Company Formation
Sole trader, or s.r.o.? One of the first big questions when starting a business. Let's walk through five differences you should know before you decide.
As a sole trader you are liable for business debts with your entire personal assets.
The company is liable with its own assets; the owner only up to the value of their unpaid contribution.
A simple trade-license registration — fast and cheap, ready practically on the spot.
A €220 registration fee to the notary, plus a separate fee for the notarial deed on the founding of the company — mandatory since Aug 17, 2026, even for a single-member s.r.o. The process can take several weeks.
Income tax of 15 – 25%, depending on the tax base.
Income tax of 10 – 24%, depending on the company's revenue.
The levy-free period lasts only the first 6 months of business — from month 6 you must pay at least the minimum Social Insurance contributions.
A managing director who draws no salary doesn't have to pay social insurance contributions.
Single-entry bookkeeping is enough, often with flat-rate expenses.
Double-entry bookkeeping and published financial statements are mandatory by law.
It depends on your specific situation — the scale of your business, whether you plan to hire employees, how much risk you're willing to carry, and how much an s.r.o. matters to your business partners. There's no universally correct answer, only the one that fits your specific business.
Not sure which way to go? Let's go through your situation together and figure out which form makes the most sense.
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