Written for expat.rs by Legal Advisor Nada Živanovi?, Dankovi?-Jagodnik-Tomi? Law Office

Foreign citizens wanting to setup their business operations in Serbia can, besides establishing companies, also perform economic activities as entrepreneurs.

An entrepreneur is a natural person registered in the Serbian Business Register Agency who, for the purpose of acquiring profit, performs all activities accepted by Law. Every natural person with the ability to work can be the founder of an enterprise.  

The process of setting up an entrepreneurial business is quite simple. The first step is submitting a registration form to the Agency. Along with the registration form, one has to submit proof of identity for the founder (copy of passport or personal ID) as well as the proof of paid taxes for the procedure. There is no minimum founding capital prescribed by the Law nor by the Decision on Establishing a Company, as is the case when establishing a limited liability company.

The Agency has an obligation to register the entrepreneur within five days i.e. it has to issue the Certificate of Establishment. After receiving the certificate from the Agency, the entrepreneur is obligated to make a stamp and then file an application with the tax authorities for a tax identification number and  open a bank account. In addition, the entrepreneur must file a tax application, file for communal taxes and file an application for the city’s construction land.

After the procedure is finalized, the entrepreneur can begin with his/her chosen activity

An entrepreneurial establishment does not have legal person status; it does not posess legal subjectivity rather it constitutes a unity with the entrepreneur.
In regards to a different type of activity chosen by the entrepreneur, his establishment can be orientated towards providing different kinds of services: caterer, craft, agencies, bureau etc….

The entrepreneurial establishment more often has fewer employees than a Limited Liability Company.     

This type of individual legal form of business is wide spread. Benefits of  organizing one’s business activities in such manner include low costs of business, simplicity of organization (there are no assemblies or special form of decision making), flexibility (it can be easily adapted in regards to changed circumstances based only on the decision of the entrepreneur).
However there are significant shortcomings: liability (entrepreneur is liable with all of his assets for any obligations arising from his activities; there are no options to limit this liability) and financing (it depends on self income).

Activity of entrepreneur can be terminated:

    •    Voluntarily – notice of withdrawal (filing application for cancellation with the Agency)
    •    Forced-liquidation (in event of entrepreneur’s death, loss of ability to work, non-conduction of business for longer than one year, a ban on conducting business activity, etc.) or in the event of  bankruptcy (if insolvency occurs)

Taking into consideration all of the above mentioned, this form of conducting business is convenient for people who would like to practice retail, providing services etc; but if the intention is to do more demanding business activities, then a limited liability company is a much better solution.

Hopefully the content of this text made the subject of entrepreneurs in our legal system easier to comprehend.