A practical guide to trade licences, self-employment and business in Czechia

Which form of business

OSVČ or s.r.o.? Comparison for 2026

Short answer: A self-employed person (OSVČ) with a trade licence is cheap and quick to set up, but you are liable with your entire personal assets. A limited liability company (s.r.o.) is more expensive and administratively more demanding, but you benefit from limited liability and a better image. For most small sole traders with annual profits of roughly up to 1–2 million Kč, being a self-employed person (OSVČ) tends to be simpler and often cheaper — people switch to an s.r.o. mainly because of liability, higher profits, reinvestment, or having additional partners.

Setup: 1,000 vs 6–11 thousand Kč Tax: 15/23 % vs 21 % + 15 % Capital: 0 vs 1 Kč Liability: unlimited vs limited
Calculate what works best for me Is an s.r.o. worth it for me?

Where do you lean?

OSVČ suits me

cheap · fast · no notary

Solo business, lower risk, you want the money available immediately and don't want to deal with paperwork.

How to set up a trade licence

I'm considering an s.r.o.

limited liability · higher profits · partners

Higher liability risk, reinvesting profit, more partners, or a plan to sell the company one day.

Is an s.r.o. worth it for me?

The big OSVČ vs. s.r.o. comparison

CriterionOSVČ (trade licence)s.r.o.
Liability for debtsentire personal assets (unlimited)limited — once the contribution is paid up, a member is in principle not liable for the company's debts (§ 132 et seq. ZOK)
Registered capitalnonemin. 1 Kč (§ 142 ZOK)
Time and cost of setuppractically immediate, 1,000 Kč administrative feetypically 2–3 weeks, approx. 6,000–11,000 Kč
Notarynot requiredmandatory (notarial deed of the memorandum of association)
Accountingtax records / lump-sum expense allowances / flat-rate taxdouble-entry bookkeeping (mandatory)
Tax on profit15 % up to the threshold / 23 % above the threshold21 % corporate income tax + 15 % withholding tax on the profit paid out
Withdrawing moneyfreely — the profit is directly your incomemanaging director's salary or share of profit (formalised)
Image and credibilitylower (especially for large B2B contracts)higher — perceived as a more reputable partner
Sale / transfer of the businesscannot be sold (tied to the person)can be sold / the share transferred

Rates and amounts verified for 2026 (Tax Administration (Finanční správa), ČSSZ (Czech Social Security Administration), Ministry of Finance of the Czech Republic, Business Corporations Act No. 90/2012 Coll.). This material is for information only and does not replace consultation with a tax adviser or lawyer.

OSVČ or s.r.o. — which suits you? Run the 4 axes

Answer four questions for a rough recommendation — quick guidance, not legal advice.

How large a profit do you expect?
What is the liability risk in your field?
Are you in business alone or with partners?
Do you want to withdraw the profit or reinvest it?

Answer every question.

Watch out for double taxation of profit in an s.r.o.

Profit in an s.r.o. is taxed twice: first with 21 % corporate income tax, and when you pay out the remainder as a share of profit, with a further 15 % withholding tax. Out of 100 Kč of profit you are therefore left with roughly 67 Kč in hand — the effective taxation of the paid-out profit is approximately 32.85 %. The good news: you don't have to make that leap to an s.r.o. straight away — you can start as a self-employed person (OSVČ) and switch to an s.r.o. later, once it makes sense for you. (Verified 2026.)

Explore the individual topics in depth

Is an s.r.o. worth it for me?

From what profit level and under what circumstances switching to an s.r.o. is really worth it — decision guidelines and the break-even point.

Cost of setting up an s.r.o.

2026 price breakdown: notary fees, trade authorisation, registration in the commercial register, and registered capital — approximately 6–11 thousand Kč in total.

Paying out profit from an s.r.o.

Managing director's salary vs. share of profit, 15 % withholding tax, and when no social insurance and health insurance contributions are payable.

Switching from OSVČ to s.r.o.

Signs that it is time to switch, the step-by-step procedure, and the tax implications of changing the form of business.

Frequently asked questions: OSVČ vs. s.r.o.

From what profit level is an s.r.o. worth it?
There is no single magic number. For low to medium profits, roughly up to 1–1.5 million Kč a year without employees and with low risk, OSVČ tends to be simpler and often cheaper (especially with the flat-rate tax or lump-sum expense allowances). An s.r.o. usually starts to pay off at higher profits — as a rough guide, above 1.5–2 million Kč a year — mainly if you reinvest the profit into the company. Have the specific threshold calculated using a calculator or a tax adviser.
Is the managing director liable for the company's debts?
In an s.r.o., the company itself is primarily liable for its obligations, and once the contribution is paid up, a member is in principle not liable for the company's debts with their personal assets (§ 132 et seq. ZOK). The managing director may, however, be liable in the event of a breach of the duty of due managerial care, in the company's insolvency, or for certain arrears. Moreover, banks often require the managing director's personal guarantee for loans, which in practice partly negates the advantage of limited liability.
Can I have both an OSVČ and an s.r.o. at the same time?
Yes. You can simultaneously be a sole trader (OSVČ) and a member or managing director of an s.r.o. These are two entirely separate legal worlds: trade income is taxed at the level of a natural person, whereas an s.r.o. has its own accounting and is subject to corporate income tax. This is common, for example, during a gradual transition from OSVČ to an s.r.o.
What is the effective taxation of profit in an s.r.o.?
Profit in an s.r.o. is taxed twice: first with 21 % corporate income tax and, upon paying out the share of profit, with a further 15 % withholding tax. Out of 100 Kč of profit you are therefore left with roughly 67 Kč in hand, meaning the effective taxation of the paid-out profit is approximately 32.85 %. If, however, you leave the profit in the company and reinvest it, you pay only 21 % for the time being.
How much does setting up an s.r.o. cost and how long does it take, compared with a trade licence?
You can file a trade licence notification practically immediately for an administrative fee of 1,000 Kč, without a notary and without registered capital; the authority enters you in the register within 5 working days. Setting up an s.r.o. typically takes 2–3 weeks and costs approximately 6,000–11,000 Kč, because a notarial deed of the memorandum of association and registered capital (at least 1 Kč) are mandatory.
Does an s.r.o. have to keep double-entry bookkeeping?
Yes, an s.r.o. is required to keep double-entry bookkeeping and must publish its financial statements in the collection of documents of the Commercial Register. A self-employed person (OSVČ) can get by with tax records, lump-sum expense allowances, or even the flat-rate tax, under which they do not even need to file a tax return.

Not sure? Have it calculated

Enter your expected profit and how much you want to pay out — the calculator compares your net income as an OSVČ and as an s.r.o. and shows where the break-even point is for you.

OSVČ vs. s.r.o. calculator