Trade at work in 2026: when it pays and what to watch out for

Are you deciding whether you can run a business while employed or whether your employer is proposing you work “on an IČO”? Contact an Affordable Lawyer – we will assess your situation and propose a safe solution.

Get a permit

If you want to run a business while employed, you often need permission not only from the trade licensing authority, but also from the employer itself. This happens when:

• you work in the civil service – here you usually need the approval of the head of the authority, regardless of the area of business.
• you want to go into business in the same field as your employer – in this case you need his written consent. If he gives it to you, it is not won once and for all, because he can take it back at any time.

However, there are some professions where the possibility of going into business is very difficult or even forbidden. These include, for example, bailiffs and judges.

Set up a side business

If none of the above applies to you and you decide that you want to make a living as a dog walker or fitness trainer alongside your accountancy work, you should first find out what kind of business it is. Trades are divided into two groups – licensed trades (for which you must first obtain a licence – e.g. taxi service) and reporting trades. Notifiable trades include craft trades, bound trades and free trades. For the first two trades, i.e. craft and bonded trades, in addition to the general conditions, there is a condition of professional competence, while no professional competence is required for free trades.

If you are a first-time entrepreneur, you may still come across the term “trade licence”, even though it is no longer officially used. Today, instead of a trade certificate, a trade licence certificate is issued, which carries the same legal weight. The older term trade certificate still persists in common parlance, but the correct document to receive is called a certificate.

You will then go to the Trade Licensing Office where you will fill in a single registration form and apply for a trade licence. You will need a list of registered activities, proof of identity and a fee of CZK 1 000. Every entrepreneur, whether main or secondary, must have an assigned personal identification number, i.e. an IČO. The IČO is obtained automatically when you register your trade at the trade office. If you run a business while you are employed, you should indicate your business ID number, for example, when issuing invoices or in contracts.

You can register as a self-employed person (self-employed) with your tax office, the district social security office and your health insurance company all in one form. As a self-employed person, you can take advantage of the benefits of secondary self-employment. Being self-employed not only entails tax obligations, but also different rules for paying insurance premiums. If you are setting up a business for the first time, you can simply tick the box on one form to register as self-employed.

If you want your business activity to be considered secondary, you must report this information to your health insurance company and the Social Security Administration. This is very important for determining the amount of the advance payments, which are significantly lower for secondary self-employment and may not even be set for the first year of business. The very fact that you are an employed person and that you will carry out this employment in parallel with your gainful activity is essential for your activity to be considered secondary. It is therefore irrelevant whether you work full-time or part-time.

If you become liable to pay pension contributions, the minimum contribution in 2026 will be CZK 1,574 per month.

You must notify the district social security administration of your self-employed activity no later than the end of the calendar month following the month in which the report for that calendar year was submitted, and provide proof of this by the end of the calendar month following the month in which the report for that calendar year was submitted.

Benefits of doing business while employed

• As mentioned above, if you run a business while you are employed, your business will be treated as secondary. This gives you benefits such as lower National Insurance and Health Insurance contributions .
• You can claim business expenses as a percentage of your income so you don’t have to keep records of everything. As a rule, this flat-rate claiming of expenses will pay off if your actual expenses are no more than the flat-rate you can claim depending on the type of income (flat-rates of 80%, 60%, 40% or 30% are used for self-employment income).
• As a self-employed self-employed person, you do not have to pay monthly health insurance premiums in the first year of your business. In the following years, everything depends on your income and the amount of your tax base. If you pay at least the minimum wage from your employment, you do not have to pay monthly premiums, even in subsequent years. Health insurance is only paid after you have submitted your income and expenditure statement to the health insurance company. The calculated health insurance for the whole year must then be paid.

• For social security, the rule is that you don’t pay it at all if your gross profit is within the limit. The decisive amount, i.e. the limit for 2026, is CZK 117,521. So if your profit for the year is less, you don’t pay social security at all. If you exceed this limit, you pay social insurance on the profit you actually make. If you are self-employed as a secondary activity for only part of the year, the limit is reduced proportionally.
• You do not paysickness insurance as a secondary self-employed person, or it is voluntary. However, if you sign up for it, you become self-employed as a main worker with the obligation to pay minimum monthly pension contributions.
• Pension insurance is only payable by secondary self-employed workers whose income after deducting expenses reaches a certain threshold amount. This amount changes every year. For 2026, the aforementioned amount of CZK 117 521 applies.

Disadvantages of current employment and trade

Tax Returns – if you had no idea what tax depreciation is and when to file your tax return because your employer did everything for you and you just signed the “pink slip”, you are now out of luck. As a self-employed worker, you are required to file a tax return if you have an income of more than £50,000 for the year. If you have both income from employment and other income under Sections 7 to 10 of the Income Tax Act, the CZK 20,000 limit for this other income is also important. If this limit is exceeded, the annual tax settlement with the employer is usually no longer sufficient.

This also involves the necessary administration, keeping records of all invoices or income documents and knowledge of tax forms or a good tax advisor. In addition to business income, you must also include employment income on your tax return. Therefore, you need a certificate of income from your employer.

Beware of the scarcity system

But you may not be asking yourself how to combine both types of activity, but which one to choose. For example, if your employer gives you the choice of being employed or invoiced. In this case, you should know that if you do dependent work for your employer, it is very likely to be a quasi-scheme, which is illegal and can result in fines not only for the employer but also for you. If it is indeed a scheme where you would be supplying work as an independent person (for example, as a translator), look at the following areas when making your decision:

• Income – you are very likely to have a higher net income as a self-employed person. Your employer (or the person commissioning the service) will not be paying contributions on your behalf (up to 33.8% of your gross pay) and therefore may give some of the money they would have spent on contributions to you. He will still get a good return on his investment and you will get a higher income.
• Security – if you are in a precarious social situation (for example, caring for parents or young children) then opt for an employment relationship. You are significantly more protected and you are not at risk of losing your job again quickly.
• Protection during sickness – the employee protection also applies in the next situation, which is sickness. While employees can take the flu in their stride and their pay will only be reduced proportionately, self-employed workers must have either a good insurance policy, high savings or a partner to support them financially. In the worst case, they then have to ride out the illness. So, again, this is not an ideal situation for single mothers.
• Flexibility – does time flexibility or home office suit you? Such a need is more conducive to working as a self-employed person. For many employees, free working hours and a high proportion of home offices are not an extraordinary benefit, but rather a daily bread.

An example from our law practice

We were approached by a client who was about to switch to working for the same company as a self-employed person after several years of employment. She would continue to work for the same supervisor, during the same working hours, on a company laptop and exclusively for one customer. We warned her that such a setup showed signs of dependent work and could be assessed as a quasi-system. We suggested modifying the cooperation so that she had her own work organization, clearly defined work, the possibility to work for other clients and a contract corresponding to a real business. As a result, the client avoided a risky model and gained better conditions for further negotiations.

Not sure whether a contract of employment, an agreement, or working with an IČO is safer for you? As part of our tailored legal problem solving service, we will assess the cooperation proposal, highlight the risk of the scarcity system and recommend a contractual setup that will stand up to scrutiny.

Summary

Combining employment and a trade can be a practical way to test your business without immediately leaving the security of employment. In 2026, such a model is still common and beneficial for many people, particularly as running a business while employed is usually treated as a sideline to self-employment.

Before you go into business, check that you don’t need your employer’s consent. This is especially true if you want to do business in the same field as your employer or if you work in the public service or another regulated profession. You then need to register your trade correctly, sort out registrations with the tax office, health insurance company and the Social Security Agency, and check whether you are liable to make advance payments and file a tax return.

Pay particular attention to situations where your employer proposes you to switch to working “on an IČO”. A higher net income may look tempting at first glance, but if you continue to work as a regular employee, it is a quasi-scheme. It is a risk for both the company and the worker. It is therefore worth checking the cooperation set-up legally before signing the contract.