Types of Business Entities in Serbia

Types of business entities in Serbia offer various options for those looking to establish a presence in this welcoming business environment. Serbia’s economic development and favorable business conditions make it an ideal place for starting new ventures. This guide provides a detailed review of the different types of business entities you can establish in Serbia, facilitating your choice of the most suitable legal form for your operations. 

The most common types of business entities in Serbia are: 

  • Sole Proprietorship – Flat Rate (paušalac): This entity type is straightforward to register and manage, making it ideal for small businesses and individuals. These entrepreneurs pay a fixed monthly tax predetermined for the whole year, which simplifies tax compliance and financial planning. 
  • Sole Proprietorship – Regular Accounting (preduzetnik): Like the flat-rate sole proprietorship, taxes are not paid on a flat-rate basis; instead, taxes are based on the difference between income and expenses (profit). 
  • Limited Liability Company (DOO): Requires minimal founding capital, provides limited liability to owners, and is suitable for small to medium-sized enterprises. 
  • Joint Stock Company (AD): Intended for larger enterprises with a minimum founding capital of 25,000 EUR, allowing the issuance of shares and the attraction of investors. 
  • Limited Partnership (KD): Combines elements of DOO and general partnership, where general partners have unlimited liability and limited partners have liability restricted to their investment. 
  • General Partnership (OD): All partners have unlimited liability, making it less popular among entrepreneurs who wish to limit their risk. 

While these are the basic types of business entities in Serbia, we will now focus on comparing the three most common types: the flat-rate sole proprietor (paušalac), the sole proprietor who maintains regular accounts (preduzetnik), and the limited liability company (DOO). 

Each of these forms has its specific advantages and requirements that may influence your choice depending on your business needs and goals. 

Flat-rate Sole Proprietor (paušalac): Pays tax based on a predetermined fixed amount, which depends on the activity and business zone. This option is popular among small entrepreneurs because it does not require detailed business documentation and accounting. Advantages of flat-rate entrepreneurship include simpler administration and clear tax obligations, making it ideal for those starting their business or operating on a smaller scale. 

Sole Proprietor with Regular Accounting (preduzetnik): Unlike the flat-rate sole proprietor, this type of entrepreneur must maintain complete accounting records and pay income tax on profits. This form is suitable for entrepreneurs with larger business volumes or those whose financial activities are more complex. Maintaining regular books allows for a more detailed financial overview and can help in more effective business management, though it requires more time and resources for administration. 

Limited Liability Company (DOO): This legal entity allows its owners to limit their liability to the amount of capital invested. This form is ideal for larger business ventures and for entrepreneurs who want to protect their personal assets. DOO requires a certain amount of founding capital and is subject to more stringent regulatory requirements, including annual financial statements and audits depending on the size of the company. 

Each type of business entity offers unique benefits and poses different challenges, impacting the decision based on the business’s specific needs. 

Registration and Costs: 

Sole Proprietorship (paušalac) and Regular Accounting (preduzetnik): Both types of sole proprietorship involve simpler and lower-cost registration processes, making them accessible options for individuals and small business owners who wish to start quickly and with minimal initial investment. 

Limited Liability Company (DOO): Registering a DOO involves more complex procedures and slightly higher costs. The complexity is due to the legal requirements for documentation and the minimum capital required to establish a DOO. 


Sole Proprietorship (paušalac) and Regular Accounting (preduzetnik): Both types of sole proprietors are personally liable for business obligations, meaning their personal assets could be at risk if the business incurs debt or legal issues. 

DOO: Offers limited liability protection. This means the personal assets of the owners are protected, and liability is confined to the business assets or the amount initially invested in the company. 


Paušalac: Does not require maintaining formal accounting books or hiring a licensed accountant, which reduces administrative burdens and costs. 

Regular Accounting Sole Proprietor (preduzetnik) and DOO: Both require maintaining detailed financial records and employing a licensed accountant to ensure compliance with Serbian accounting standards and tax regulations. 

Closing the Business: 

Sole Proprietorship (paušalac) and Regular Accounting (preduzetnik): The process to dissolve a sole proprietorship is straightforward and quick, providing an easy exit strategy with minimal bureaucratic hurdles. 

DOO: Dissolving a DOO is more complex, requiring several months to complete. The process involves more administrative steps, potentially including audits and legal filings, resulting in higher costs and longer durations. 

To sum up:  

  • Simplicity and flexibility: The flat-rate sole proprietor offers the greatest flexibility and the least bureaucratic procedures. Sole proprietors with regular accounting and DOO offer greater control and professionalism in business operations but require more administrative work. 
  • Liability: Flat-rate sole proprietors and those with regular accounting personally account for business liabilities, whereas in a DOO, liability is limited to the amount of invested capital. 
  • Tax policy: Flat-rate sole proprietors usually have lower tax liabilities, while sole proprietors with regular accounting and DOO pay corporate income tax, which can be favorable depending on business circumstances. 

Choosing from types of business entities in Serbia for your business should be carefully considered based on your specific needs, business scale, and long-term plans. Think about your business’s long-term goals and the level of risk you are willing to accept. Regardless of the chosen type, it is important to consult with legal and financial advisors to ensure your business complies with all applicable laws and regulations. 

If you’re considering starting a business in Serbia and need guidance on choosing the right business entity, we at Virtual Office Serbia are here to help. Our team offers expert advice and support to streamline the process and ensure that your business meets all regulatory requirements. Contact us today to learn how we can assist you in setting up your business in Serbia efficiently and effectively. 

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