Nature of business
The decision depends on planned business activities.
The amount of available capital
When establishing legal entities of certain types, the founder of a legal entity must have certain amount of the authorised capital.
Taxes
The amount of taxes directly depends on the form of activities a person has chosen.
The degree of personal liability
If a person intends to limit his liability for business failures with his personal or family property, he or she should choose a legal entity of limited civil liability.
The number of founders
If there are several or more interested persons wishing to jointly conduct business activities, they should establish a legal entity for these business activities.
The degree of complexity of business activities
For example, conducting individual activities is easier than having a company, because there is no management structure or need to perform other formalities necessary for legal entities.
Types of companies available in Croatia
A d.o.o. is the equivalent of a limited liability company, and is the most common business in Croatia. A d.o.o. can be owned by one or multiple persons. To set up the company, 20.000 HRK in minimum share capital requirement.
A j.d.o.o. is similar to a d.o.o. and typically used for companies with limited share capital. To set up the company, 10 HRK in minimum share capital requirement.
An obrt is not a company in the traditional sense and is instead connected to a specific person and the type of “craft” in which they specialize. For example, locksmiths, hairstylists, and carpenters would all fall into this category.
An udruga is for a non-profit organization, whose primary function is to “protect their interests or for the protection of human rights and freedoms, as well as environmental, humanitarian, informational, cultural, national, pro-natalist, educational, social, professional, sporting, technical, medical, scientific or other beliefs and goals”. To start an udruga, you must have a minimum of 3 persons.
| Limited liability company | Simple limited liability company | Sole trader/craft | NGO- Association | |
|---|---|---|---|---|
| Number of persons required for incorporation | 1+ | 1-5 | 1 | 3 |
| Non-residents may incorporate | + | + | + | + |
| The person incorporating are liable with own property | - | - | + | - |
| Subject to Personal Income Tax and MSSIC | - | - | + | - |
| Profit distribution | A part is paid as dividends | A part is paid as dividends | Income | - |
| Management | Shareholders’ meeting and the board | Shareholders’ meeting and the board | The owner takes decisions unilaterally | Shareholders’ (general assembly) meeting and presidency body |
| Notary fee and state fee for registration | 400 EUR | 150 EUR | 50,00 EUR | 5 EUR |
Good Business Tip #4: don’t guess, better test
Info that was useful to others:
There are lots of different regulations depending on business sectors. When starting a business you need to clarify what permits and licenses you need to acquire for your business field
There are professions that are regulated by state and in order to exercise them, one is required to attain professional recognition by the state. It is a procedure, upon which a state entitles a person to engage in a regulated professional activity in its territory, considering holding of specific professional qualifications acquired in the other state.
Register your company and its name at the Center of Registers. You can do it in only three days’ time and by email with such ease that your company will start operating instantly!
Employment procedure must be done according to the labour code. You need to take into account:
- Types of employment contracts
- Documents required for employment
- Content of an employment contract
- Termination/expiry of employment contract
- Working time (balance between rest time and working time)
- Wage (at least minimum wage)
Other relevant points that you can find in the labour code.