Every new entrepreneur starting a business has surely, at least once, faced a sea of administrative requirements preceding the establishment of a company or a sole proprietorship. There are countless steps, trips from one service counter to another, and waits for one step to conclude before the next can begin.
The process of establishing business entities has been greatly simplified by the launch of the START system. The Croatian START information system for the electronic launch of businesses began operations in late 2019 (predating the coronavirus pandemic, which subsequently accelerated the pace of digitalization overall). It represents a major step forward in digitalization and the interconnection of the various systems and institutions involved in the business incorporation process.
The concept behind the START system is to resolve administrative hurdles—replacing complex bureaucracy by consolidating a multitude of steps, banks, and government institutions into a single digital system. The entire business startup process can be completed using just one e-form.
Through START, it is possible to establish a company (LLC or Simplified LLC) or a sole proprietorship, with either a single domestic founder or multiple domestic founders.
When establishing a LLC or Simplified LLC, the service enables:
- electronic incorporation of a LLC or Simplified LLC (registration of the company in the court register and the Register of Business Entities at the Croatian Bureau of Statistics),
- electronic payment of share capital and court fees,
- registration of the company in the VAT register and/or assignment of a VAT ID number (Tax Administration), and registration of the user in the HZMO (Croatian Pension Insurance Institute) system,
- opening a transaction account at a chosen commercial bank, and
- registration of the company in the Register of Beneficial Owners,
and for the establishment of a sole proprietorship:
- electronic establishment of the sole proprietorship (entry in the Register of Trades),
- opening a transaction account at a chosen commercial bank,
- registration of the sole proprietorship in the register of taxpayers and the VAT register, and/or assignment of a VAT ID number (Tax Administration), and
- registration of the user in the HZMO system.
What does setting up a company via the START platform look like?
First of all, to be able to set up any business entity digitally, it is necessary to obtain an advanced electronic signature certificate, which replaces a traditional signature.
The system itself is essentially very simple: by checking the appropriate boxes, the user selects which of the aforementioned procedures they wish to initiate via START (depending on whether they want to set up a company or a sole proprietorship). All these steps can also be completed via traditional methods, and it is not mandatory to carry them out within this integrated system; in other words, the user can choose which steps—and how many of them—to complete via START. Depending on the selected steps, the user then enters the required information regarding the future company or sole proprietorship, as necessitated by the chosen options.
The system then directs the user to make an electronic payment of the share capital and digitally sign all documentation using an advanced electronic certificate; based on the entered data, it generates a statement of incorporation (for a single-founder company) or an articles of association document (for a company with two or more founders) and submits the incorporation request to the competent commercial court, which then decides on the registration. Should the court return the request for supplementation, that process is also handled digitally.
The user receives an email notification after each completed step, ensuring they are constantly informed of the entity’s incorporation status; upon registration, they digitally download the company documentation, thereby concluding the incorporation process.
Simple, isn’t it?
It appears so; however, the digitalization of business entity incorporation has not entirely replaced the traditional administrative procedures associated with setting up a business.
After completing the steps described above, a user who has chosen to open a business bank account must still visit the selected bank in person. Since the START platform only reserves an IBAN, the user must initiate account activation and verification within 15 days—processes that involve specific procedures and take several days to complete. Once the account is finally activated and verified, the bank notifies FINA, and it takes a few more days for the share capital to be transferred from the bank’s holding account to the company’s business account. Regarding the HZMO (Croatian Pension Insurance Institute), while registering the user in the HZMO system is part of the company incorporation process, this registration must still be carried out in person: the person authorized to represent the company must visit the HZMO office and submit the required forms at the counter to complete the registration.
Furthermore, if there are multiple founders, an articles of association (or partnership agreement) must be drawn up. When a company is incorporated remotely, the articles of association are generated automatically based on the entered data; it is not possible to add extra provisions or modify the existing terms through this process. In fact, the generated articles of association are highly simplified. For instance, it is not possible to appoint a company procurator—the system does not recognize this option at all. Consequently, any such change—or indeed any other modification to the articles of association—must be executed before a notary public, who then submits the amended document to the competent commercial court for registration; this, however, is a more expensive option.
In theory, the company incorporation process has been greatly simplified, making it more accessible to the general public; essentially, all that is required is internet access, an advanced electronic signature certificate, and the share capital. However, while it all sounds very promising, in practice there is still room to improve digital connectivity to ensure the company formation process runs as smoothly as expected—especially given that this is a digital platform linking multiple institutions specifically to facilitate remote company incorporation.
In principle, there should be no issues with the actual incorporation before the commercial court or registration in the Register of Beneficial Owners; however, other aspects still require further refinement and improvement. Founders—or persons authorized to represent the company—must be prepared to visit various institutions to finalize the incorporation and successfully complete all administrative requirements.
Regardless of certain shortcomings, the START platform represents a significant step forward in the digitization of the establishment of business entities, as evidenced by the number of entities opened digitally, which is increasing year by year.
