The short answer
A j.d.o.o. (jednostavno društvo s ograničenom odgovornošću) suits a small start with one to three owners and minimal capital. A d.o.o. (društvo s ograničenom odgovornošću) suits a business that expects more partners, investors, larger contracts or bank financing.
| j.d.o.o. | d.o.o. | |
|---|---|---|
| Minimum share capital | EUR 1 | EUR 2,500 |
| Members | Up to three | No upper limit |
| Management board | One member | One or more members |
| Profit | A quarter of annual profit (after prior losses) goes to legal reserves until the capital requirement is met | No such reserve rule |
| Conversion | A j.d.o.o. can later become a d.o.o. by increasing its capital | |
When a j.d.o.o. makes sense
- You are testing a business idea with low initial investment.
- There are at most three owners and one director.
- You do not plan to take profit out in the first years anyway.
When a d.o.o. is the better choice
- You expect more than three partners or an outside investor.
- You want more than one director.
- Customers, landlords or banks will judge you on your balance sheet.
- You want to distribute profit without the reserve requirement.
Share capital is not a fee. It belongs to the company and can be used for business expenses once the company is registered.