They say it takes a village to raise a child. The same could be applied to a very different sort of child: your own small business.
While the two are in no way similar in real life, they do share certain traits in theory: being a first-time parent to either implies you probably have no idea what you’re doing, instead acting on instinct and turning to more experienced people for advice. At one point, both of your offspring will leave you freaking out, convinced you’re doing something wrong; while your actual children are probably going to turn out just fine (here’s to hoping), failing to ‘raise’ your business properly might result in considerable consequences.
Jokes aside, running a business in Croatia really does have the tendency to drive people insane. Laws and regulations are changing every so often, various clerks in state offices seem to have different opinions on your legal obligations, and even if you do consult the letter of the law, being factually right(eous) doesn’t mean you’ll actually manage to get anything done. The good ol’ daily grind.
If you own a company in Croatia (d.o.o. or j.d.o.o), you’re legally obliged to employ an accountant who’ll manage your finances. If you own a sole proprietorship business (obrt), namely the type that doesn’t oblige you to pay VAT, you’re off the hook – no accountants needed. While the former option does come at a higher price, it has an advantage that seems more and more attractive to us obrt owners with each passing day: you can kick back and relax, as you’re paying someone to keep track of all the pesky details for you. No need to check and recheck regulations every single month, dreading the unexpected changes, raised fees and rates. Your accountant’s job is to stay in the loop and take care of formalities while you’re out planning business strategies and whatnot.
Obrt owners don’t have it that simple, and no matter how hard you try, there will come a point where you’ll fail to do something on time or pay something in full. Not because you’re lazy, forgetful or irresponsible, but because you have to keep everything under control on your own, fighting your way through an administrative jungle to stay up to date where regulations are considered. In case you’ve been following our series on foreign entrepreneurs doing business in Croatia, you’ve probably noticed they had all encountered the same bureaucratic issues, faced the same paperwork hell and shared the same piece of advice: get a good accountant. Heh. That option aside, even if you keep an impeccable record of your finances, pay your taxes and other various fees on time, turn in every imaginable financial report before the deadline has passed, something will pop up and ruin your personal sense of achievement. It’s a given.
That’s where the village comes into play. Friends and colleagues who have lived through the dreary process of opening an obrt and are now trying to master the Croatian bureaucracy are always ready to lend a helping hand and share whatever meagre information they managed to dig out. Their wisdom will save you a trip to the tax office or stop you from paying a fee you’re not obliged to pay (but have been asked to nonetheless, as the state budget is an ever-starving animal). On some occasions, they will prevent you from getting hit by more serious repercussions. Last night, a former TCN colleague asked me whether I’ve turned in my tax report for 2017 – slipped my mind somewhere around New Year’s Eve, naturally, but was planning to do it these days. If it hadn’t been for the friendly reminder, I wouldn’t have known the deadline was today, January 15, and while there’s no way to know if there would’ve been consequences for my mishap, the tax administration is not an entity you want to provoke.
She also mentioned something about having to pay a membership fee to the Tourist Board – a bit bizarre, as us freelance writers and translators don’t have much to do with tourism, at least in theory. To be fair, I knew both about that and one other fee I’ll get to in a minute, but having received no notice about them and seeing that my business activity doesn’t overlap with tourism, I thought I was exempt from this obligation. (Hint: I’m not.) So I filled out my tax report and on to the tax office I went, pleased I’d be turning it in on time after all. I talked to my assigned clerk, who said everything was in order, save for one little detail: where are my reports for the TB membership and “the forest thing”?
Ah, there we are. My absolute favourite among all the taxes, fees and regulations in effect in Croatia. All business owners and natural persons who conduct any kind of business activity must pay an annual fee for the use of… not even sure how to translate this – the use of public forest functions. If you pop by the Ministry of Agriculture, you’ll find a nice little essay on the ecological and cultural benefits the Croatian society reaps from its forest resources. While I do agree with that, I don’t quite see why every business owner should have to part with exactly 0.0265% of their annual income to help preserve our forests. Does it actually help? Where does that money go? When half of the Croatian forest fund burned down last summer, fire departments’ appeals for new equipment didn’t bother the local authorities that much. Where’s my 0.0265% ending up? Who even came up with such a peculiar rate? Etc, etc.
Glad to help.
All things considered, I don’t even mind paying the forest fee. I’ve had coffees more expensive than my 2017 contribution to our natural treasure. What I do mind is not being informed of having to pay it in the first place. When you open a business, you’re aware of the common players: tax administration, pension fund, health insurance. Most state offices will send you notices of certain obligations; there’s a good reason behind ‘death and taxes’ being such a popular saying. You would think any state office would find immense pleasure in informing their subjects they owe them a certain share of their income. It seems it isn’t always so.
This morning, just as I was about to turn in my tax report, another obrt-owning friend messaged me to ask about the forest fee. Have I heard anything about it? Do we really need to pay for that? Turns out, she’s had a business for three years and has turned in three impeccable annual tax reports thus far – without ever being informed about the TB membership and the forest fee. Depends on your designated clerk; while mine is obviously diligent, others are not.
Even if you take it upon yourself to track down all the information about your formal obligations, how would you even know what to look for? Can you honestly tell me typing ‘do i have to pay for the privilege of having forests’ into your search engine is a thing that would cross your mind? Probably not, and while the officials keep you in the dark about the mysterious fees for years, interest rate is slowly building up behind your back. You’re out and about, tending to your business, blissfully unaware the Ministry of Agriculture might serve you with a nice fine at any given moment.
The only thing to do is to turn to your village. You get some valuable information, you share some in return. You hold each other up and you indulge in some harmless self-pity. Useful links gets shared, forest fees get paid, and interest rates are no more. God, we could all use a business-running manual in this country. Seems we’ll have to make one on our own.
