Running your business in the Czech Republic is a truly profitable commercial venture with a minimum of risk. It’s not for nothing that this jurisdiction is called Eastern European Switzerland. But due to the stereotypes that have developed in society, many people are simply afraid to take any steps, believing that the undertaking will be doomed to failure in any case.
That is why we decided to write a review material for you, in which we tried to tell you about all the features and advantages of running your business in the Czech Republic. And if you are already ready to take such a step, pay attention to the most attractive options and the section dedicated to common mistakes that can be completely avoided!
Why the Czech Republic?
A short, succinct and absolutely correct answer – because it is really profitable and simple – will be incorrect in relation to the readers. After all, you most likely need specific expert information, and not the proclamation of unproven truths.
Actual advantages of doing business in the Czech Republic:
- Business in this jurisdiction has all the rights and opportunities inherent in the business world of the European Union.
- Full membership in the Schengen area. This provides, among other things, the possibility of free visa-free movement within the borders of the European Union and full medical insurance.
- The country’s financial sector is not on the “black lists” of regulators.
- Low service rates in all local banks.
- State deposit insurance.
- Business in the Czech Republic is a unique opportunity to become the holder of a Schengen visa (with all the privileges of an EU resident!), which gives the right to obtain official permanent residence in the near future.
- A working family reunification program if one of its members officially conducts business in the Czech Republic.
- Even without obtaining resident status, you will have almost all the rights of native Czechs.
- Free education for all family members (in Czech). And for some specialties – also in English or German.
- Low level of corruption.
- In terms of the speed of economic development, the country is in third place in the EU.
- Political stability.
- Official representative offices of almost all major global companies operate in the country.
- Low price level.
- Possibility to open an account in any European bank.
How expensive is it to open your own business in the Czech Republic?
The data, which you can find below, clearly proves that high price tags for intermediary services in this case are a myth. At least, if we talk about the conditions of the experts of the Internationalwealth.info portal. At the same time, we guarantee absolute safety, comprehensive turnkey service and many additional services. All prices are given in Czech crowns excluding VAT (CZK, approximate rate in relation to EUR – 25.85:1, to USD – 23.61:1 at the end of September 2019).
Costs for registering individual entrepreneurs and LLCs, respectively:
- With all accounting maintenance for 1 year: 9.500 / 29.500.
- Providing a legal address: 6,000.
- Free licenses: 2,500.
- Registration for value added tax: from 2,000.
- Registration for other fees, as well as at customs: from 1,500.
- Making adjustments to existing registration data: 5,000.
- Liquidation of an individual entrepreneur or suspension of its activities: 5,000 / 50,000 (if the procedure is performed voluntarily).
- Expert legal assistance: 3,000 (1 hour of face-to-face consultation).
- Translations into Czech with court certification: from 1,250.
As you can easily see, the prices are quite affordable. Especially if, for comparison, we remember the Moscow prices in equivalent (cappuccino 66 CZK, a simple lunch 210 CZK, a cheap hostel 800 CZK).
Business in the Czech Republic: main features
You can freely register an LLC and become its founder even without obtaining resident status (unlike Singapore); organizational efforts will require approximately 1 week. Another option to start your own business in this jurisdiction is to purchase a ready-made company – it requires less time – just a few days.
Features of Czech business:
- In most cases, no special licenses are required. For specific types of activities you will need a permit, which can be obtained in one and a half to two months.
- The minimum authorized capital is 1 CZK. But we would like to note that with such an amount, potential partners, clients and investors will have an extremely wary attitude towards the new company. Therefore, we strongly recommend that you deposit the required funds, adjusted for these circumstances. Based on work experience, we can say that the optimal value should not be less than 200,000 CZK.
- Business in the Czech Republic on the basis of an LLC or individual entrepreneur gives you the right to hire employees without any restrictions.
- A significant advantage of an LLC is the opportunity to subsequently sell a well-promoted and successful company for a great profit. IP does not have such an advantage.
- For a “temporary” business (for example, you just want to try to do business in the Czech Republic), an individual entrepreneur is best suited, since the process of its liquidation is as simplified as possible. Closing a company will require much more effort, time and money.
Attention! The organizational and legal form of an individual entrepreneur is ideal for students and those who want to work exclusively for themselves. For them, the individual entrepreneur format will be beneficial due to the simplified (and accelerated!) procedure for obtaining permanent residence.
Own business in the Czech Republic: the most common mistakes
If all organizational issues are dealt with by the experts of our portal, then with a 100% probability they will be avoided. But the mentality of Russian citizens is such that many of them often try to save money, in this case to their own detriment.
What mistakes are made most often:
- Purchasing a ready-made company from a dubious seller at a low price. Almost always, such an offer means deception, especially if the business structure put up for sale brings a stable and tangible income. After all, you are unlikely to be able to independently monitor legal purity and find potential problems that often do not lie on the surface. But if you buy a zero company, or we offer you an existing project, then in this case you can be calm.
- Misunderstanding of the Czech mentality. It is believed that any means are good for promoting a company, including not entirely legal ones. Very often, companies in the Russian Federation that offer specific goods and services deliberately “save” on their quality, especially at the stage of formation. The calculation in this case is simple: you receive working capital that can be immediately used for business development. Alas, this scheme does not work here: Czechs will never turn to a supplier if they have been offered a low-quality product or service at least once.
The most profitable options for your business in the Czech Republic
There are quite a lot of them. But even at the planning stage, it is worth considering that market conditions are changing rapidly, so in a short time the situation may well change. But the options that our experts have prepared for you are “long-lasting”, and therefore deserve the closest attention.
Our recommendations:
- Hotel business . An extremely profitable option, because more than 10 million guests come to the Czech Republic every year, who need to not only be accommodated, but done with maximum comfort for the guest. The only negative is the fairly high financial barrier to entry.
- Souvenir shops . Here you will need much less funds, and the demand (taking into account the number of visitors) will be consistently high. But remember that competition in this business sector is quite serious.
- Tourism . Perhaps the most acceptable and consistently popular option. A travel agency will not require significant initial costs, and there are not many worthy competitors on the market (except for “random” people) on the market.
- Pharmacies . There are surprisingly few of them in Prague (and much less than in Moscow, St. Petersburg or any other Russian city). But you will need working capital and permits from regulatory organizations.
- SPA, beauty salons, fitness centers . An interesting option, especially if you are not ready to spend money on renting a large hall and purchasing many exercise machines. Czechs love everything cozy and homely, so you can start a business with a minimum of initial costs.
- Real estate agency . If you have connections in this business and have the gift of anticipating the desires of clients, you can try it. By the way, this area of activity has almost nothing to do with crime, so you don’t have to worry about your investment.
- Animal care (vet clinics, specialty pharmacies, etc.) . Czechs love their pets very much and spare no expense in caring for them. Therefore, you have a good chance to earn money without significant investments.
- Construction stores . The idea may work because local residents are very economical, so they would rather do the repairs themselves, without inviting hired workers. And for this you will need materials and tools.
- Internet trading . In this case, the main argument will be the same: the desire of the Czechs to save money. We also ask you to take into account the lack of need for an office, a large staff and utility costs.
- Logistics companies . Everything is clear here without comment. But remember that transporting passengers will require additional licensing.
- Cafes and restaurants . Guests to the Czech Republic must not only stay somewhere, but also eat. Preferably, dishes of national cuisine. And if funds are not enough, you can open a pub and offer visitors good beer. The approximate payback period is from 3 to 10 years.