The most common ways of doing business in Slovakia are trading as a sole trader under a trade licence or through a limited company (s.r.o.). Most experts clearly recommend an s.r.o. Let us therefore look at the main reasons why doing business through an s.r.o. is more advantageous.
Contributions
As the director of an s.r.o., you do not have to pay contributions to the Social Insurance Agency, and you pay only the statutory minimum to your health insurance company. Naturally, this applies only if you do not pay yourself a salary for your role as director.
Financial risk As a sole trader, you are liable for your obligations with all your assets – including your personal property and that of your family. If problems arise, a bailiff can seize your personal assets up to any amount.
When you do business through a limited company, your liability for its obligations is limited – that is, up to the amount of your contribution. If the business fails, your personal assets are therefore not at risk.
Image Another undeniable advantage of an s.r.o. is the impression it makes on customers and potential business partners. A limited company is generally seen as a more trustworthy business partner than an individual sole trader, which makes it easier to win customers.
In most cases, these three main reasons make doing business through an s.r.o. more advantageous and safer for the entrepreneur. There are, of course, cases where a trade licence is entirely sufficient, but any sole trader who is serious about their business should sooner or later switch to an s.r.o.