If you are interested in starting a business in Poland, you might be wondering what are the most common and popular types of running a business in this country. In this article, EU Tax Advice will provide you with some basic information and guidance on the different types of business entities in Poland, their advantages and disadvantages, and the legal requirements for setting them up.
According to the data from the Central Statistical Office of Poland (GUS), as of June 2021, there were 2,382,000 active business entities in Poland, out of which 1,928,000 were sole traders (self-employed), 284,000 were civil law partnerships, 93,000 were limited liability companies, 18,000 were registered partnerships, 5,000 were limited partnerships, 2,000 were joint stock companies, and 1,000 were limited joint-stock partnerships.
As you can see from these numbers, the most frequently chosen type of running a business in Poland is a sole trader (self-employment/sole proprietorship), followed by civil law partnership and limited liability company. Let's take a closer look at each of these types and their main features.
Sole trader (self-employment)
It is a simple and cheap form of establishment
It is intended for natural persons who want to operate on their own
It is registered in the Central Register and Information on Economic Activity (CEIDG), which in some circumstances can be done online
It does not require a minimum amount of capital
The accounting depends on the form of taxation: when taxing on a general basis (tax scale or flat-rate tax), simplified accounting (revenue and expenditure book) may be maintained; for lump sums, records of lump sums are required; and last one and very rare a tax card, where there is no obligation to keep accounting records
The entrepreneur is liable with all his assets for obligations arising as a result of running the business
The company name must include at least the name of the applicant (e.g. John Smith), but it can also contain other elements defining the profile of the activity or a business name
The entrepreneur has the sole right to represent his activity, and he can appoint a representative who is then listed in the CEIDG register
The entrepreneur is a personal income tax (PIT) payer
The entrepreneur may be subject to value-added tax (VAT)
Civil law partnership
It is a form of cooperation between two or more partners (natural persons, legal persons, or organizational units with legal capacity)
It is established by a written contract between the partners
It does not have a legal personality, but it has a legal capacity
It does not require a minimum amount of capital
It is registered in CEIDG by each partner separately
The accounting depends on the form of taxation: when taxing on a general basis (tax scale or flat-rate tax), simplified accounting (revenue and expenditure book) may be maintained; for lump sums, records of lump sums are required; and last one and very rare a tax card, where there is no obligation to keep accounting records
The partners are jointly and severally liable with all their assets for obligations arising as a result of running the business
The company name can be freely chosen by the partners, however, partner names should be also included in the company name
The partnership is represented by each partner individually or jointly by two or more partners
The partnership is not a separate Personal Income Tax Payer; each partner pays PIT on his share of income from the partnership
The partnership may be subject to VAT
Limited liability company
It is the most common form of legal entity and can be established for any kind of activity
It is intended for natural persons, legal persons, or organizational units with legal capacity who want to limit their liability and separate their personal assets from the company's assets
It is established by a notarial deed between one or more shareholders
It has a legal personality and legal capacity
It requires a minimum share capital of 5,000 PLN (about 1,100 EUR)
It is registered in the National Court Register (KRS), which in some circumstances can be done online through the S24 system
It must keep full accounting records and prepare financial statements
The shareholders are not liable for the company's obligations; their liability is limited to their contributions to the share capital
The company name must include the words "spółka z ograniczoną odpowiedzialnością" or "sp. z o.o."
The company is represented by one or more members of the management board appointed by the shareholders' meeting or by proxy holders authorized by them
The company is a corporate income tax (CIT) payer
The company may be subject to VAT
Other types of running a business in Poland that are not listed above may include various forms of partnerships that can be established by two or more partners the most popular are:
civil law partnership: a simple form of cooperation between two or more natural persons, legal persons, or organizational units with legal capacity. It does not have a legal personality or share capital. It is transparent for tax purposes. All partners are jointly and severally liable for the partnership's obligations.
registered partnership: a form of commercial activity that can be established by two or more natural persons, legal persons, or organizational units with legal capacity. It has a legal personality but no share capital. It is transparent for tax purposes. All partners are jointly and severally liable for the partnership's obligations.
professional partnership: a form of commercial activity that can be established by two or more natural persons who are authorized to practice liberal professions (such as lawyers, doctors, architects, etc.). It has a legal personality but no share capital. It is transparent for tax purposes. Each partner is liable only for his or her own professional actions.
Also, we are not presenting more details about the joint stock companies (standard and limited) as they are not popular in Poland, as well as the simplest and cheapest form of business activity in Poland i.e., a non-registered business, as you can read more about it in ETA’s other article.
Comments