Entrepreneurs in the Czech Republic did not seem to worry about the future of their businesses despite the emerging impacts of the economic crunch. Czechs formed more than 26,000 new companies last year, about 3,600 more than in 2007, according to data provided by court registers.

“The limited liability company was the most frequent form of entity with 24,242 such companies formed last year, 4,450 more than in 2007. Entrepreneurs were less interested in joint stock companies, said Josef Jaroš, director of Smart Office & Companies, which released the data.

There was a drop of 911 joint stock companies registered last year compared to 2007, but it was more than in 2006.

Joint stock companies = more responsibility

Experts say the popularity of limited liability companies is growing as foreign investors prefer this kind of entity.

“The Czech form of the limited liability company is similar to legal systems foreign investors know from their countries. Moreover, this form of business is easier and more favourable to form and operate due to low demands on administration and costs,” said Michal Hrnčíř of the advocacy group Ambruz & Dark.

Whereas with joint stock companies, their founders must fulfill more requirements.

Ready-made and European

Now a novelty among popular business entities are companies defined as ES – European Companies.

“The Czech Republic has the most ESs registered in the EU. In 2008, 97 European Companies were formed in the Czech Republic, while only a little over 100 of these entities were registered in the whole of Europe at the end of 2007,” said Jaroš.

He says the European companies are increasingly popular not only because of advantages they get as EU members, such as the possibility to move the company’s seat anywhere within the EU, but also because of their easily accessible ready-made form. These ready made businesses are becoming more popular among entrepreneurs.

The main advantage of the ESs is the possibility to move the company’s seat anywhere within the EU without having to close down the business. This enables them to select the country with the most favourable tax or legal system.

Instead of collecting the necessary documents from authorities, entrepreneurs can simply buy a registered ready-made firm through a company dealing with this kind of business.

“According to our data, nearly 10% of newly formed businesses were ready-made companies,” said Jaroš. More than ten companies in the Czech Republic are involved in this kind of business. They promise to save clients’ time and money.