Running a Business While Employed: How to Get Started and What to Watch Out For
Running a Business While Employed: How to Get Started and What to Watch Out For
More and more Czechs are combining regular employment with running their own business. According to data from the Czech Social Security Administration, OSVČ operating as a secondary activity make up a significant share of all registered trade licence holders. And it's no wonder — running a side business while employed gives you the chance to test your own venture without the risk of losing a steady income, while also benefiting from significantly lower insurance contributions.
In this article, you'll learn how to properly start a side business in 2026 while remaining employed, what your obligations are, how much you'll pay in contributions, and what to watch out for to stay out of trouble.
What Does "Secondary Activity" Mean and Why Is It Advantageous?
If you are employed under a main employment contract and simultaneously run a business as an OSVČ, your business is classified as a secondary self-employed activity. This classification comes with two key advantages:
- Lower minimum advance payments on social and health insurance
- The option to pay no social insurance at all, if your tax base does not exceed the threshold amount
Who Can Be an OSVČ on Secondary Activity?
You can operate as a secondary activity if you simultaneously meet at least one of the following conditions:
- You are employed and your employer pays insurance contributions on your behalf (the most common reason)
- You are entitled to a disability or old-age pension
- You are entitled to parental allowance or maternity benefit
- You are a student under 26 years of age
- You care for a person dependent on the care of another person
- You are performing military service
Source: ČSSZ — Mandatory Participation in Insurance
Do You Need to Inform Your Employer?
This is one of the most frequently asked questions. The answer depends on the field in which you want to do business:
Same Field of Activity
Under § 304 of the Labour Code: if you want to do business in the same field as your employer, you need their written consent. Your employer is not obliged to grant it and may withdraw their consent at any time.
Different Field of Activity
If you do business in a different field from your employer's, you don't need their consent. However, you do have a notification obligation — you should inform your employer that you are running a side business, because:
- your employer needs to know about additional income for the purposes of the annual tax settlement (if you request one),
- your employment contract may contain a non-compete clause or other restrictions.
Practical Tip
Always read your employment contract carefully. Some contracts include a clause stating that the employee may not engage in any other gainful activity without the employer's consent, regardless of the field. If your contract contains such a clause, make sure you comply with it.
How to Get Started: Step by Step
📋Steps for Starting a Side Business While Employed
Social Insurance for Secondary Activity
This is where the biggest advantage of running a side business while employed lies. Unlike a primary activity, you are not automatically required to pay advance payments on social insurance.
Threshold Amount for 2026
The key concept here is the threshold amount — the tax base limit above which you become a mandatory participant in pension insurance.
Threshold Amount for Secondary Activity 2026
Annual threshold amount: 117,521 CZK
Monthly threshold amount: 9,794 CZK (for each month you carried out the activity)
If your tax base for 2026 DOES NOT EXCEED 117,521 CZK:
- You don't have to pay any social insurance at all
- However, the year will not count towards your pension
If your tax base for 2026 EXCEEDS 117,521 CZK:
- You must pay the insurance contributions for the entire year in full
- From the following month, you begin paying advance payments (minimum 1,574 CZK)
Source: ČSSZ — Overview of Key Data for 2026
What Is the Tax Base?
Tax base = business income minus expenses (actual or flat-rate). If your income is 500,000 CZK and you apply flat-rate expenses of 60%, your tax base is 200,000 CZK (500,000 − 300,000). The assessment base for insurance contributions is then 55% of the tax base, i.e. 110,000 CZK.
Social Insurance Advance Payments — Secondary Activity
📊Social Insurance — Comparison of Primary vs. Secondary Activity 2026
*) Advance payments are only due if you become a mandatory participant in pension insurance (your tax base exceeded the threshold amount).
How It Works in Practice
In the first year of running a secondary activity, you pay no advance payments on social insurance. After the end of the year, you submit an income and expense overview to the ČSSZ. Only based on this overview will it be determined whether your tax base exceeded the threshold amount:
- Did not exceed: You pay nothing. The year does not count towards your pension.
- Exceeded: You pay the contributions for the entire year in one lump sum and begin making advance payments from the following month.
Health Insurance for Secondary Activity
The situation for health insurance differs from social insurance — there is no threshold amount, and contributions are always due.
Advance Payments
If you are employed and your employer pays health insurance contributions on your behalf from at least the minimum employee assessment base, you are not required to make monthly advance payments on health insurance as an OSVČ on secondary activity.
You then pay the contributions in a single lump sum after submitting your income and expense overview to the health insurance company — within 8 days of submitting the overview.
Health Insurance Calculation — Secondary Activity
Formula: Contribution = (income − expenses) × 50% × 13.5%
Example:
- Business income: 400,000 CZK
- Flat-rate expenses 60%: 240,000 CZK
- Tax base: 160,000 CZK
- Assessment base (50%): 80,000 CZK
- Contribution at 13.5%: 10,800 CZK for the entire year
You pay this amount in a single lump sum after submitting your overview.
Source: VZP — OSVČ Minimum Advance Payment Amount
No Minimum Assessment Base
A major advantage of secondary activity: the minimum assessment base for health insurance does not apply to you. You pay contributions on your actual income, even if it's just a few hundred crowns a year. Under a primary activity, you would have to pay at least 3,306 CZK per month.
Tax Obligations
When Do You Need to File a Tax Return?
If you have income from both employment and a business, you cannot ask your employer to carry out the annual tax settlement on your behalf. You must file a tax return yourself, in the following cases:
- your annual income from business exceeds 6,000 CZK (from 2025, the 6,000 CZK threshold applies to secondary income alongside employment),
- or you have income from more than one employer at the same time.
Important: Obligation to File a Return
If you run a side business while employed, you will almost always need to file a tax return yourself. Ask your employer for a confirmation of taxable income (previously known as "confirmation of income from dependent activity") and include your employment income in the tax return together with your business income.
How Tax Is Calculated
In your tax return, you add together:
- Employment income (§ 6 of the Income Tax Act) — gross salary
- Business income (§ 7) — income minus expenses (actual or flat-rate)
From the total tax base, you deduct non-taxable items (mortgage interest, charitable donations, life insurance, etc.) and tax credits (basic taxpayer credit of 30,840 CZK).
Example: Income Tax with Business and Employment Income
Employment:
- Annual gross salary: 480,000 CZK
Business (free trade licence):
- Income: 300,000 CZK
- Flat-rate expenses 60%: 180,000 CZK
- Tax base from business: 120,000 CZK
Total tax base: 480,000 + 120,000 = 600,000 CZK Tax at 15%: 90,000 CZK Basic taxpayer credit: −30,840 CZK Tax advance payments paid by employer: −72,000 CZK (example) Additional tax payable: approx. −12,840 CZK (overpayment)
Note: This is a simplified example. The actual calculation depends on many factors.
Filing Deadlines
📊Deadlines for Tax Return and Overviews 2026 (for the 2025 tax year)
Overviews for ČSSZ and the Health Insurance Company
Even as an OSVČ on secondary activity, you are required to submit annual income and expense overviews:
Overview for ČSSZ
Submitted electronically via the ČSSZ ePortal (eportal.cssz.cz). In the overview, you state:
- total business income and expenses,
- tax base,
- reason for secondary activity (employment),
- calculation of contributions.
You attach a confirmation from your employer to the overview, proving that you were employed throughout the year.
Overview for the Health Insurance Company
From 2026, this must be submitted exclusively electronically — via the Moje VZP app, data mailbox, or the health insurance company's portal. Paper submission is no longer accepted.
Practical Examples
Example 1: IT Specialist with a Freelance Side Business
Mr. Novák works as a programmer in employment (gross salary 60,000 CZK/month). In the evenings and at weekends, he builds websites under a trade licence.
- Annual business income: 250,000 CZK
- Flat-rate expenses 60%: 150,000 CZK
- Tax base: 100,000 CZK
Social insurance: Tax base of 100,000 CZK is below the threshold of 117,521 CZK — pays nothing.
Health insurance: 100,000 × 50% × 13.5% = 6,750 CZK per year (lump sum after the overview).
Example 2: Teacher with a Side Cake-Baking Business
Ms. Svobodová teaches at a primary school and bakes custom cakes at home (craft trade licence).
- Annual business income: 350,000 CZK
- Flat-rate expenses 80%: 280,000 CZK
- Tax base: 70,000 CZK
Social insurance: Tax base of 70,000 CZK is below the threshold — pays nothing.
Health insurance: 70,000 × 50% × 13.5% = 4,725 CZK per year.
Example 3: Marketing Professional with a Side E-Shop
Mr. Dvořák works at a marketing agency and runs an online shop selling sports equipment.
- Annual business income: 800,000 CZK
- Flat-rate expenses 60%: 480,000 CZK
- Tax base: 320,000 CZK
Social insurance: Tax base of 320,000 CZK exceeds the threshold of 117,521 CZK — must pay: 320,000 × 55% × 29.2% = 51,392 CZK per year, and from the following month pays advance payments of at least 1,574 CZK (or more based on actual income).
Health insurance: 320,000 × 50% × 13.5% = 21,600 CZK per year.
Comparison of Total Contributions
| | Example 1 | Example 2 | Example 3 | |---|---|---|---| | Income | 250,000 CZK | 350,000 CZK | 800,000 CZK | | Social insurance | 0 CZK | 0 CZK | 51,392 CZK | | Health insurance | 6,750 CZK | 4,725 CZK | 21,600 CZK | | Total contributions | 6,750 CZK | 4,725 CZK | 72,992 CZK |
Frequently Asked Questions
Can I Have a Secondary Activity Under a DPP or DPČ Agreement?
Yes, but be careful — secondary activity status is only recognised if insurance contributions are being paid on your behalf from employment. For a work performance agreement (DPP), contributions are only paid when the monthly limit of 10,500 CZK is exceeded (in 2026). For a work activity agreement (DPČ), the limit is 4,000 CZK/month.
Can I Have a Secondary Activity While Working for Two Employers?
Yes, what matters is that you are employed and your employer pays insurance contributions on your behalf. The number of employers is irrelevant.
What Happens If I Lose My Job During the Year?
From the month in which you are no longer employed, your trade licence automatically becomes a primary activity. This means higher minimum advance payments and mandatory participation in pension insurance. You must notify the OSSZ and your health insurance company of the change.
Can I Switch from Primary to Secondary Activity During the Year?
Yes, you notify the OSSZ and your health insurance company of the change. From the month in which you have grounds for secondary activity (i.e. you start a job), your advance payments will change accordingly.
Can I Join the Flat-Rate Tax Scheme as a Secondary Activity?
No. The flat-rate tax scheme is only available to OSVČ who have no employment income (other than income taxed by withholding tax).
Summary of Advantages and Disadvantages
📊Secondary Activity — Advantages and Disadvantages
Conclusion
Running a side business while employed is a great way to try out entrepreneurship with minimal risk. Thanks to secondary activity status, you pay significantly less in contributions, and in the first year you don't need to worry about social insurance advance payments at all. The key is to properly register your secondary activity, keep records of your income and expenses, and submit your tax return and overviews after the year ends.
DokladBot helps you keep your secondary activity accounts organised and separate from your employment income. Simply take a photo of a receipt or forward an invoice via WhatsApp — DokladBot automatically sorts and records everything, and reminds you of important deadlines.
Get started with DokladBot and keep your side business under control →
This article is based on information from the Czech Social Security Administration (cssz.cz), the General Health Insurance Company (vzp.cz), and the Labour Code. Information is current as of February 2026.
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