Decided to go self-employed in Czechia? You are now your own boss and also your own bookkeeper, salesperson and administrator. The first year is the hardest and the one that matters most: the habits you form now will follow you for years. This guide covers what to set up, where the money goes, and the traps that catch nearly everyone.
Before you start: the first few days
A handful of administrative steps come before the first invoice. Most of them fit into a week.
1. The trade licence
You register the živnost (trade licence) at the trade licensing office or at a CzechPoint counter. For most freelancers the unqualified trade (živnost volná) is enough. The single registration form, JRF, doubles as your registration with the tax office, ČSSZ (social security) and your health insurer — you do not have to visit four institutions separately.
2. A bank account
The law does not require a separate business account, but it is strongly worth having one:
- business and personal transactions stay apart
- tax records get simpler — you are not filtering grocery shopping out of a statement
- a business account looks better on an invoice
- if the tax office ever reviews your accounts, your private spending is not part of the conversation
Several banks offer a business account free or for a token fee.
3. The data box
Since 2023 every sole trader has a datová schránka (data box) set up by law. It is how you communicate with the tax office, ČSSZ and other authorities. If one has not appeared for you automatically, ask at a CzechPoint. Having a data box means you are obliged to file your tax return electronically — which is mostly an advantage, because the electronic deadline is a month later.
4. Tools for invoicing and records
From day one you need a way to issue invoices and record income and expenses. A spreadsheet is a poor choice: it invites errors, has no reliable numbering, and cannot produce QR payment codes or the XML exports the tax authority wants.
Taxorio's FREE plan issues 2 invoices a month, which is enough to start with. When you outgrow it, PRO costs 69 Kč a month and removes the invoice limit. From the beginning you get automatic numbering, ARES lookup of client details, QR payment codes and AI document scanning; the XML exports for the Financial Administration come with PRO.
Money: where beginners go wrong
Mistake 1: not putting anything aside
This is the common one and the painful one. You are paid 50 000 Kč, you spend 50 000 Kč, and in March you discover you owe the tax office, ČSSZ and your health insurer something in the region of 80 000 Kč between them.
The rule is simple: move 30–40 % of every payment you receive into a savings account, or at minimum a separate account you do not touch. That is what pays:
- income tax — 15 % of the tax base, after deductions and reliefs
- social insurance — 29.2 % of the assessment base, which since 2024 is 55 % of the tax base
- health insurance — 13.5 % of the assessment base, which is 50 % of the tax base
To make it concrete: on 600 000 Kč of annual income with 60 % flat-rate expenses, the tax base is 240 000 Kč. Income tax after the basic taxpayer relief comes to roughly 5 160 Kč. Social and health contributions calculated from that base would fall below the statutory minimums, so you pay the minimums instead. For social insurance the amount prescribed for 2026 is 64 350 Kč (5 720 Kč a month from January to June, 5 005 Kč from July, after amendment No. 90/2026 Coll.); ČSSZ settles the 4 290 Kč overpaid in the first half of the year against your statement, or refunds it on request, which leaves 60 060 Kč — the equivalent of 5 005 Kč a month. Health insurance is 39 672 Kč a year (3 306 Kč a month). Together, once the overpayment is settled, that is about 104 892 Kč, roughly 17.5 % of income. The percentage falls as income rises, until the calculated contributions overtake the minimums. The example uses the standard minimum: if you started your main activity as a new self-employed person (after 2024, with no self-employment in the preceding years), you pay no social insurance advances in the year you start or the following year, and the annual premium is based on the reduced minimum of 25 % of the average wage — about 42 900 Kč for the whole of 2026 (12 × 3 575 Kč), paid in one go after you file the přehled. With the minimum health insurance that comes to roughly 82 600 Kč, so set money aside for the social insurance balance as you go. You can try your own figures in the income tax calculator and the social and health advances calculator.
Mistake 2: ignoring the monthly advances
In your first year you pay the minimum advances, because there is no previous year's return to calculate from — unless the new-starter exemption described below applies to you. For 2026 the minimums are:
- Social insurance: 5 005 Kč a month. Amendment No. 90/2026 Coll. lowered the minimum retroactively for the whole of 2026 — from January to June 2026 the amount actually paid was 5 720 Kč a month, and the overpayment is settled. New sole traders: if you started after 31 December 2024 and did not carry on self-employment in the previous 5 calendar years, your social advance is 0 Kč in the year you start and in the immediately following calendar year (for both main and side activity); the premium for those years is paid in one sum after you file the přehled (within 8 days of filing), so put money aside for it. If you started your main self-employed activity on or after 1 January 2024 and had not carried it on in the preceding 20 years, the reduced assessment base for new sole traders also applies to you (25 % of the average wage instead of 35 %, a minimum advance of 3 575 Kč a month) in the year you start and the two calendar years after it (§ 14(6) of Act No. 589/1992 Coll.) — it is used in the annual settlement, for advances in the third year, and straight away for people who were last self-employed 5–20 years ago.
- Health insurance: 3 306 Kč a month from the month you start a main activity (no relief for new sole traders).
These are monthly obligations (social insurance only if your advance is not zero). Social insurance is paid to the ČSSZ account by the last day of the calendar month the advance relates to; health insurance by the 8th day of the following month. Late payment carries a penalty.
If the business is a secondary activity — you also have a job or you are studying — you pay social insurance only if your tax base exceeds the decisive amount (117 521 Kč for 2026); the premium is set in the přehled and later advances follow your last přehled (a new sole trader with no self-employment in the previous 5 years has 0 Kč advances in the start year and the following year). The minimum assessment base for health insurance does not apply to you, and since 2026 you do not pay health insurance advances at all (in the first or any later year) — the premium is paid in one sum after the přehled. You must notify ČSSZ that the activity is secondary, and confirm the health insurance side with your insurer, because it depends on what your main activity is.
Mistake 3: mixing personal and business money
The separate account is only the start. The deeper problems:
- personal spending going out of the business account
- invoice payments coming into the personal one
- no idea which part of the balance is really yours
Use the business account only for business, and once a month transfer yourself a "salary" — the amount you know you can spend once tax and insurance money is set aside.
Mistake 4: no reserve
Self-employment comes without paid holiday, without sick pay unless you take out voluntary sickness insurance, and without severance. You want a cushion covering at least three months of fixed costs — rent, insurance, food, repayments. Six months is better.
In the first year, when income is irregular by nature, the reserve is what keeps a slow month from becoming a crisis. Build it as early as you can, ideally before you start.
Administration: what to know from day one
Issuing invoices correctly
Every invoice has to carry the details the law requires. A faulty invoice can be sent back by the client and makes a mess of your records. The basics:
- your name, IČO (business ID) and address
- the customer's name and their IČO, if they are in business
- an invoice number, unique and part of a continuous series
- the date of issue and the due date
- a description of the goods or services delivered
- the total amount
- the payment method and bank details
In Taxorio most of that is handled for you: your details are filled in, the invoice number is assigned, a QR payment code is added once QR payments are switched on, and entering a client's IČO pulls their details from ARES. Three PDF templates are available — Aurora, Modern and Classic.
Income and expense records
As a sole trader you keep tax records (daňová evidence, once called simple bookkeeping) under § 7b of the Income Tax Act. They consist of:
- income — every payment received, with date, amount and description
- expenses — every business expense, with its document
- assets — if you own tangible assets worth more than 80 000 Kč
- receivables and payables — unpaid invoices, issued and received
On flat-rate expenses you keep only the record of income and receivables. Expenses need not be recorded, though keeping the documents is sensible.
Archiving
Tax records have to be kept for as long as the tax can still be assessed — three years after the filing deadline under § 148 of the Tax Code, though the period can be extended (up to ten years). Tax documents for VAT purposes have a much longer period: ten years from the end of the tax period in which the supply took place (§ 35 of the VAT Act). Keeping everything for ten years is the simplest rule to follow.
Electronic archiving is allowed: a scan or a photograph is sufficient if it is legible and faithfully reproduces the original.
Month by month
Months 1–3: getting going
The hard part is finding the first clients and settling into a rhythm. On the administrative side:
- set up your invoicing tool and issue the first invoice
- set up expense records — scan documents as they arrive, not once a month
- pay the first insurance advances
- decide what share of income you put aside; 35 % is a reasonable starting point
Months 4–6: steadying
Income is becoming regular and so is the routine. Focus on:
- checking every invoice has been paid on time, and chasing the ones that have not, immediately
- revisiting your rates — did you price the early work too low?
- watching turnover: are you approaching 2 000 000 Kč, the threshold for compulsory VAT registration?
- extending your trade licence if you are moving into new areas
Months 7–9: taking stock
Half a year in, it is worth a proper look:
- compare income and expenses — are you actually in profit?
- estimate how the year will end
- start thinking about flat-rate versus actual expenses
- consider whether you want a tax adviser; 3 000–8 000 Kč for preparing a return usually pays for itself
Months 10–12: preparing for the year end
The end of the year brings a stack of obligations, set out in detail in our year-end checklist. The essentials:
- review every invoice and expense for the year
- track down missing documents
- decide on any large purchases
- gather what you need for the return
The part nobody mentions
Plenty is written about money and paperwork; less about how demanding the first year is mentally. A few things to expect.
Uncertain income
There is no regular payslip. Some months are excellent, some are thin, and that is normal. The reserve and a long view are what get you through — do not judge the business on one weak month.
Isolation
Working from home can be lonely. Coworking, standing meet-ups with other freelancers, and online communities all help more than they sound like they would.
Discipline
With nobody checking, work is easy to postpone. Build a routine: fixed hours, a separate working space, real breaks. Do the admin — invoicing, records — continuously rather than in one dreadful session.
Impostor syndrome
A lot of new sole traders feel they cannot possibly charge what they are charging. Your price covers not only the hours but your experience, your overheads, your insurance, your tax and your risk. If the client agreed to it, it was the right price.
Eight things experienced sole traders tell beginners
- Invoice immediately. The moment the work is delivered, issue the invoice.
- Automate the repetitive parts. Default invoice items, price templates, standing expense categories. The fewer decisions a routine task needs, the better.
- Scan documents on the spot. A receipt left in a wallet fades within a month. Photograph it with your phone as you get it.
- Watch cash flow, not just profit. A million in issued invoices is not money until somebody pays. The dashboard shows what is still outstanding.
- Learn the basics. Read up on tax records, understand the difference between income and profit, learn how the advances are calculated. A few hours of reading saves thousands of crowns.
- Have a tax adviser's number. Even if you file the first return yourself, you want a contact for the first complicated situation.
- Write things down. Even an email confirming scope and price beats a verbal agreement. For larger projects, insist on a contract.
- Keep building the cushion. In the first year, put aside everything you can. The reserve is your insurance against everything you did not plan for.
The first year is demanding and entirely manageable. Preparation, discipline with the paperwork and the right tools are most of it. Taxorio handles the invoicing and the records from day one so you can spend your attention on the work itself — start on FREE, which costs nothing, and move to PRO at 69 Kč a month when you outgrow it.
Taxorio scope: Taxorio provides invoicing and income/expense records for Czech sole traders. It is not full accounting or personalised tax advice. For an unsupported or unusual case, verify the treatment with a Czech accountant or tax adviser before filing.