Starting a Company

When registering a company in the Republic of Srpska, we usually choose between two options: a limited company (Ltd. or d.o.o. in the local language) or a sole proprietorship (S.P.). The differences are large and it is very important to know them.

A limited company (Ltd.) is one of the company types defined by the Law on Business Companies of the Republic of Srpska. In legal terms, it is a legal entity, and the founder’s responsibility for the obligations of the Ltd. is only up to the founding stake. On the other hand, S.P. is an individual who performs one of the entrepreneurial activities defined by the Regulation on Entrepreneurial Activities, published in the “Official Gazette of the Republic of Srpska”. The individual bears the responsibility for his business obligations with his entire property. Other differences are mostly related to administrative procedures, prices and fees, taxes, costs for changing registration, closing costs, etc. Closing costs for the S.P. are significantly smaller than for the Ltd., while the Ltd. has a wider range of activities that can be chosen and performed.

Registration of a Limited Company (Ltd.)

In establishing the limited company there are two scenarios. The simplest form of registration is a situation where one person, as the founder, registers an Ltd. with a founding stake of 1 BAM. If the company has more than one founder, or the founding stake is greater than 1 BAM, there are certain differences in the processing of the necessary documentation. But let’s start in sequence.

The first station is the notary office, where the following documents should be obtained:

• The Foundation Act – in the case of a one-member Ltd. with a stake of 1 BAM, the founder alone, or with the help of a lawyer, makes the Foundation Act, and only the notarial verification of the founder’s signature is required. In the case where the company has more than one founder, it is necessary for the notary to make this document, which then becomes the founding agreement, with all notarial processing. Heading 7a. of the Regulation on the Determination of Notary Fees in the Republic of Srpska (“Official Gazette of the Republic of Srpska”, No. 54/12, 103/13, 6/17 and 73/18) prescribes prices for verifying the signature of the founder. For a legal entity, one-member company with limited liability which pays the minimal founding capital of 1 BAM, notary service of founder signatures verification costs 45 BAM + VAT, while one notary verification of the founder’s signature, an individual in a one-member company with limited liability that pays the minimal founding capital of 1 BAM, costs  3,50 BAM + VAT.
• Decision on the appointing of a person authorized to represent the company – a director – by the same rule, for a one-member limited company the founder composes and signs a document naming the director of the company, and the signature is certified by a notary who charges the price for the signature verification. In the second scenario, the notary is creating and processing this document. Article 32 of the Law on Registration of Business Entities in the Republic of Srpska (“Official Gazette of the Republic of Srpska”, No. 67/13, 15/16 and 84/19) does not prescribe mandatory notarial processing of the documents that are appointing a person authorized to represent the company – the director.
• Statement of acceptance of the director duties – certified by a notary or in the respective municipality, prepared and processed by a notary for a company with more than one member or a founding stake greater than 1 BAM. Article 32 of the Law on Registration of Business Entities in the Republic of Srpska (“Official Gazette of the Republic of Srpska”, No. 67/13, 15/16 and 84/19) does not prescribe mandatory notarial processing of the statement of acceptance of the director duties.
• OP form – the form of certified signatures of individuals authorized for representation, certified by a notary or in the respective municipality.

Once all the above mentioned documents have been collected and certified by a notary (or municipality, in some cases), the following must be obtained:

• Certified copies of founders and directors ID cards – certified by the municipality or by a notary. Heading No. 8 of the Regulation on the Determination of Notary Fees in the Republic of Srpska prescribes a compensation for a certified photocopy of a document (ID, etc.) in the amount of 5 BAM + VAT for the first page and 2,50 BAM + VAT for each subsequent page, with a fee of 2 BAM per sheet / stamp,
• Residence certificate for founder and director – obtained from the CIPS, with a fee of 10 BAM per certificate,
• Tax certificate for the founder/s – proof that the founder/s have no tax debts; it is obtained from the Tax Administration, with a fee of 10 BAM per certificate
• Bank confirmation on the founding deposit payment – payment of the founding deposit is made on a temporary account, and in the case when a company has more than one founder, the amount of deposit parts is defined in advance by the company founding agreement,
• Business Registration Application – Downloaded from APIF’s website and filled in electronically.

Once all these documents have been collected, they must be submitted to the Intermediary Agency for IT and financial services (APIF) that will obtain unique identification number (JIB) of the new business entity from the Tax Administration. All documents will then be forwarded to the District Commercial Court. When submitting the application, there is a fee of 35 BAM to be payed to the APIF.

Within two days upon receiving the documentation from the APIF, the District Commercial Court is obliged to make a decision on the company registration in the court register and, if everything is in order, it will issue the registration decision.

After obtaining the registration decision from the District Commercial Court, the newly established limited company receives a notification on the classification of business entities by activities, from the APIF.

On this occasion, a fee must be paid for the publication of the registration decision in the “Official Gazette” (usually between 20 and 50 BAM).

After receiving the registration decision from the court, a company stamp can be made, and then a request for the obtained JIB certificate is submitted to the Tax Administration.

The last step is happening at the bank. All the above mentioned documents must be submitted to the bank for opening a bank account. Also, a request for transferring the founding capital to the new account of the company must be submitted.

It should also be mentioned that the above scenario is primarily intended for those who are planning to start their own business for the first time, and for that reason it is somewhat simplified. Other scenarios are possible, such as, for example, the one in which the company founders give away a property as a founding capital, or the other in which a company is automatically estimated to have more than 50.000 BAM in annual income, and thus it is obliged to enter the VAT system.

Sole Proprietor Registration (S.P.)

The decision on a sole proprietor registration is made by the department of economy of the city or municipality, the so-called registration authority, based on the following documentation:

• Completed SP-1 Entrepreneur Registration Form – can be obtained in the City Hall or downloaded electronically
• Certified copy of an ID card – verified in the municipality, with a fee of 2 BAM
• Certificate from the Basic Court – proving that the individual has not been pronounced a final ban on performing the requested activity
• Certificate from the Tax Administration of the Republic of Srpska – proving that the individual has no outstanding tax liabilities
• Founding contract for the establishment of a partnership business – only if the founders are two or more individuals, and it is drafted and certified by a notary, with notarial processing
• Proof of the registration fee payment – up to a maximum of 30 BAM.

After submitting these documents, the registration authority is obliged to issue the registration decision within two days, if the documentation is valid.

Upon receipt of the decision, the official seal can be made, which costs between 20 and 50 BAM.

Within five days from the day of issuing the registration decision, the entrepreneur is obliged to file the taxpayer and / or the contribution payment application to the Tax Administration, and on that occasion it is necessary to submit:

• Completed P2 application form – can be obtained from the Tax Administration office or downloaded electronically
• The decision on a sole proprietor registration
• Certified copy of an ID card
• Accounting Services Agreement – if the entrepreneur does not keep the business books by himself.
• Again, the last step is at the bank. The bank account is opened on the basis of the following documents:
• The decision on a sole proprietor registration
• Card of deposited signatures of persons authorized to sign an order – obtained from the bank
• Taxpayer registration certificate

Whether you decide to start an S.P. or a limited company, if you complete all the above steps correctly, the process of registering your business is complete. After going through the administrative procedure, you are left with fiscalization and VAT registration, in case it is estimated that the business will produce more than 50.000 BAM of profit per year.

And, of course, it is mandatory that every company has an official address at which it will be registered.