It’s not easy to run a company in Poland, especially when you don’t speak Polish. But still there are people who decide to (or are forced to…) start their company here. If you’re going to register a company in Poland in form of the sole proprietorship, these instructions will help you to go through the registration process.
What’s a sole proprietorship? Check out the description of individual business activity in this pdf file prepared by the Invest in Poland portal.
It’s worth your time to check out the Biznes.gov.pl website
Most details in that article come from a great info center for entrepreneurs led by the Ministry of Development: Biznes.gov.pl. An English language version is available, but mostly in the form of automated Google translations. I attached links with further details in every paragraph of my article in case you decide to rely on automated translation.
Readers of the Biznes.gov.pl website are encouraged to use this tool, where you can first ask your question to the virtual assistant, and then – if you don’t get the right answer – you may send your question to an expert. Make sure to have a fluent Polish speaker help you ask your questions.
Registrations in the CEIDG and ZUS are free
As you’ll notice soon it will be very difficult for you to make good decisions on your own, so you’ll probably ask your friends or professional consultants for help. Remember that registrations in the CEIDG (Central Registration and Information on Business) and ZUS (The Polish Social Insurance Institution) are always free.
How do you register a company in Poland?
- Confirm that you can register a sole proprietorship
- Find an accounting office
- Make some basic decisions
- decide which form of income taxation works best for your business
- decide if you wish to pay PIT contributions each month or each quarter
- choose a form of accounting
- choose the name for your company
- choose a starting date for your business
- prepare the address of the place where you’ll be conducting your business
- choose so-called PKD codes
- decide if you wish to set up a new bank account for your business, or if you’ll be using the current one
- decide if you wish to register for VAT purposes
- Fill out the CEIDG-1 form
- Register with ZUS
- Update your data in the CEIDG: bank account, and PESEL
Confirm that you can register a sole proprietorship
Citizens of the following countries can register a sole proprietorship with no extra restrictions:
- Czech Republic
- United Kingdom
- United States
Non-EU citizens also can register a company in Poland
Some non-EU citizens are also allowed to register a sole proprietorship if they meet conditions listed on the Migrant.info page. If you don’t meet the conditions, you may register another form of business activity. You’ll find more details on the linked Migrant.info page. Contact me if you want me to find an expert who’ll register a company for you.
After you check that your passport entitles you to register a sole proprietorship you need to also check if there are any additional restrictions for your planned activity. If you wish to figure that out on your own and you have a Polish speaker for language assistance, you can continue your research on this Polish page. With the help of a Polish speaker you may also check your planned services in this database of the descriptions of procedures, or in this search engine for PKD codes with procedures included.
Find an accounting office
Polish entrepreneurs have three options: deal with accounting on their own, hire an accountant, or contract out your bookkeeping to an accounting office.
It seems hardly possible that you can take care of accounting on your own. And hiring your own accountant is expensive. According to this website with salary reports you should expect to pay your accountant between 2.700 PLN and 4.516 PLN. The median of an accountant’s monthly gross salary is 3.500 PLN.
Accounting office seems to be the best solution for small and medium businesses. The cost of their service is something between 200 and 400 PLN monthly. Unfortunately when the accounting office fails the owner of the company is held responsible, so you’ll be the one who is punished. That’s why it’s important to confirm that your accounting office has a current civil liability insurance.
Accounting office for foreigners
Few offices are able to work for non-Polish speakers. When I was calling offices in Kraków to find a partner for one of my readers I found only 3 offices working for English speakers out of 19 that answered my calls. Ask in an expat Facebook group if other members can recommend anyone to you. If not, let me know and I’ll call offices in your city.
Before signing the contract make sure that the accountants will represent you in the tax office and fill out all necessary forms for you. Ask them also if they will assist you in the registration process. It may be necessary for them to help you make all the decisions from the next point of that article forward, because you might not be able to make the best choices on your own.
Accounting office and tax advisors
Not everyone will do this for you. There is a difference between accountancy offices and certified tax advisors. It’s legal for employees of accountancy offices to do your books even though they don’t have special licences, but they are not allowed to advise you, share their opinions, or give you explanations. Only certified tax advisors, who have passed the national exam, can do that. On this English website you can search for certified tax advisers. Make sure to ask your tax adviser for the cost of the service first, as the prices may be much higher than in the accountancy offices.
Make some basic decisions
Decide which form of income taxation works best for your business
Entrepreneurs registered in the CEIDG pay the personal income tax (PIT) – just like employees hired by companies. However, whereas employees always calculate their taxes according to the general rules, entrepreneurs can choose from four possible taxation forms. Differences between potential tax amounts are significant, but the choice is restricted by many regulations. It’s good to consult with a tax adviser about your choice.
Learn more about taxation forms here.
Biznes.gov.pl published an interactive guidebook (only in Polish) in order to help future entrepreneurs choose a taxation form.
In most cases people choose the general rules.
Decide if you wish to pay PIT contributions each month or each quarter
While registering your company you’ll be asked to decide if you wish to pay PIT contributions each month or each quarter. There will be also a third option: the simplified payment system, but you cannot choose it when registering a company.
Quarterly payments have many advantages. As a new entrepreneur you are entitled to use that form for at least the first year.
If you’ve already conducted another business activity in Poland, or you were a partner in some Polish company, or your spouse has conducted business activity while you had community property, you should contact an expert for additional advice.
Choose a form of accounting
You’ll be asked to choose which type of accountancy documentation you want be kept. There are four options:
- Accounting books
- Revenue and expense ledger
- Other registers
- Accountancy documentation is not kept
Accounting books are used for the full accountancy. You are obliged to use them only if you receive over €1,2 mln of income per year.
Revenue and expense ledger is used by people who chose general principles (progressive tax) or a flat tax as a taxation form and have less than €1,2 mln of income per year, so they’re not required to use accounting books.
Options 3rd and 4th are for people who chose lump-sum tax or fixed amount tax.
Choose the name for your company
Basically the company’s name must include the name of the owner, and there can also be something more, so either “John Smith”, or “John Smith JustAsk Poland”.
Choose a starting date for your business
According to this Polish article choosing the best day to start your company will save you a few hundred złoty. Don’t start a business activity from the last day of a month because you’ll need to pay the full health insurance contribution for a month that’s almost finished. That means paying 297,28 PLN for a health insurance contribution for no reason. This and many other articles argue that it’s best to start your business on the second day of a month, because then you’ll be paying preferential contributions for ZUS for one month longer. I’ll discuss insurance contributions later in this article.
Prepare the address of the place where you’ll be conducting your business
The address of your place for conducting a business activity will be published on the website of the CEIDG. It’s common that owners of sole proprietorships use their private addresses: in many cases rented flats. You won’t be asked to show your tenancy contract during a registration, but you’re obliged to provide the office with the right address of the real property that you rent.
Although the office won’t check this out, it’s necessary to obtain permission from the property owner to use the flat for business purposes because of the possible higher property tax that they will need to pay. If you physically conduct your business in a flat (for example you’re a freelancer and you work from home) the property tax will be higher. If you’re a teacher and you work in a language school, the property tax won’t change. The competent office sometimes contacts entrepreneurs from CEIDG and asks them to explain where they work from. You can make sure that they won’t contact you if you attach a written statement on your places for conducting business activity in Polish to your CEIDG-1 form.
It happens that entrepreneurs use virtual offices. If you’re interested in this solution, ask expats from your city for recommendations. If no one has heard about anything, I may look for some office for you.
Your can also use a place shared with you for free by your close family member or even someone unrelated. Check how to do that on this Biznes.gov.pl website.
Choose so-called PKD codes
During the registration you’ll need to indicate so-called PKD (Polish Classification of Activities) codes. The codes show what your company does. You can modify your set of codes at any time for free – either add new ones or cross out old ones. Here’s the PKD list.
As you see, it’s not that easy to use it. The good news is that clerks in business contact points will choose PKD codes for you. I went to the office in Kraków (Wielicka 28a) and they confirmed that you can tell them what kind of business you’re going to have and they will find the full list of codes for you. You can also call them in Polish from Monday to Friday until 15:15 (number: 12 616-5600) and they will help you over the phone.
There is no limit for indicated codes. It’s only stated that you must indicate at least one code. That means that besides one key code you can add as many sideline codes as you wish.
You may read more about PKD codes here.
Decide if you wish to set up a new bank account for your business, or if you’ll use your current one
You can either set up a special bank account for your company or use your personal bank account instead. A personal account is allowed only when you’re the sole owner of it (you don’t share it with your spouse for example).
If you decide to use your personal account, submit its number during the registration. If you decide to set up a business account, register a company without giving your account number, then print out the confirmation that your company has been registered in the CEIDG, then on the base of the confirmation set up an account, and after that update your data in the CEIDG.
Biznes.gov.pl listed the following pluses and minuses of using a personal account for company purposes:
- Lower fees.
- Company and private expenses mixed together. Every company’s expense should be documented (for example for supervision or accounting purposes).
- Personal account must be covered by a capital gains tax.
- Some banks may restrict the possibility of using personal accounts for business purposes – you need to check that before making the decision.
- It’s possible that the tax office will refuse to transfer your VAT refund to a personal account.
Full description prepared by Biznes.gov.pl has been published here.
With the help of a Polish speaker choose the best business account here . I’ll publish an article about the top 10 personal bank accounts in Poland in the future, so join me on Facebook to make sure that you don’t lose anything.
Decide if you wish to register for VAT purposes
This is also the moment when you need to consult with experts if you wish to register your company for VAT purposes. VAT registered taxpayers must add 5%/8%/23% of the tax amount to their net prices. Of course you won’t need to do that if you only wish to teach English. For other types of activity however it’s good to consider the rules of the registration. If you live in a big city, try to find a business contact point organized by the municipality office. In Kraków, on Wielicka 28a, there is a tax adviser on duty every first and last Monday of the month from 9:00 to 13:00. He’s there to advise you on VAT issues, taxation forms, excise duty and cash registers.
To make it short:
- Some types of activity must always be registered for VAT purposes. You can read about them here.
- Every company with a sales value over 200.000 PLN per year must be registered for VAT purposes – the details have been described here.
- When you register a company you can, but you don’t have to register for VAT purposes if your business activity hasn’t been listed on a website from point 1.
Some basic advantages of the registration:
- it can be an asset in business relations, because your contractors will be able to deduct VAT from the cost of your products or services
- you’ll have the right to deduct VAT from the cost of many products and services bought for your company.
- extra formalities: VAT declarations and additional VAT registers
- good knowledge of the Polish tax system is required so that you or your accountant don’t make mistakes in VAT calculations