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Accounting in the Czech Republic
Updated on Wednesday 12th April 2023 Rate this article
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Our team of accountants in Czech Republic can present the types of accounting services available for local businesses and can also represent investors in such procedures.
Our tax advisor in Prague can decide on the actual situation of your company by looking at the financial documents of all shareholders, investors, customers, employees etc. Various changes have arisen from the European influence concerning the obligations of companies with regard to the legislative provisions (new transparency regulations) and financial communication.
| Quick Facts | |
|---|---|
| Who requires accounting services in Czech Republic | - companies with operations in Czech Republic, - associations, - trade unions |
| Applicable accounting legislation | - IFRS, - Accounting Act of 1991 |
| Types of accounting services we offer | - bookkeeping, - payroll, - annual financial statements, - tax returns, - debt monitoring |
| Tax advice and compliance (YES/NO) | Yes |
| We provide support fot tax registration (YES/NO) | Yes |
| Financial planning for company owners | On request |
| Risk assessment and evaluation | On request |
| Types of audit services | - internal, - external, - financial, - statutory, - compliance, - operational |
| Tax minimization methods available | - advance tax and credit payments, - donations, - retirement plans |
| Personalized financial consultancy services | On request |
| Investment consultancy for high-net-worth individuals | On request |
| Financial and analysis reports for companies | Yes |
| Human resources services available (YES/NO) | Yes |
| Expertise provided by certified accountants (YES/NO) | Yes |
| Free case evaluation (YES/NO) | Yes |
Our agents in company registration in the Czech Republic can guide you through, in order to find any accountancy irregularities in your company and avoid any risk of bankruptcy. Also, our services in the Czech Republic are based on specific values that are essential if you want to benefit from transparent accounting and financial information which is why you can rely on our accountants in Czech Republic.
What our tax advisor in Czech Republic offers can also help with the access to the capital at an acceptable cost and ease the transfer of businesses. We also stand by cross-border trading and so we can help your company's competitiveness in the business environment of Europe.
Who needs accounting services in Czech Republic?
All entities developing commercial activities have to maintain various accounting documents, which can vary based on the company’s business form, the size of the business and its revenues. This is necessary as all businesses have to justify the manner in which they have gained their profits, the fact that they have paid taxes and so on.
However, it is also necessary to know that the accounting obligations of an entity will also vary based on the economic category in which the entity activates, as per the regulations of the Act on Accounting. The Czech accounting regulations distinguish between the following types of entities:
- • entrepreneurs – commercial companies registered in Czech Republic or which develop commercial activities on the Czech territory;
- • banking entities – commercial banks and various types of financial institutions;
- • the insurance sector – represented by insurance companies; Chech with our tax advisor in Prague.
- • selected accounting units – state funds entities, regional autonomous units, health insurance units;
- • non-profit entities - such as political parties, civil associations, non-profit organizations and other similar entities.
Reasons for considering accounting services in Czech Republic
We can guarantee that accounting services and financial information are of high quality and characterized by accuracy of the bank accounts and accounting statements. The correctness and the review of your company's documents are essential for the activity of your business.
Our accounting services in the Czech Republic are provided by tax advisor in Prague. We can assist both natural persons developing a commercial activity in this country and legal entities operating here. We can provide our services to foreign companies operating through branch offices or subsidiaries; some of accounting in Czech Republic include the following:
- • partial or full outsourcing of the accounting department and the organization, monitoring and conducting the accounting and legal documents;
- • preparation of the income statement and notes, as well as the balance sheet;
- • analytical management accounting and advice on general and strategic management (evaluation, management control, audit, review of provisional accounts);
- • consolidation of small groups and the correction and reviewing of every accounting document;
- • implementation of external audits (statutory and contractual), resulting in putting a diagnose on the financial situation of your company;
- • private and legal expertise with regard to the company's accounting, analysis of technical procedures, position of the company in terms of profitability, risk etc.;
- • checking the accounts of inheritance, provisional or custody management and then formatting it;
- • drawing up a periodic layout of accounting journals, financial histories etc.
Important information on the Czech accounting system
Businessmen opening a company in the Czech Republic have to comply with the accounting procedures applicable at a national level. As a member state of the European Union (EU), Czech Republic implemented the accounting procedures used at the level of the Union. With regards to this matter, investors should be aware of the following:
- • the Czech Republic applies the EU 1606/2002 Regulation on the Application of International Financial Standards (IAS);
- • according to the Law on Accountancy, the tax year must have 12 months, but the fiscal period can be different than the calendar year;
- • joint stock companies have to prepare their financial statements for audit if they meet one of the following: the company’s assets have a value of minimum CZK 40 million, the net turnover is of minimum CZK 80 million or if it employs at least 50 employees;
- • in the case of a limited liability company, the audit is necessary when the company satisfies at least 2 of the 3 conditions mentioned above;
- • companies employing at least 50 employees are considered, from an accounting point of view, as medium-sized companies, but they are also defined by assets with a value of CZK 100 – 500 million and a yearly turnover of CZK 500 million – CZK 1 billion.
Businessmen who want to open a company in Czech Republic have to be aware that once the company becomes operational, they have to maintain a set of accounting documents in accordance with the required procedures and that they are also obliged to file the said documents with the financial institutions in this country.
As a general rule, companies in Czech Republic are entitled to use a different financial year (which generally coincides with the calendar year), but for this, such companies must request an approval from the Financial Office. The basic accounting documents a company must submit are the income tax return and the financial statements, which must be presented in a period of three months since the end of the financial year.
In the case the company needs to be audited, then the obligation to submit the required accounting documents can be completed in the first six months after the end of the financial year. In the case of entities that are not subjected to audit, condensed financial notes can be used, while audited companies have to publicly present their annual financial report. The document will be made available by the Commercial Register, in accordance with the regulations of the Articles 21 and 21a of the Act on Accounting. You can talk to our tax advisor in Czech Republic for extra details on this topic.
What are the basic accounting rules in the Czech Republic?
The accounting principles available in the Czech Republic are based on double-entry bookkeeping, which is a system implemented in most of the European countries as well. Although the Czech accounting system is harmonized with the one available in the EU, certain accounting procedure differences can appear, which are given by the country’s national law on the matter.
The Czech accounting system is established under the regulations of the Ministry of Finance and it is determined based on the principles of the National Accounting Standards, which follow the International Financial Standards (IAS) and the International Financial Reporting Standards (IFRS). Companies operating in the Czech Republic should know that they have the following obligations throughout a financial year:
- • the company’s accounting records must be kept in the Czech language;
- • all companies that are registered with the Czech Commercial Register have to maintain double-entry bookkeeping;
- • double-entry bookkeeping is also necessary for entities operating as associations, trade unions, non-profit organizations and others;
- • the annual financial statements must be comprised of a balance sheet, the income statements and the notes of the financial statements;
- • the financial statements must also contain a statement of cash flow in the case of companies that have to conclude an audit;
- • all annual financial statements have to be published in the Commercial Register.
When is the audit necessary in the Czech Republic?
One of the components of the accounting procedures in the Czech Republic is the audit, a process through which the company’s financial documents are verified by certified accountants in Czech Republic in order to determine if the recorded data represents the actual situation of the company. The obligation to conclude an audit is based on the size of the company, which, here, is divided into four categories, that can be presented by our team of accountants in the Czech Republic.
According to the accounting principles available in this country, there are four types of accounting entities: micro companies, small companies, medium-sized companies and large companies. As a general rule, the obligation to bring a certified auditor to verify the company’s documents is imposed to medium-sized and to large companies.
However, this can also be the case of small companies, which are defined by the following criteria: they have assets with a value of CZK 9 - 100 million, their annual turnover ranges from CZK 18 million to CZK 200 million and they employ 10 to 50 employees.
The audit is necessary when at least one of these conditions is met, if the company operates as a joint stock company, or when two conditions are met, in the case in which the business operates as a limited liability company or other corporate entity. Our team of specialists in company formation in the Czech Republic can offer tailored advice on the audit requirements and the accounting principles applicable to a specific company type operating in this country.
What is the audit framework in Czech Republic?
The audit is an important part of the Czech law on accounting procedures, which is regulated by the national law of the country in accordance with the rules of the European Union (EU). EU member states had to transpose in their national accounting law the Directive 2014/56/EU regarding statutory audits and Czech Republic completed this task in 2016, when the Parliament passed the amendments on audit in the Act on Auditors.
Our team of consultants in company formation in Czech Republic can present additional on the obligations that derived since the publication of the new law, but one has to know that this law created the Public Audit Oversight Board, which handles the audit procedures applicable for public entities.
It also stipulates the professional obligations of those performing an audit, who have to be members of the Chamber of Auditors of the Czech Republic (CACR). This is a mandatory step for all audit companies and for statutory auditors and in order to have the right to conclude an audit, any person wishing to have this profession must be licensed by the CACR.
The elements of a balance sheet in Czech Republic
One of the main documents companies have to prepare when requesting accounting services in Czech Republic is the balance sheet. The balance sheet represents a financial document which gives an insight on the company’s assets, liability and equity. This document reveals the current financial situation of a company and it presents details on its liquidity as well as the efficiency in which the company’s money is used.
The assets of a company can refer to money, property, company inventory and others, while liabilities can be represented by any element which represents an expense for a company, such as wages, taxes, rent, loans, utilities. When a company prepares this document, it will show these elements and will present only the current situation. In order to see the full image of the company, the other financial documents must be prepared also.
You can request information on the elements of other financial documents from our team of accountants in Czech Republic, who can help you better understand these papers and who can also represent you in the process of preparing and submitting such papers. You can also rely on our tax advisor in Czech Republic.
The following video offers a short presentation on the main accounting services available in Czech Republic:
Bookkeeping in Czech Republic
Bookkeeping is an important part of accounting, and an expert in the field can deal with these aspects in detail. Regarding bookkeeping tasks and obligations, we present some of them:
- • Cash inflow and outflow involve the recording of financial inflows and outflows in the company. All documents involved in these transactions must be kept in the company.
- • Business transactions are recorded in the ledger.
- • Bills, invoices, purchase orders, and receipts are among the most important documents related to bookkeeping.
- • Bookkeeping software is used by accountants in the Czech Republic for recording financial transactions in the company.
- • With the help of bookkeeping, everything related to financial transactions can be monitored in detail, if all the documents involved are kept.
- • Annual financial statements can also be prepared with the help of bookkeeping.
If you are thinking of hiring the services of accountants in Czech Republic, you can choose our company. As for the costs involved, they are determined according to the size of the company, activities, number of employees, etc. Discuss all aspects with one of our tax advisor in Prague.
Details about payroll in the Czech Republic
Payroll is the service through which the employees' salaries are calculated, following the tax, they are paid. There are a number of factors that underlie payroll services. First of all, accountants in Czech Republic will calculate the taxes related to each individual salary. Secondly, the list with the respective salaries will be sent for approval to the department in charge of this. Finally, the actual payment of salaries and their payment into the employees' accounts is carried out.
An accountant has access to the list of employees, salaries, and bank accounts and can deal with payroll in detail. This service can also be outsourced, but you can discuss more with our specialists.
Human resources services
Also in the area of payroll is the administration of employees in the company. Among the tasks involved are the recruitment of personnel, the preparation of employment contracts, the documents for the dismissal of employees, and medical and maternity leave. If you are also interested in this type of service, you can talk to our accountants in Czech Republic and benefit from personalized offers.
Annual financial statements for Czech companies
Annual financial statements represent a financial report that highlights the financial performance of a company. Thus, the profits and losses of a company can be determined, as well as other financial details. Also, annual financial statements must be presented to the financial authorities for thorough verification.
But the preparation of annual financial statements involves a series of documents, including cash flow statement, balance sheet, notes to financial statement, and profit and loss statement. And to ensure that these documents are correct before submission, we invite you to contact our specialists. Talk to our tax advisor in Prague if your company is established in this city.
Choosing our accountants in the Czech Republic
Instead of an entire accounting department, you can access the services of our company, at advantageous prices. Our accountants are certified, have experience in the field, and can deal with small, medium, or large companies from an accounting point of view.
For complete information about the accounting in Czech Republic, you can contact us. This way, you can benefit from our representation and consultation, lifting up your competitiveness level on the Czech business market. Our tax advisor in Czech Republic can also provide you with assistance if you want to open a company in the Czech Republic.
Meet us in Brno
Call us at +420 721 565 868 to set up an appointment with our specialists in company formation in Brno. Alternatively you can incorporate your company without traveling to Czech Republic.
As an CorpexLab client, you will benefit from the joint expertize of local experts and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Czech Republic.
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