Who must register?
The Czech Act on Public Registers clearly defines who must be listed in the Companies Register. In a nutshell, this concerns the following companies and self-employed persons:
- Any and all legal entities operating a business, that is, companies and corporations including housing cooperatives and building societies,
- Some natural persons running a business – as a rule of thumb, those self-employed traders whose income exceeded 120 million crowns (after deducting VAT) over the last 2 accounting periods; in addition, those that register out of their free will,
- Some foreign businessmen,
- other entrepreneurs specified by the law.
Your Attorneys Online advise: Political parties, associations and foundations have their own registers – nonetheless, you may look them up in the business register, as the databases are interconnected.
Will an average self-employed person benefit from registration?
As long as a tradesman’s income doesn’t exceed a certain amount, they needn’t register. Nonetheless, they’re free to do so voluntarily, which is the main difference from the Trade Register, where any trade licence holder must be listed.
Although registering in the Companies Register may not seem a crucial decision at first sight, it does carry a number of obligations. Let’s briefly look at the most prominent ones:
- Bookkeeping – this represents a major administrative burden, as ordinary tradesmen only need to keep tax records, which is incomparably simpler,
- Source documents – while ordinary tradesmen (in fact, only non-VAT payers) may use any kind of invoice, those registered in the business register must make out bookkeeping vouchers.
- Making their closures public – any subject registered in the business register must place their financial statements on file, and voluntarily registered tradesmen are no exception.
Tip: Do you want to register express for no extra charge? Try the direct registration described below.
The company must be founded first
To register, any legal entity must already be founded. The vast majority of businesses are founded by signing a partnership contract. Limited companies are required to notarize this step. If a company is founded by a single partner, the partnership contract is replaced by a foundation charter, which also needs to be recorded at the notary. A joint-stock company is founded by adopting its articles of association, and a cooperative by arranging a statutory meeting, where its statutes are passed and the members of the statutory body elected.
The law clearly differentiates between founding and establishing a company. While adopting a certain document or passing the statutes refers to the former, the latter is only completed upon registration.
In other words, the process of creating a legal entity has two phases: First, the founders congregate at the notary and found the company. Second, they provide the regional court, which administers the business register, with all the required documents, thus establishing the company.
Where and how to register
Whether you’re registering voluntarily or out of necessity, you need to fulfil several requisites. Besides actually founding the company, you have to file the registration application, which can be found at the website of the Ministry of Justice and comes in a smart electronic form. It’s used for filing the first record as well as for submitting changes and deleting records. After filling it in directly on the web, you can choose between submitting it digitally (via the web interface or your data box) and printing and posting it.
In either case, the application is addressed to a registration court, i.e., the regional court (or the Municipal Court in Prague) holding jurisdiction over the location of the company’s or physical person’s headquarters. Remember to enclose or attach the deed of association, founder’s establishment or any other document testifying to the founding of your company and other facts for the record.
The application must include the business name, that is, the official title under which the company will register and operate. How to choose a proper business name:
- It’s unique and distinctive,
- it’s not misleading and doesn’t contain the names of other fields than those in which the company operates (e.g., the name of a company selling electronics must not contain the word “butchery”),
- it incorporates the denomination of its form, which is s.r.o. for limited liability, a.s. for joint-stock, v.o.s. for unlimited partnership, k.s. for limited partnership and the word “družstvo” for cooperative.
Did you know? To make sure that nobody beats you to your desired business name, you can register it immediately after founding your company, before you file the registration. Do remember, however, to file it within a month of applying for the record of your business name.
Besides the business name, the application must contain:
- the headquarters address,
- a clearly specified subject of business,
- the members of statutory and other bodies,
- the partners’ names,
- details on basic capital,
- other facts required by law,
- attested signatures of the applicant(s), digital or notarized.
The registration must be filed by a particular person(s), for instance, all the partners registering an unlimited partnership company. If the application contains formal errors or is filed by an ineligible person, the registration court will reject it, in which case you’ll need to reapply and the whole process will be delayed. Therefore, we advise you to pay great attention to all the legal necessities and to strictly comply with the prescribed procedures.
<h2id=”fees”>Business registration fees, how long it takes to register
Provided the application meets all the previously noted criteria, the registration court usually creates the record within 5 working days, and subsequently informs you about this in writing; the letter also contains an extract from the Companies Register.
The amount of the registration fee depends mainly on two factors: The form of the company you’re registering and whether you’re registering for the first time, or are modifying an already existing record. In the latter case, the kind of modification also matters.
Direct registration at the notary
Not merely registration courts, but also notaries may, under certain circumstances, register your company via their remote access to the Commercial Register. The notary verifies the founding documents and then proceeds with the registration. This variant is faster (the company usually appears at justice.cz on the following day), however, the notaries will charge you depending on, again, the company form and the type of entry. Only the notary who prepared all the documents may file the registration.
Even so, we do recommend this variant. Especially if you’re establishing the new j.s.a. company form (a hybrid of a limited and joint-stock company tailored for start-ups), the registration costs will be significantly lower than at the court.
Your Attorneys Online advise: Many are discouraged by the notion that notaries are expensive. However, while it holds true that you do need to take into account the fees for the notarial record and direct registration, this option is still cheaper than registering at the court. To illustrate, registering a limited liability company costs 2,700 crowns at the notary and 6,000 at the court. For a joint-stock company, you’ll pay about 8,000 at the notary and 12,000 at the court. As can be clearly seen, direct registration does pay off.
Get everything right
Registering at the Companies Register definitely represents a task worthy of your full attention. A single minor error is all it takes for the registration court to reject your application. Don’t lose time, which is doubly valuable when establishing a business. We’ll assist with the preparation of any and all documents, offer advice on how to proceed with the registration, and, eventually, draft your contracts, statutes or any other documents required to establish your company. In addition, we’ll arrange everything with the notary.