You have decided to start your own business, but you don’t know where to begin or what to expect?
As you know, founding a company involves much more than just filling out forms or choosing a name. It’s a process that requires clear planning, understanding of legal procedures, and careful utilization of all the opportunities provided by the legal system.
In this guide, we will explain the steps and legal requirements involved in setting up a business in Bosnia and Herzegovina and provide advice on how to establish your own limited liability company as efficiently and securely as possible.
Why choose a d.o.o. (LLC) as a legal form?
A limited liability company (d.o.o. – društvo s ograničenom odgovornošću) is the most popular business form in Bosnia and Herzegovina. The main advantage of this legal form lies in its name: limited liability. This means that the founder, as well as each member (owner) of the company, assumes business risks only up to the amount of their initial capital contribution. This provides personal security and protection from larger financial losses.
Furthermore, an LLC offers management flexibility and easy access to investment, which is especially important for startups and smaller entrepreneurs.
Establishing an LLC in Bosnia and Herzegovina
1. Choosing and verifying the company name
First of all, you need to select a name for your new business entity. This is a crucial step because the name must be unique and not similar or identical to existing names or registered trademarks. The entire process of name verification and approval is conducted by the competent registration court. It is advisable to choose several alternative names in case the first one is already taken or deemed unacceptable.
2. Preparing the foundation act or agreement
The key document for any limited liability company is the foundation act. If there are multiple founders, the act is drafted in the form of an agreement.
This document must clearly specify important elements such as:
- Company name
- Business activity
- Seat address
- Founders’ contributions
- Amount and method of the initial capital contribution
- Rights, authorizations and responsibilities of the founders
- Procedures if a founder fails to fulfill an agreement
- Procedures in case of unsuccessful formation
It is recommended to hire a legal expert to ensure the proper drafting of this document, legal compliance, and correct preparation of all accompanying documentation.
3. Paying the initial capital
The minimum initial capital contribution is 1,000 BAM. However, it is advisable to contribute a larger amount to ensure greater financial stability and credibility of the company. The amount is deposited by the founder(s) into a temporary account at a commercial bank in Bosnia and Herzegovina, accompanied by a copy of the founding act. It’s also possible to deposit the amount via an authorized lawyer.
4. Registering the company (at the Court)
After gathering all necessary documents — including the foundation act, proof of deposit of the initial capital, proof of paid court fees, a statement from the tax authority confirming no outstanding debts, notarized signature of the authorized representative, and a notarized statement from the director accepting all responsibilities — you will be required to submit a registration request to the competent municipal court.
Upon review and approval, you will receive a registration decision.
5. Creating a company seal
Once registration is complete, you will be required to produce a company seal with your company’s name at an authorized seal maker.
6. Registration with other authorities
The next step is to obtain all other permits to ensure your business complies with all legal obligations. First, you need proof of the address where the company will operate — this can be a lease agreement or a land registry extract.
Afterward, you can begin registering with other institutions:
- Register in the Tax Administration to obtain a unique identification number (JIB) and VAT number.
- Register with the Institute of Statistics for the purpose of economic activity classification.
- If your activity requires special licenses or permits (e.g., commerce, hospitality, construction), you must obtain these from relevant inspection authorities or ministries.
- Registration with chambers of commerce and associations is optional but can provide additional advantages such as legal support, training, and cooperation.
7. Opening a business bank account
After registering with all relevant authorities, you must open a business bank account at the bank where the initial capital was deposited. Ensure you have proof of the opened account before officially commencing operations.
8. Employee registration
If you plan to hire workers, you are required to register employees with the tax office in the municipality where your company is registered and meet all employment and social security obligations.
9. VAT registration
If your expected annual turnover exceeds the legal threshold (50,000 BAM), you must register the company in the VAT system with the Indirect Taxation Authority.
10. Fiscalization
Regardless of the economic activity, every company is obliged to have a fiscal cash register. After completing all prior registrations, you will be required to select an authorized distributor to implement the fiscal system. They will perform the fiscalization process once you provide them with the request for initial fiscalization, proof of tax registration and VAT registration, and classification certificate.
Fiscalization represents the final formal step in the registration of your business entity.
11. Managing business operations and financial reporting
After completing the registration process for the limited liability company, it is important to familiarize yourself with your ongoing obligations. This includes regularly maintaining accounting records, submitting financial statements, tax returns, and fulfilling other requirements set by authorities.
In accordance with applicable laws, the LLC is obliged to keep proper business books, issue invoices, and maintain records of assets and financial transactions.
We recommend hiring a certified accounting service to ensure compliance with all legal requirements.
12. Maintaining and expanding your business
Following initial formation and start of operations, it is crucial to maintain the legal and financial stability of the company. This involves:
- Conducting regular tax and legal audits: This is to ensure your operations stay compliant with legal changes and requirements.
- Business expansion: If planning to broaden your activities, you need to make appropriate amendments and updates to your registration and obtain necessary permits.
- Adapting to new legal requirements: Laws change frequently, so it’s recommended to have a legal advisor who will monitor such changes and notify you in a timely manner.
Why is it recommended to hire a legal expert?
The process of establishing a company can be complex, as it involves numerous formal and legal requirements. Errors or insufficient knowledge of procedures can lead to delays or even rejection.
Moreover, during the subsequent management of the business, having a legal advisor can help ensure consistent compliance with laws and regulations. This includes protection from legal risks, preparing contracts with partners and employees, resolving disputes, and more.
A professional lawyer will ensure:
- Fast name verification and approval
- Legal review of contracts and documentation
- Compliance with all relevant laws
- Assistance with the registration process
- Maintaining legal security throughout the entire business cycle, etc.
Setting up a business?
If you’re considering founding your own limited liability company in Bosnia and Herzegovina, don’t face these challenges alone. Our team is ready to provide competent legal support, from document preparation, registration procedures, to ongoing legal advice and protection.
Contact us for consultations or more information. Together, we can turn your business ideas into a successful and legally protected business entity.
Conclusion
Establishing a limited liability company in Bosnia and Herzegovina is not complicated if you have legal support and a clear strategy. Properly following the process in accordance with current laws allows you a stable and legally secure business, protecting your personal and business assets.
If you need further information or assistance, we are at your disposal.
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