How to set up a trade licence: procedure and costs

Deciding to set up a trade licence is, for many people, the first step into the world of business. A trade licence is the simplest and fastest way to start earning on your own – without the need for high share capital or complicated administration. In this article, we guide you through the whole process, from the decision all the way to issuing your first invoice, so that you know what to expect and how to avoid unnecessary mistakes.

When it makes sense to set up a trade licence

A trade licence is suitable for those who want to do business on their own, have straightforward costs and do not want to deal with the paperwork that comes with a commercial company. If you plan to provide services, practise a craft or sell your own products, it is often the most logical choice. Before you decide to set up a trade licence, consider your expected turnover, the extent of your liability and whether you will need employees.

What types of trades exist

In Slovakia, we distinguish between free, craft and regulated trades. Free trades do not require proof of professional competence, whereas craft and regulated trades do – for example a vocational certificate or a certificate of professional experience. Classifying your business activity correctly is crucial, because it determines the documents you must submit when notifying the trade.

The procedure for setting up a trade licence

The notification itself is made at the trade licensing department of the district office, or electronically via the slovensko.sk portal with a qualified electronic signature. Electronic notification tends to be more advantageous in terms of both fees and speed.

1. Choose a business name and your business activities.
2. Prepare your identity documents and any documents proving professional competence.
3. Make sure you are entitled to use the premises as your place of business.
4. Submit the trade notification in person or electronically.
5. Collect the certificate of trade authorisation.

Costs and obligations after setting up

Notification involves administrative fees, which vary depending on the type of trade and the method of submission – always check the current fees and deadlines with the relevant office or an expert. Once the trade licence has come into existence, the office usually registers you with the tax office and your health insurance company. You do not have to register with the Social Insurance Agency (Sociálna poisťovňa) at first; the obligation may arise later depending on the amount of your income.

• Registration for income tax and allocation of a tax ID (DIČ).
• Registration with a health insurance company.
• Keeping records of income or single-entry bookkeeping.
• Keeping an ongoing eye on your obligation to pay social and health insurance contributions.

Common mistakes you can avoid

New entrepreneurs often underestimate the choice of business activities or forget about their tax and contribution obligations. Another common mistake is mixing private and business finances. We recommend keeping a separate account and working from the outset with an accountant who will help you set up your processes correctly.

Why consult an accountant

Even though you can manage to set up a trade licence on your own, professional advice will save you both time and money. An accountant will assess whether it is more advantageous for you to claim flat-rate expenses or actual expenses, and will alert you to deadlines you must not miss. They will also explain how advance tax payments work, when it pays to become a VAT payer and how to set up your invoicing so that you always have an overview of your income and expenses. As a result, you can devote yourself fully to what you do best – your business – and leave the administration to the experts.

How to keep track from the start

The first months in business determine how you will cope with your obligations later on. We recommend introducing simple habits right at the start, which will save you a great deal of trouble. If you keep an eye on your documents and records from day one, the end of the year will not be a source of stress but a routine. That is precisely why many entrepreneurs decide to set up a trade licence with the support of an experienced accountant.

• Archive all documents, both received and issued.
• Record your income and expenses regularly.
• Set aside part of your income for taxes and contributions.
• Keep track of changes in legislation that affect you.

Related articles: Share capital of an s.r.o.: how much and how to pay it in, How to set up an s.r.o. in Slovakia step by step, Reducing and increasing a company’s share capital.

Frequently asked questions

How long does it take after notification before I can start doing business?

Your trade authorisation usually comes into existence on the day of notification, or on the date stated in the notification if that is later. The office will issue the certificate within the statutory time limit. Check the specific time limits and the method of delivery with the relevant district office.

Do I have to register with the Social Insurance Agency immediately after setting up a trade licence?

As a rule, not at the start of your business. The obligation to pay contributions to the Social Insurance Agency may arise later, depending on the amount of your income. Check the current thresholds and deadlines, or consult an accountant.