What is a Czech SRO Company?
Limitations - what it is
- An SRO is a company. A company is an independent legal entity with one or more directors / shareholders.
- An SRO is owned by 1 or more persons. Any mix of directors and share holders is possible. (Foreign) companies can be shareholders.
- With an SRO there is no 'limited liability' as you would expect - you can and will be held responsible for financial mismanagement
- An SRO can be transferred to another person, although in reality, it is easier to liquidate if you no longer want / need it.
- You do not have to be resident in Czech Republic in order to have an SRO. (But you need to be in CZ to open a bank account).
- With an SRO you can have customers abroad, use foreign currencies and even foreign bank accounts
Comparison to a Trade License
- A Trade License is much easier, cheaper and faster to set up than an SRO
- Taking out salary from an SRO is a lot more expensive than being self-employed
- More than 95% of our clients really do not need an SRO for the type of business they do
- It is possible to have a Trade License and simultaneously be employee, have an SRO or a business abroad. Only register the SRO if you really need it, not sooner.
- An SRO always requires double-entry accouting. Accounting requirements are kept to a minimum using a Trade License.
- An SRO name needs to be approved by Court. With a Trade License you can use a business name other than your name - you don't even need to register it anywhere
- Getting rid of an SRO is complicated / expensive. A Trade License can be paused or stopped relatively easily.
- With both, you can pay other freelancers / self-employed persons, or have official employees
- Extending a Business Visa based on an SRO will be more complicated than a Business Visa based on a Trade License.
Trade License or another Business Type - What to ChooseIf you are new to Czech Republic and / or entrepreneurship - don't complicate your life with an SRO or some company registration abroad. In case you have your finger on the order button already, don't click yet. Let us first explain why you probably don't need one.
Keep it simple. When you really will be making millions (hopefully in near future), we can always look for ways to optimize - but start as self-employed person with a Živnostenský List ('Živno' for short). You will not regret it.
There are plenty of expat consultants / lawyers that advise you to open a company because 'it is better', usually without specifying why. Monetary gain of the seller is a common motivation. Or lack of understanding of what one can do with a Trade License. Or both.
Not convinced yet a Trade License is a good choice? See What is a Czech Trade License
Continue to: Registration Steps for an SRO