Czech Accounting Basics for s.r.o. Companies and Trade Licenses

Single-entry or Double-entry

Accounting comes in two flavours: single-entry and double-entry.

Single-entry (Jednoduché úcetnictví) is basically one long list with all positive and negative sums listed, without precisely sub-dividing or specifying all details. It is only suitable for relatively simple bookkeeping.

Double-entry (Podvojné úcetnictví) is basically a table with 2 columns: credit (+) and debit (-). They should match at the bottom. Each column has several (many) internal accounts, each account represents a certain type of expense / revenue. This system allows easy checks and financial statements and accurate profit / loss calculations.

s.r.o. Company accounting is always double-entry.

Both accounting systems are used for zivnos, although the majority use single-entry bookkeeping. Double-entry bookkeeping used to be obligated if the Trade License is registered at Commercial Court but that is no longer the case. See Živnostenský list

Depreciation of Goods / "write-off"

In Czech Republic depreciation of goods, divided in 6 'write-off' groups, can vary from 36 to 600 months:

group 1, 36 months: IT equipment, tools, "machinery"
group 2, 54 months: cars, office equipment, "machinery"
group 3, 114 months: "heavy machinery"
group 4, 240 months: pipelines etc.
group 5, 360 months: buildings
group 6, 600 months: commercial and administrative buildings, department stores, hotels

As a rule of thumb, anything for the company costing less than 40.000 CZK can be written off in one year.

For more information and special faster write-off in 2009 / 2010 (no longer possible in 2011), see

VAT Registration and VAT Returns

If your expected turnover is higher than 1.000.000 CZK in 12 consecutive months, you are obligated to register as VAT payer. This also means that you'll have to file a VAT report quarterly or even monthly. It is not clever to do this yearly, because your paid VAT will be gone for over a year. With quarterly or monthly reporting your amount due or returnable doesn't accumulate to enormous sums.

Personnel, Employees and Temporary Workers

Sooner or later most businesses will have employees or at least temporary workers. Employing people / Payroll accounting is one of the most difficult issues of running a company, due to the many czech regulations and is really best left to an accountant with experience.

Hiring foreign employees is even more complicated, because of the Work Permits and Visas for 3rd-Country Nationals, and the labor-office registration for EU Citizens.

If you are thinking of hiring, we recommend contacting us first if you have no experience in this field, and please keep in mind that there is no such thing as hiring a 3rd-country national quickly. Count on at least 6 weeks for the work permit, and then the visa application / renewal.

Free Business Training and Business Support

At Alexio, we are very much dependent on the bookkeeping information you provide us.
The more correct that is, the better the accounting result will be.

Therefore, and especially for new entrepreneurs this is interesting, we will teach you how to do the paper side of your business. Since almost no business owner is also a full-time accountant, we have prepared free templates in Excel for Invoices, Expense Forms, Business Trips and Milage Registration and alike.

It is a proven fact that with a couple of hours of training our clients find starting and running their company far easier, because they have a basic understanding of accounting and Czech regulations. For more complex matters, we offer email / phone support without charge for all our accountancy clients, so that we can detect issues in an early stage, solving them before they become a problem.