For almost every freelancer living in the Czech Republic, a trade license is cheaper, simpler and keeps more money in your pocket. More than 95% of our clients do not need an s.r.o. for the work they do.
What you keep of 1,000,000 CZK
Revenue of 1,000,000 CZK a year in 2026, before other tax credits and deductions:
The difference is roughly 160,000 to 190,000 CZK a year, every year. See all options, including employee and DPP, in trade license vs salary vs dividends, or enter your own revenue in the costs calculator.
Side by side
| Trade license | s.r.o. company | |
|---|---|---|
| Setting up | Much easier, cheaper and faster to set up. | Commercial court, approved company name, more paperwork and costs. |
| Taxes | Revenue 1–2 million CZK: tax, social and health together about 13% (about 10% without public health insurance). Above 2 million it rises, to about 30% at 5 million: still less than dividends. | 21% corporate tax, then 15–23% on dividends. Only dividends? You still pay health insurance yourself. A salary costs about 1.8 times the net amount. |
| Accounting | Minimal: with 60/40 or the flat-tax method, little more than your invoices. | Always double-entry accounting. |
| Liability | You are liable with your own assets. | Not the protection people expect: as a director you can still be held responsible for financial mismanagement. |
| Business visa | The usual basis for a business visa, and simpler to extend. | Extending a business visa based on an s.r.o. is more complicated. |
| Stopping | Pause or stop it in a few steps. | Closing a company is complicated and expensive; selling it is rare. |
When can an s.r.o. make sense?
- You start a business together with partners or investors who want shares.
High revenue on its own is not a reason. Even at 5 million CZK a year, an s.r.o. paying out dividends still costs you more than a trade license.
Start as self-employed first. You can always set up a company later, and the trade license can run next to it.
Many advisers recommend a company "because it is better", without saying why. Often the reason is the fee for setting it up. Ask for the numbers for your situation.
We do not register s.r.o. companies
Tradelicense.cz is for the self-employed. We register and support trade licenses, and we do not form companies. If you still want an s.r.o. after reading this, we can refer you to a company-formation provider we have worked with for many years.
Continue to: What is a Czech trade license?
