Business start-up basics!

Enough is enough with the personal posts I have been writing on my blog. I have been talking too much about feelings, and not enough about business... I guess for me the two go hand in hand.. you see... there I go again :)

SO I promised a Serbia start up talk for all those who want to start a business in Serbia (I know that this post might be read by no-one)

SO in order to cover this is an orderly way, I divided the main areas to discus in a few sections

1. Financing and accounting

2. Preparations and time frame

3 Ownership responsibilities

4 Staff

5.Distributors and suppliers

Lets go through it one by one.

1. Financing and Accounting

Financing your business in Serbia is of course the first thing you need to think about. You need money to make money. The business in Serbia was started with around 15,000 euros. This includes the paperwork and administration fees, stocking the bar, stocking the bike shop, building materials, promotion and marketing. We saved up all our money for around one year to have the starting funds. I know many businesses that started here for way less, and some that started for way more. Calculating your costs is a lengthy procedure, you can do this by simply asking other business owners for their costs, checking product costs online and adding the amount. However it cannot be accurate because of fluctuations in the market. You also need to have a buffer of one or two months rent and bills prepared for the initial phases of the business when it is just starting to get off the ground.

What licences do you need to start your business? The papers for starting a business in Serbia are fairly simple, but you cannot do them alone, you will need the help of an accountant (especially if you do not speak Serbian very well) A lot of the running around to get different papers can be done by you, but you will need the help of your accountant to know which papers you need and to guide you through the process. I really depend on my accountant when I need help to get any kind of paper associated with CE, he usually knows which office to go to (because there are lots of different ones). If you feel confused with the business structure here, the best thing to do is to ask lots of questions... but to the right people. If you know someone who already has a business like the one you want to set up, or at least some knowledge about it, be sure to ask them for their advice about which accountant you should choose, someone here always knows someone and the connections between people are extremely important.

Also your accountant can give you advice on which kind of business you should set up, there are two main structures for the tax system of businesses here

1. D.O.O is for a bigger company, this because the taxation system is much stronger, it also allows for export and import (we set the bike shop up as a D.O.O because we were importing parts, not because we were making a lot of money) The cost for opening this kind of business is 1-2 hundred euros, If I remember right.

2. Preduzetnik: this is for entrepreneurial businesses, with one main owner, you don't get heavily taxed until you reach over 40.000 euros a year in profit (that means after you take out salaries, your monthly wage and company expenses) You can see that for a small business this is impossible, so its better to be a Preduzetnik. As soon as you are extremely successful and get over that amount (we haven't yet) you can transfer your company to a D.O.O

The taxes for opening a Preduzetnik are around 3-4 hundred euros, if I remember correctly, it is not more.

Can foreigners take out a business loan? As far as I know you cannot take out a business loan without having sufficient credit in the country, meaning owning property or having some security. You would need to ask for this at the bank, I am not entirely sure.

Visa? You need to set up the company before you ask for a business Visa, as you need the starting papers to fill in your application. Most of the paperwork here in Serbia can seem kind of confusing in the way that you don't know what comes first, the cart and the horse trade positions regularly. For instance shouldn't you have your visa (permission to stay) before you can begin a business... but then again how would they know you will set this up without the papers.

Visa's are another subject all together, and I will have to cover this in another post.

One question I get ask is if it is more difficult for a foreigner to set up a business in Serbia, then for a local person. The answer to this is No, its not more difficult. The paperwork is almost the same, you just need some additional information on your stay in Serbia, you need no university qualifications to set up a Cafe or bike shop. No special education is needed or proof of previous employment (I am including this because it is different in other countries)

The licences you need for a Cafe

1. Business licence in your name (this takes about one month to be finalised)

2. Music license, if you will have music played on a laptop or other sound system, or live shows and bands(I have to cover this in another post, its a big subject).

3. Fire and safety check (You need to do a short training with your staff, which they organize, its really funny)

You do not need an alcohol licence to sell liquor here

The licences for a Bike shop

1. Business licence in your name

You do not need a separate licence for repair or sales of bike parts, this should be written in your original paperwork, specifying the kind of sales you will make and the kind of services you offer

How much work is the paperwork? Well if you have an accountant, and some perseverance, its not that much work. It does take running around to a few different offices to sign this or that. Going to the bank a few times etc. but in general all can be done in around a month or a month and a half.

2.Time frame and preparation

This is dependent mainly on you and your resources. For us we spent a year saving for the finances of CE, we spent another 3 months looking for the right location (though we were doing this the entire time) I will cover in another post the process we went through to find the CE location in Novi Sad. We spent one month exactly on building the interior of CE. We did have a big work force, all of us joining in and working together, plus the help of many, many friends. We put a poster on the window with the date we would open, so we really couldn't change it.

As for the time frame for the paperwork, it is mentioned above.

3.Ownership responsibilities.

 The owner of the business on the paperwork (me) is responsible and held liable for everything that happens within the company. Anything that is found illegally is held to your name. You will have to at the best go to court for any infractions, at the worst case, go to prison. Also your signature is needed for every decision, unless you sign the power to another person within the company, which is what I will have to do, as we expand the company in other countries (I cannot always be here). Every week you have to bring the income for the business to the bank, see the form below.

It is written out like this, your signature needs to seal the deal, also to pay any bills, you must be the one to sign, employees signatures will be noted as a forgery and could cause problems. If you have a question about this, you should ask your accountant.

Your taxes for the business will be paid monthly, to do this, you will get the correct forms from your.. yes you guessed it.. accountant. You need to sign the papers and bring them to the bank, the amount will be subtracted from your account.

The bad news is that there are many laws in Serbia covering every area of business.. the good news is that no one keeps them. One of the most confusing areas of being an owner is that there is really so many grey areas in the law. Things that are written that you must do, but if you ask your accountant or other business owners they will tell you that its not necessary and that no one does it. If you are confused and wonder if you can get into trouble for this, they will always tell you in the very Serbian way... 'don't worry, nothing bad is going to happen'. Not always true, but yes very optimistic.

There is also a list of requirements that every business must have before it opens. You can obtain this from the inspection office (ask your accountant where it is). Before we opened CE, I heard a lot about the merciless inspections that happen here. I went to the inspection office before we opened and talked to the main lady in charge, I explained that we wanted to set up the business to fulfil every expectation. She was friendly and gave me the list of things they check for in a Cafe. Such as the smoking signs being correct, the fire escape signs, the correct number of seating for your licence, the amount of bathrooms you need. (Your accountant can tell you most of these things as well, and you will need to know them before you build anything, but it can help to find out exactly what infractions they look for)

4.Staff

Staffing your business is going to be different depending on the size of your operation.

The taxes for one staff member is roughly 120 euros a month. You pay this to the government through your bank account. Not all the staff who work for you need to on a permanent legal basis at your business (check this with your accountant) there are loopholes.. that's all I will say. Every business in Serbia has people working on black, whether you choose to do this or not is up to you. Your immediate family can work in the business without taxation.

Also all employees whether legal or on black must do a hygiene test, to see if they are healthy enough for the working environment.

To do this, you must go to a building on Futoska Street where they do a few tests, they ask you for a poo sample (in a small bottle which you get at the pharmacy) I still remember that me and Suzy brought ours on the wrong day and had to keep it in the fridge overnight.. disgusting. Also one time I got a very official letter stating that one staff member had not given enough poo in her sample, really funny. They also stick something in... wait for it... your nose and mouth, you sort of line up and they just attack you with two cue tips. After this you wait for a week and you get the results, almost everyone passes, but its best not to go if you the flu or are sick, wait till you feel better. The cost of this test is about 10 euros. Everyone must do it, including you as the owner, if you are working within the business of course.

The normal wage for someone working in Serbia is about 900 din per working shift, incredibly low, the minimal wage I think is 850 din, this is for 8 hours of work.

If you are employing legally, you will have to take their salary from your bank account, if they are working on black... well you figure it out.

5. Distributors and Suppliers

The suppliers from the companies that give you beer or other drink products will most of the time supply you with the fridges, glasses, promotional material etc. You need to call them to set up a meeting and discuss what you are doing. They will come to the premises and suggest to you what they can give and what they need from you. You can find their contact information online.

You will have to sign some contracts with them.

They will come regularly to check on your sales and to also maintain the equipment.

You can choose to also get your coffee and machine from a supplier, in that case you are bound to use their blend, and a certain amount of coffee per month. We chose to get our own machine (second hand) because we wanted the freedom to change our coffee suppliers if we wanted to have different blends. ( I will cover the subject of coffee in another post, also where to source some of your equipment from, as in second hand or new, will have to be written another time)

Ok so also when it comes to your business you will be pleased to hear that there are many inspections that frequent Cafe businesses. I will talk about our experience in this, in yet another post.

I hope I covered the main areas for business start-up in Serbia. Unfortunately I cannot verify my figures exactly because its been 2 and a half years since we started and some taxes might have changed. This post took me about 4 hours. I hope its useful. To re-cap the first things you should do are

1. Find a good accountant (preferably who speaks English, because a lot of things are really hard to explain in Serbian, they are complicated legal terms)

2. Find out what the requirements are legally for your kind of business

I hope this helped you :) write me if you need more help

the fire escape plan in CE, you need this to be in a visible place legally, no matter how obvious the exits are

My draft for this post :)