How to start a business: first steps for beginners

Starting a business tends to be exciting and stressful at the same time. If you go through the steps in the right order, you will spare yourself unnecessary mistakes and costs. Here is an overview for beginners.

1. Validate your idea

Before you invest, check whether there is interest in your service or product. Approach potential customers and test the price and the demand. An idea that nobody wants to pay for is not worth scaling.

2. Choose a legal form

Decide between a trade licence and a limited liability company (s.r.o.) based on the risk, your expected income and your plans for growth. This decision will affect your taxes, your social and health insurance contributions and your administration.

3. Take care of the registrations

Register your trade licence or set up an s.r.o., then register with the tax office and a health insurance company. Consider whether and when VAT registration applies to you.

4. Set up your finances

Keep your business and personal finances apart with a separate account. Prepare a simple budget and a reserve for the contributions and taxes that will come later.

5. Deal with accounting from the start

Set up a system for your documents and invoicing right at the start. Keeping things in order from day one will save you problems with your first tax return.

6. Think about pricing and contributions

Build into your prices not only your costs but also your future contributions and taxes. Many beginners underestimate how much their contributions will “jump” after the first year.

7. Do not be afraid to seek advice

A consultation with an accountant at the start is an investment, not a cost. It will help you choose the right legal form, avoid mistakes and set up your processes so that you can concentrate on your business.

Related articles: The most common mistakes made by new entrepreneurs, Business idea: how to validate it before you launch, A trade licence alongside employment: what you need to know.

Frequently asked questions

Do I need an accountant right from the start?

At least an initial consultation is worth it – it will help you choose a legal form and set up your records so that you do not have to fix things later.

How much should I set aside for taxes and contributions?

It depends on the legal form and your income, but it is sensible to keep setting aside part of your income as you go, so that your first annual settlement of contributions does not take you by surprise.