Freelancing is the least regulated type of trade. Therefore, virtually anyone can obtain a trade licence. In our article we will focus on what conditions need to be met and which activities are included in it.
Freelancing is the least regulated type of trade. Therefore, virtually anyone can obtain a trade licence. In our article we will focus on what conditions need to be met and which activities are included in it.
A trade is defined by the Trade Licensing Act as “asystematic activity carried on independently, in one’s own name, on one’s own responsibility, for profit and under the conditions laid down by the Trade Licensing Act.” It is therefore one type of business that allows you to work on your own without an employer, but also without the protection mechanisms and other benefits typical of employees, such as fixed working hours or holiday entitlement. Sole traders also pay their own social security and health insurance and pay their own taxes. This includes the obligation to file an annual tax return. A person running a trade is called a self-employed person (self-employed).
Trades are divided into two main groups, the reporting trades and the licensed trades. The reporting trades include free trades, craft trades and tied trades. In this article we will focus only on the free trade.
Tip: You can read more about other types of trades and the Trade Licensing Act in our article.
This is the least regulated type of trade, which can be arranged by virtually anyone. It can be arranged without the need for special permits or qualifications. All you need to do is register with the trade office.
To obtain a trade licence, you need to go to the trade office. Take your ID card and a completed single registration form with you. If you want to have a place of business other than your permanent residence (i.e. your mailing address), you will also need a land registry extract confirming that you are the owner of the property or a lease agreement for your intended place of business.
There is a fee of CZK 1,000 for registration. As this is a notifiable trade, it is effective immediately.
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The second option is to set up a business online. You can do this simply by filling in a single registration form, which you send via data box (or by post if you do not have a data box) to the address of the trade office. In this case, however, the trade does not come into existence immediately, but only after about a week, when you will receive an extract from the trade register, in which you will be assigned your identification number (IČO).
Tip: Read our article on: Five Steps to Starting a Business Easily. Here you will find a detailed description of how to set up different types of trades.
You do not need any specific training or permits to start a freelance business. The only requirements are legal capacity and good character, i.e. a clean criminal record. However, it should be said that even a criminal record is not always a barrier. It depends on what is on it – the main barrier may be offences that are related to your previous business activities, such as embezzlement.
The liberal trades include those fields of work in which anyone can set up a trade without the need for specific qualifications or training. Whether, for example, the products or trades within a free trade will not have to meet certain standards is another matter. A total of 82 trades are classified as free trades:
Tip: Trade or job? Try both! What are the advantages of such a combination, and what can get in the way of doing business, we discussed in our article.
A scourge called the shvarcsystem is emerging in the labour market. This is a specific type of illegal employment. It is a system where a company “employs” tradesmen who invoice it monthly as a client, but in reality these workers are subjected to conditions that correspond to a standard employment relationship. That is, they have the disadvantages of an employment relationship (such as low flexibility, etc.) but do not have the advantages of an employment relationship (such as paid leave, notice period, etc.).
This model allows the employer to avoid paying health and social insurance for their employees, resulting in lower costs for the company. Therefore, a person who works on the basis of the shvarcsystem is a sole trader “on paper“, but in reality does not work as a sole trader at all.
Tip: Does your employer want to transfer you to a shvarcsystem? Don’t let it get to you! At Affordable Advocate, we are ready to fight for your rights – we will propose a solution that will lead to the best possible outcome.
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