Everything You Wanted to Know About LLC

Many of our freelancers ask us about the specifics of doing business as an LLC. We have therefore decided to prepare a brief summary of information that is worth considering before transitioning to an LLC.*

*For clarity, in this guide, the Slovak “s. r. o.” is referred to as a limited liability company (LLC), although these structures are not fully identical to their U.S. equivalents.

Updated 14 August 2025

Do you want to start a business, but don’t know where to start or what to look out for? At TITANS, we have tapped into the deep knowledge of our CFO, Michal Brigant, on this topic and, with his help, have prepared a summary of basic information about starting a business as an LLC.

Basic information about LLC

A natural person may decide to conduct business through a commercial entity, in our case, an LLC. One or more persons may jointly establish an LLC, a separate legal entity with its own business name, authorised to conduct business activities, which must be registered in the Commercial Register. The company’s founder may serve as a partner, executive, or employee of the LLC.

Starting a business as an LLC

It is only possible to do business in the form of an LLC after it has been registered with the Commercial Register. First, it is necessary to prepare and sign a set of founding documents, and then apply for a trade license (yes, even in the case of LLC). Finally, an application for registration with the Commercial Register is submitted, for which a court fee of €220 must be paid.

In this case, you can use the services of companies that will handle the entire process for you and establish your LLC for a fee of approximately €300. When establishing a company, it is also necessary to consider the minimum share capital of €5,000. The entire process of establishing an LLC usually takes up to two weeks.

Liability or risk associated with running a business

In the case of running a business in the form of an LLC, a simplified assumption based on its name (limited liability company) generally prevails, but it is important to note that:

• as a separate legal entity, an LLC is liable for business obligations with all of its assets (i.e. even a car that you register to your LLC);
• a partner in an LLC is liable for the company’s obligations up to the amount of their unpaid contribution registered in the Commercial Register; these obligations are normally paid off, and the partner is not liable for any amount above this limit;
• the managing director of an LLC should perform their duties with professional care and in the interests of the company as a legal entity. In the event of bankruptcy proceedings against the company’s assets, creditors may, pursuant to Section 135a(5) of the Commercial Code, assert claims for damages against managing directors who fail to prove that they exercised professional care in managing the company and may again seize the personal assets of the managing directors.

Deductions

In the case of an LLC, there are several options. They apply depending on the form of remuneration paid to the partner/managing director or employee.

• If a natural person is an employee of an LLC, they pay 13.4% contributions from their gross salary, and the company also pays 36.2% employer contributions (the so-called super-gross salary is the sum of the gross salary and employer contributions).
• For the regular remuneration of the managing director, the managing director pays 13.4% of the contributions, and the company pays 35.15%.
• In the case of irregular remuneration of the managing director, the managing director pays 11.0% contributions, and the company pays 32.75%.
  • Note: remuneration of the managing director for the first quarter in the amount of EUR 3,000 and EUR 9,000 for the rest of the year does not constitute irregular remuneration.
• The share of the company’s profits paid to the partner (the so-called dividend) is exempt from social security and health insurance contributions.

Income tax from LLC

If you felt that there were too many different tax rates, then you’d better take a seat. Let’s start with a simpler topic: the income tax rate.

In the case of LLC, there are three legal entity income tax ranges depending on the company’s annual revenue (the rates apply to the entire tax base within a given range):

• 10% rate for revenues up to EUR 100,000
• 21% rate for revenues between EUR 100,000 and EUR 5,000,000
• 24% rate for revenues over EUR 5,000,000

However, taxation of the company’s profits does not end there for an LLC. When a share of after-tax profits is paid out to a partner in an LLC, this income is subject to the withholding income tax (for profits generated in 2025, the rate of this tax is 7%). The tax is paid at source, i.e., the share of profits is paid to the partner after withholding tax, and the company pays the tax directly to the tax office.

That is all about income tax rates. But how is the tax base to which the rate applies calculated?

• The income tax base is based on the company’s accounting profit before tax, but for tax calculation purposes, it must be adjusted for so-called add-back and deductible items.
  • Add-backs are typically expenses that are not tax-deductible (e.g. representation expenses) but also expenses that are tax-deductible only after they have been paid (e.g. consulting services, rent, etc.).
    • Have you ever heard someone say, “I’ll write that off as a business expense”? Everyone has a different tolerance for adrenaline, and maybe some people enjoy tax audits, but in any case, it is important to remember the law on income tax: tax-deductible expenses are expenses incurred to achieve, secure, or maintain the company’s income. Costs unrelated to business also affect VAT.
  • Deductible items may be revenues exempt from income tax, e.g. a share of profits paid by a subsidiary.

For smaller companies, it is also easier to set accounting depreciation at the tax level so that it is not necessary to address the difference in the calculation of the tax base.

For legal entities — in our case, LLC — there is also a so-called minimum income tax or tax license that the company must pay even if it has a negative tax base. For revenues up to EUR 50,000, this amounts to EUR 340, and for revenues up to EUR 250,000, it amounts to EUR 960. For revenues up to EUR 500,000, it amounts to EUR 1,920, and for higher revenues, it amounts to EUR 3,840.

Transaction tax

At this point, there would already be more than enough taxes and deductions, but hang in there, we’re almost done. The 2025 public finance consolidation package in Slovakia introduced a new transaction tax for legal entities and sole traders.

Simply put, commercial companies and sole traders operating in Slovakia began paying tax on their costs from 1 April 2025, at a rate of 0.4% on payments made by bank transfer (the maximum transaction tax per payment is EUR 40, which is reached when paying EUR 10,000). In addition, cash withdrawals from ATMs are taxed at a rate of 0.8% of the withdrawal amount, with no limit on the amount of tax. Payments to the state treasury (VAT payments, income tax, and deductions) and transfers between accounts of the same entity within one bank, as well as payments made by payment card, are exempt from the tax.

For LLCs, it was mandatory to have a separate bank account used for business purposes even before the tax was introduced. However, you will not be able to avoid the transaction tax when dividends are paid into your private bank account.

We have a little tip for you regarding the transaction tax. We do not recommend “workarounds” such as opening an account with Revolut or a foreign bank. While in the case of a Slovak bank, your bank will calculate and pay the tax for you, in the case of using a foreign bank, this obligation passes from the entity doing business in Slovakia to you.

VAT

Last but not least, we must also mention the value-added tax. Let’s start with a situation where a company must register as a VAT payer.

From 2025, it is no longer the turnover for the last 12 months that is assessed, but the company’s turnover for the relevant calendar year. There are two important turnover thresholds for the calendar year:

• turnover of €50,000 – when this turnover level is reached, the company becomes a VAT payer from 1 January of the following calendar year (however, it can still choose to become a payer as soon as this level is reached);
• turnover of EUR 62,500 – when this level is reached, the company immediately becomes a VAT payer for the relevant calendar year period.

If your turnover exceeds €50,000, you must submit an application for registration as a VAT payer within five working days. The tax office will register you and assign you a VAT ID number within 10 days of receiving your application. You become a VAT payer either from 1 January of the following year or earlier (if your turnover exceeds €62,500, you voluntarily choose an earlier date, or for other reasons).

Besides mandatory registration, you can also voluntarily register for VAT before reaching the turnover limits mentioned above. After submitting your application, the tax administrator will likely contact you and may request additional documents (invoices, bank statements, contracts, accounting outputs, etc.).

After registering for VAT, VAT payers must report their bank accounts used for business purposes to the Finance Administration. Payments for their invoices should be made to these accounts.

The standard tax period for VAT is a calendar month. Under certain conditions, it is possible to switch to a quarterly tax period (if you have been a VAT payer for more than 12 months or if the company’s turnover for the last 12 months does not reach EUR 100,000).

For the relevant tax period, the VAT payer submits a tax return and a VAT control statement, and in the event of sales to EU Member States, also a summary statement. The deadline for submitting all these documents, together with payment of the tax liability, is the 25th day of the month following the end of the tax period.

Finally, we would like to draw your attention to the specifics of VAT, such as the obligation to register for VAT when providing cross-border services (in this case, however, the person does not become a VAT payer), as well as the aforementioned excess of non-tax-deductible costs in the VAT deduction.

Accounting and administration

An LLC must keep double-entry accounting records and account for costs related to reported revenues according to their nature and timing, keep payroll records, prepare inventories, and compile financial statements. In addition, it is necessary to organise general meetings and record them in the minutes.

Last but not least, the relationship between the legal entity and the partner/executive must be based on a contract. At first glance, this sounds daunting, but it is always possible to outsource accounting to an experienced accounting firm. Depending on the complexity and number of transactions, you can expect monthly costs of €150 – €300 for a smaller LLC. It’s no exaggeration to say that a good accountant is priceless.

Can’t find or choose one? Contact us, and we will advise you. In any case, however, the accountant only works with the documents you provide, and you are responsible for their accuracy and completeness.

Termination of business

In the best-case scenario, all’s well that ends well.

The dissolution of an LLC is a complicated process, which is completed by deletion from the Commercial Register at the earliest 6 months after entering into liquidation. As part of the liquidation process, you must pay an advance of €1,500, which must be deposited at a notary’s office and will ideally be returned after the liquidation is complete. In addition, expect a €50 fee for registering the LLC for liquidation. It may be faster to sell the company, but here you need to be careful about the terms of the purchase agreement.

Conclusion

Unfortunately, that’s it in a nutshell. The tax and administrative burden on entrepreneurs in Slovakia is far from negligible, but don’t let that discourage you. If you are a rookie entrepreneur with expected annual revenues of up to €50,000, consider a trade license as a more flexible option to start with. If your business is successful, you can always switch from a trade license to an LLC, but we do not recommend providing the same services concurrently through a trade license and an LLC. This could easily lead to problems with the tax office.

TITANS is ready to lend you a helping hand and kick-start your career. For more information about sole proprietorships and their comparison with an LLC, see the articles below:

Sole trader or private limited company?

How to do Business as a Sole Proprietorship

The information provided in this article relates to business and current legislation in Slovakia.

This text does not constitute tax advice or a complete description of the procedures, factors, and actions associated with the individual areas described above. If you have any questions or concerns, we always recommend seeking professional help from an accountant or tax advisor.

Updated 14 August 2025