What does chaining mean? The provision in § 105 para. 2 Commercial Code which was introduced in 2001 and which prohibits a Czech s.r.o. to have as sole shareholder another s.r.o. (or similar legal form if it is a foreign company) with only one shareholder. Despite the almost 11 years of existence by now, thousands of Czech s.r.o. still have this illegal structure and — at least theoretically — face liquidation by decision of the Commercial Court.
CzechTrade and CzechInvest are the two main support structures operated by the Ministry of Industry and Trade to help companies looking to expand their business. CzechInvest helps foreign firms to establish offices and factories in the Czech Republic. CzechTrade, on the other hand, helps to pair up Czech companies with foreign business partners.
Entrepreneurs planning to start a large scale endeavor or one with multiple owners might want to consider creating a joint stock company. Be aware, though, that under the law you would be required to deposit a substantial amount of share capital and meet other formalities such as establishing a board of directors and holding general shareholder meetings.
Setting up a company costs more money and takes more time, but it also offers more legal protections than working from a trade license. Another advantage is that many businesses prefer to do commerce with other businesses, rather than with individuals.
While there has been some improvement, it is still a dfficult task to set up a business in the Czech Republic, according to the World Bank. The process becomes a bit more complicated for foreigners, who may need official translations of some documents such as criminal and tax records from other countries they have lived in.
If you want to avoid all the hassles of paperwork involved in setting up a business, there are services that sell already registered companies. Speed is an advantage, but there are several issues to consider. The cost of buying a company is substantially higher than setting one up on your own. It pays to read the fine print. Some services want annual fees as well for use of a business address.
Doing almost any kind of activity aimed at making money requires a license. The process was simplified in 2008 with the introduction of “one stop” offices, but still requires several steps. One stumbling block for Americans is the clean criminal record, which the US doesn’t issue. For some professions, you need to prove your qualifications, which may require having diplomas translated. A final hurdle is convincing a landlord to sign off on using your flat as business address.