How to get a trade licence

A simple guide how to become an IT freelancer

How to get a trade licence

If you are employed and you are giving notice because of your own business, ask for the proof of income and paid tax advances before you leave. You will need it later for tax return purposes.

To be able to perform work of an IT freelancer, you need to register the right activity in the trade licence.

We recommend choosing from the following free trade activities:

  • Computer services;
  • Services related to computer data processing;
  • Advertising and marketing services; and
  • Intermediation activities in services.

Put down on a paper a list of all trades (business activities), which you would like to do. The Trade Licence Office will register all trades in the trade licence certificate (formerly trade certificate). A fee has to be paid for each trade (see the following steps).

Decide on the business name for your firm. There is a rule for business names of natural persons (self–employed) that the business name has to start with your name and surname (degrees may be included Ing., Mgr. etc.). It may (does not have to) be followed by the business name. If your name was Ján Novák, your business name might look like this:

  • Ján Novák (only your name); or
  • Ján Novák Freelancer (name and business name).

Go to the Trade Licence Office and get all forms necessary to register a trade licence. Do not forget your ID card and the necessary cash. Fill in the forms and hand them in while paying the administrative fee. Each free trade licence costs EUR 5. Duty stamps are no longer necessary. The fee can be also paid in cash.

Trade Licence Offices function as single points of contact. They will facilitate your registration of a trade licence by arranging some formalities for you automatically:

  • The Trade Licence Office will request criminal record for you.
  • The Trade Licence Office will register you as a self-employed person in a health insurance company for health insurance contributions.
  • The Trade Licence Office will register you with a tax office for personal income tax purposes.

The Trade Licence Office will issue the licence certificate (formerly trade certificate) within three business days.

You do not have to register with the Social Insurance Agency. You will be required to register with the Social Insurance Agency in the second year of doing business. If you decide not to register with the Social Insurance Agency in the first year of doing business, this time will not be included in your pension. You will not be entitled to sick pay or unemployment benefits if you decide to terminate your trade licence and do not find a job. If you want security and financial compensation in the above cases (sick leave, unemployment) you may register with the Social Insurance Agency as a voluntary payer.

The Tax Office will mail you a notice with your Tax Identification Number (Tax ID). You will state your Tax ID on invoices and you will use it as your identifier when dealing with the Tax Office.

Open a business account in a bank (or a current account that will be used only for business purposes). It is not required, but it is a must in practical terms.

Set up a standing bank order in your business account to pay health insurance contributions. Later, when you start paying social insurance contributions, set up a standing bank order for this purpose. Although it is not required to pay contributions using a standing bank order, it is far more practical and comfortable than any other way.

Report your business account to the Tax Office. You have to do so within 15 days from its opening.

If you have done everything successfully, you should now have:

  • A trade licence certificate (trade certificate);
  • Tax ID;
  • Health insurance; and
  • A business account.

If you want to become a voluntary VAT payer, it is necessary to make a request at the Tax Office and fill in the relevant forms.

Your company’s business activities and the associated contractual relationships may cause damage to a third party; therefore, it is reasonable to conclude a liability insurance policy.

The principle of insurance is that an insurance company covers risks, accidents and damage that you may cause and thus protects you from huge financial compensations that you could otherwise be forced to pay and cover from your own funds. A big advantage is that this insurance can be included in costs in the tax return.

After you obtain a trade licence or establish a business, we recommend concluding professional liability insurance with the following insurance coverage:

  • Damage to health, damage to property caused by physical damage or loss of property, including other associated property damage or lost profits resulting from this damage or loss, or from the inability to use the damaged or lost property;
  • Damage, destruction or loss of electronic data;
  • Damage to parts of movable and immovable property in which the insured or his/her authorised person performs any activities if the damage is caused as a result of or during such activities; and
  • The insurance (coverage) is valid worldwide, except for USA and Canada.

Example of an insured amount and annual premiums for professional liability insurance:

Turnover Insured amount (EUR)
50 000 EUR
Deductible
100 000 EUR
Up to 50 000 EUR
258 EUR/yearly
200 EUR
335 EUR/yearly
50 001 – 100 000 EUR
276 EUR/yearly
200 EUR
359 EUR/yearly

Prices were determined as at 21 January 2016 and may vary for different combinations of insurance.

The insurance is arranged by Broker Consulting a.s., which provides the full service, including the conclusion of an insurance policy, assistance with paperwork, as well as advisory and supervision when dealing with damage and insured events.

Contact: Branislav Sedilek; mobile: 0911 278 872; e-mail: branislav.sedilek@bcas.sk

Congratulations, you are a FREELANCER! Get your career started and enjoy all benefits of a freelancer life.

You can download a guide how to get a trade licence in PDF: