rental) and implementation of software. Reproduction of computer programs. Consulting in the field of hardware and software. Consulting in the field of communications and computer networks. Data processing using the program, in particular complete data processing, data entry services, management and operation of data processing equipment, or by another way. Activities related to the operation of databases (building a database, data collection, data storage, computer record preparation for the required information, data selection from the database, making data available to users, data sorting according to requirements, etc.). Computer network management, software uninstallation and other computer-related activities. Web hosting and other related activities.
The content of the activity is not the sale and repair of hardware.
The conditions and procedure for obtaining trade licenses are described in detail in the text on our website.
4. The statutory representative
Before founding the company, you must also clarify how many statutory representatives the company will have and who they will be. If you are starting a company for yourself, it will likely be just you. However, if you are establishing a company with several partners, you must agree with them about who and how will they act for the company. Since the company’s statutory representative has extensive rights (and, of course, obligations) in relation to the company, it may be appropriate for you to limit these rights in some cases (e.g. the obligation of joint dealing of several representatives in certain legal actions, etc.). On the other hand, multiple statutory representatives with the ability to act independently can be advantageous due to mutual substitutability.
The appointed statutory representative must submit his/her excerpt from the criminal register and an affidavit for their registration in the commercial register.