Czech accounting basics: double entry, tax records and the year-end set

A foreign founder's first meeting with a Czech accountant tends to hold one surprise. The books are kept in Czech, to Czech rules, and your home-country system will not simply be adapted. Accounting here is a legal discipline with its own statute, categories and vocabulary. Knowing the outline beforehand makes the meeting shorter and the invoice smaller.

Czech law offers two broad ways of keeping a business's records. Which one you get is partly your choice and partly the law's.

Full accounting or tax records

Full accounting (účetnictví) is governed by the Accounting Act (no. 563/1991 Coll.) and its implementing decrees. It is double-entry bookkeeping: every transaction lands in at least two accounts, assets and liabilities appear on a balance sheet, and income and costs form a profit and loss account. Companies such as the s.r.o. and a.s. must use it, as must some other entities and sole traders in defined circumstances. Others adopt it voluntarily.

Tax records (daňová evidence) are the simpler option for individuals who are not obliged to keep full accounts. They track income and expenses, plus assets and receivables as the tax rules require, and they are enough to calculate the income tax base. They produce no balance sheet. The Income Tax Act (586/1992 Coll.) says what they must contain. Our guide to becoming an OSVČ shows where this fits.

A sole trader using flat-rate expenses may keep an even lighter record of income. The choice is not always free, so confirm which applies to you before the first invoice goes out.

How double entry works

You do not need to become a bookkeeper to follow the structure. A company works from a chart of accounts, usually built on the standard Czech one, which groups accounts by type: fixed assets, stock, receivables and payables, bank accounts, equity, costs and revenues. Each transaction gets a debit and a credit. The accountant draws up a trial balance and then the statements.

Everything rests on source documents. An invoice, a bank statement, a contract, a payroll sheet: each entry needs one, and the Accounting Act lists what a proper accounting document contains. An expense without paper behind it is an expense an inspector can disallow.

Size categories

The Act sorts businesses into micro, small, medium and large entities using criteria such as total assets, net turnover and average headcount. A business moves into a category by meeting a set number of those criteria over consecutive periods. The category decides how detailed the statements are, whether the notes can be shortened, whether a management report is needed and, through a related rule, whether an audit is required. We cover the last point in audit requirements.

The thresholds sit in the Act and have been adjusted in recent years. Use the current figures from the official source (as of 2026; check the official source), not the ones in last year's blog post.

Year-end statements

The year-end set, the účetní závěrka, normally has three parts: the balance sheet (rozvaha), the profit and loss account (výkaz zisku a ztráty) and the notes (příloha). Micro entities use shorter formats, while larger ones add a cash flow statement and a statement of changes in equity. The statements are prepared under Czech accounting standards or, for certain entities, international ones.

Owners or the general meeting approve them, and companies then file them in the commercial register. That step has its own article: annual accounts filing.

The accounting period is usually the calendar year. A different 12-month financial year is possible, but it has to be justified and reported to the tax office, and it moves your deadlines, so decide early.

Records, language and retention

Records must be kept in Czech, although you can keep supplementary versions in another language alongside. Electronic records are allowed if they stay readable and protected against loss. Retention periods differ by document type: statements and ledgers are kept longer than routine supporting papers, and tax law has its own limitation periods, which can be longer still. Look up the current periods with the Financial Administration or your accountant.

The business stays responsible for its books even when an outside accountant keeps them. They are yours, and you should always be able to get them back if the relationship ends.

What your accountant needs from you

Accounting is a collaboration, and the data flows one way. The accountant cannot book what they have not seen, so the quality of the books is the quality of your document habit. The documents are not mysterious: every purchase invoice and receipt, every sales invoice, bank statements, contracts that create obligations, payroll records, and the minutes of significant decisions. If you can say on which day each month they reach the accountant, you have solved most late-filing risk.

A tip from the other side of the desk: send documents in the form the accountant prefers, named and dated, with a one-line note on anything unusual. A payment of unclear purpose sitting in a bank statement costs more to explain in March than it does to label in May. Treat the accountant's questions as a mirror of what an inspector would ask.

Software and the accountant

Most small companies use accounting software with Czech localisation, VAT handling and a connection to the tax portal. If you are a VAT payer, check that it can produce the control statement format described in how to file a VAT return.

A good accountant explains choices in plain terms, quotes in writing and tells you what papers they need and when. Ask what the fee covers: monthly bookkeeping, payroll, VAT returns, the annual return, the year-end statements. Late documents from the client are the most common cause of late filings, which is awkward for a profession that gets blamed for them.

Before the first bookkeeping month, write a one-page note: which system you use, which software, who keeps the documents, the day each month receipts go to the accountant, and the year-end date. Send it to the accountant and ask for corrections. A clear process saves more than a cheap fee.

Where to check

The Accounting Act and its implementing decrees are the source for double-entry accounting, the Income Tax Act for tax records, and the Financial Administration explains the filing side. For the size categories and retention periods, use the current text and the accountant's confirmation.

Frequently asked questions

Must records be in Czech?

Yes, though you can keep supplementary versions in another language alongside. Electronic records are allowed if they stay readable and protected against loss.

Do small businesses need a balance sheet?

Those using full accounting do. Micro entities use shorter formats, and sole traders using tax records produce no balance sheet.

Can I choose a different financial year?

A different 12-month year is possible, but it has to be justified and reported to the tax office, and it moves your deadlines.

Where do the size categories come from?

The Accounting Act sorts businesses into micro, small, medium and large using criteria such as total assets, net turnover and average headcount.

This is a general explainer, not legal or tax advice. Rules change; check the official source or a licensed adviser.