How to choose the right type of trade? Overview of trades and conditions
When you want to start working for yourself, a sole proprietorship is the easiest and fastest way. Before you go to the office, think about which type of business and what you want to do. You already know what you will be doing, but how do you translate your business into the language of the authorities? Our article will help you with that.
BASIC OVERVIEW: GET TO KNOW THE TRADE
- In the Czech Republic, there are two basic groups of trades - notifiable and licensed. They differ mainly in how quickly you can start your business.
- Reportable trades are further subdivided, so overall we distinguish 4 types of trades - free, craft, bound and licensed. Depending on the type, you will know what conditions you need to meet to successfully obtain a trade licence.
- Each type of trade is then accompanied by a list of so-called objects of activity (activities that define the scope of your business - whether you will be a bricklayer, driver, photographer or accountant, etc.).
- You choose specific activities from the lists and enter them in the trade licence when you register. You can have any number of subjects of activity registered at one time.
- If the scope of your business changes over time, you can easily add another subject to your trade licence by means of an amendment certificate (provided you meet the conditions, of course).
CONDITIONS FOR OBTAINING A TRADE LICENCE
Before we start to explain the types of trades, it is good to clarify what exactly the individual conditions set out in the Trade Licensing Act mean.
- General conditions - legal capacity and integrity. You must meet them, whatever type of business you want to run. Legal capacity means that you are 18 years old and you prove it with an ID card. The authorities will verify your good character by a criminal record extract - for Czech citizens, you can get this yourself.
- Professional competence. Specific requirements for professional competence are set by law for craft, bound and licensed trades. Typically, this involves education or experience in the trade or retraining. You must prove your competence either by yourself or through a responsible representative (i.e. another person who meets the conditions of the trade and provides you with the necessary documents).
- Concessions. In order to practice a trade that is a licensed trade, you need a special official permit issued by the state or municipality.
TYPES OF TRADES. HOW DO THEY DIFFER AND WHICH ONE SHOULD I CHOOSE?
The right to operate a notifiable trade arises at the moment of registration with the trade licensing office - you become a sole trader immediately. The only differences are in the documents you need to submit.
- Free trade. Only general conditions need to be met to practice. It is the most common type of trade with more than 80 branches of business. This includes activities such as retail and wholesale, advertising, photography and graphic design services, accommodation services and others. >> List of free trades
- Craft trade. In order to obtain it, in addition to the general conditions, you must also meet the statutory requirements for professional competence. Typical examples are bakers, painters, masons, hairdressers, beauticians and other trades. >> List of trades
- Bound trade. To declare a tied trade, it is also necessary to prove professional competence. Bound trades include fields such as bookkeeping, massage services, real estate brokerage, running a driving school, solarium or optician, etc. >> List of bound trades and their conditions
As you already know, you need a special permit to operate a licensed trade. In this case, the trade licence is only granted at the time of granting the concession. In the Trade Licensing Act you will find a list of licensed trades and their conditions - a complete list of activities, the conditions for obtaining a licence and the institution that processes the application for a licence.
In this way, the authorities regulate the number of persons operating the same business in a certain area (e.g. taxi, exchange office) or by tightening the conditions they try to ensure safety in selected business activities (e.g. production of alcohol or weapons and explosives). A concession is also necessary for selling fuel, running a travel agency, freight transport, if you want to be an Uber driver and more.
TIP: The type of trade and the subject of activity is not only important for self-employed persons, but also for companies, as they need a trade licence for a legal entity when they are established.
THE SUBJECT OF YOUR BUSINESS OR FIELD OF ACTIVITY
In addition to the type of trade, you also choose the subject of activity that will be listed in the public trade register. This should make it clear what the scope of your business is.
HOW TO CHOOSE A TRADE?
- Take a piece of paper or open your notes on the computer and write down in your own words what you plan to do as part of your business.
- Thanks to the article, you already know the types of trades, so go through the lists and assess whether they are free, craft, licensed or bound trades. This will tell you whether you just need to meet the general conditions or whether you will need to provide additional documents.
- Match the activity items from the lists with the items from your notes. For free trades, select the trades by number.
- If you are unsure about your choice of trade or if you have doubts about whether your activity belongs to the free trades or other trades where you would have to prove your expertise, you should contact the trade licensing office.
- The numbers or names of the objects of activity should then be reported to the office when the trade licence is issued or filled in yourself in the uniform registration form in box 5 - object of business.
TIP: Do you have friends or acquaintances in the same business as you? Look them up in the trade register and see what they have written down for inspiration.
HOW MUCH DOES IT COST TO SET UP A BUSINESS AND ADD ANOTHER BRANCH?
When you visit the office for the first time, you will pay an administrative fee of CZK 1,000 for declaring a trade or applying for a concession, or CZK 800 if you apply electronically. An extract from the Trade Register will cost you CZK 100 or CZK 80 if you file electronically.
Expansion of the fields (adding another subject of activity) is free of charge for free trade. You will pay an administrative fee of CZK 500, or CZK 400 if you file electronically, if you add a subject of activity from the lists of trades or crafts to your trade licence during the course of your business, or if you apply for another licence.
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