How to set up an advertising agency - practical tips
In the era of the free market, advertising often decides whether to be or not to be a company. Therefore, more and more entrepreneurs give their brands into the hands of specialists, and the demand for professional advertising services is growing. Today, the largest Polish advertising agencies serve hundreds of business customers, and their turnover reaches hundreds of millions of zlotys annually. This article describes step by step how to set up an advertising agency.
General characteristics of an advertising agency
The main activity of an advertising agency is the performance of advertising campaigns - on the Internet, on television, on the radio and in the press. It is a very broad field in which you can distinguish:
designing, planning and placing advertisements in print media, radio, television, the Internet and other media,
designing, planning and placing of outdoor advertisements - in the form of billboards, panels, display cases, balloons and airships, window displays, advertisements on means of transport, etc.,
distribution and delivery of prospectuses and advertising samples,
creating stands and other structures and exhibition places,
conducting advertising campaigns and other advertising services aimed at attracting or retaining customers.
Prerequisites for running an advertising agency
Establishing an advertising agency is easy and quick, this type of activity is not a regulated activity, therefore it does not require special permissions or certificates. By starting your own business and defining its scope, you can own your own advertising agency within a few days.
However, the legal requirements regarding copyright in advertising, thematic restrictions and competition law should be taken into account, in particular, the following should be on the agenda:
the Copyright and Related Rights Act of February 4, 1994,
the Act on Combating Unfair Competition of April 16, 1993.
Acceptable forms of running an advertising agency
An advertising agency can be run in any form, both sole proprietorships and civil law partnerships, general partnerships or limited liability companies are allowed. The exception here is a partnership, which, as a rule, can only be established by freelance professions.
How to set up an advertising agency?
After choosing the form of running a business, it must be registered. When deciding on a sole proprietorship or civil partnership, it is done on the CEIDG-1 form, which must be submitted to the city or commune office:
electronically using a secure qualified signature,
electronically without a secure qualified signature - ePUAP trusted profile,
by registered mail (signature notarized).
After selecting the third option, you must also go to the office in person and confirm your identity.
After submitting the application, an entry is obtained in the central register of economic activity, which is tantamount to obtaining NIP and REGON number. Obtaining such an entry is free.
When choosing to operate in the form of a general partnership or limited liability company, an application is submitted for entry in the National Court Register.
Determination of PKD for an advertising agency
The activity of an advertising agency is classified as PKD 73.11.Z. It is also worth paying attention to the numbers from the PKD 73.12 class, which also relate to the activities of an advertising agency.
The best form of taxation for an advertising agency
The CEIDG-1 application includes: choosing the form of taxation. When choosing the form of income tax settlement, it is worth considering the planned income and costs that may occur.
The basic form of taxation is the so-called tax scale, here the tax is settled due to tax thresholds. It is beneficial for those who have an income below PLN 85,528 - then it is taxed at the 18% tax rate. Exceeding this amount results in the application of the 32% rate in relation to the surplus over the amount of PLN 85,528. The advantage of the tax scale is the possibility of taking advantage of the tax-free amount, many tax credits and joint settlement with your spouse.
If you have an income of at least PLN 100,000, it is worth using a flat tax. The tax rate is the same regardless of the turnover and amounts to 19%. However, it excludes privileges that can be used on the tax scale.
In turn, future entrepreneurs who will not experience high tax deductible costs should consider a lump sum on recorded revenues. The tax is settled on income, so it is an extremely advantageous option for them, because costs are not taken into account at all. This form of taxation, like flat tax, excludes tax credits and joint filing.
Advertising agency with or without VAT?
The activity of an advertising agency is not exempt from VAT, in other words, due to the type of activity, the legislator excludes it from the exemption.
Beginning entrepreneurs may, however, take advantage of the subjective exemption from VAT, i.e. due to the turnover achieved, which may not exceed PLN 150,000 per year. During the tax year, however, it is necessary to monitor the amount of income obtained, because when the statutory limit is exceeded, there is an obligation to register for VAT as an active taxpayer. Automatically, the activity that caused it to be exceeded is already taxed.
When is it worth being an active VAT taxpayer? This option will be beneficial to those who:
provide services mainly to active VAT payers (then they will be "cheaper" for VAT),
provide services taxed at a rate below 23% (there will be a surplus of input tax - expenses, over due tax - sales), or
as part of their activities, they will perform intra-Community transactions.
If you want to act as a subject taxpayer exempt from VAT or an active VAT payer, you must submit a VAT-R declaration to the competent tax office. From the beginning of 2015, there is no obligation to obtain confirmation of registration (and, as a result, to pay PLN 170). It is very important to note:
in case of subjective dismissal - square in part C1 pos. thirty,
to be an active taxpayer - the square in part C1 pos. 33.
Details on how to complete the declaration are described in the article How to fill in the VAT-R.
ZUS contributions for an advertising agency
After submitting the CEIDG-1 and VAT-R application to the Social Insurance Institution, the ZUS ZUA form should be presented, which is intended to register a person for insurance.
Company account for an advertising agency
A company account is necessary when services are to be provided to companies or when the value of a one-off transaction exceeds PLN 15,000.
Currently, every bank offers to set up a business account, but before making a decision, it is worth paying attention to the amount of fees related to maintaining the account and whether transfers are paid. When making a large number of transfers, each fee may turn out to be an unnecessary expense.
What are the housing conditions for an advertising agency?
Contrary to appearances, in the case of an advertising agency, your own office is not necessary. Many advertising agencies pride themselves on having their employees fulfill orders in-house. A professional in slippers is still a professional.
When deciding to operate in a flat or a residential building, you should bear in mind that if the use of the premises changes, the activity in the flat may result in a higher property tax. The use of part of your own apartment for business purposes and the benefits that may be associated with it (e.g. part of service charges in tax deductible costs) obliges you to inform the commune or city office about it and to charge a higher property tax rate.
The right equipment for an advertising agency
After going through the formalities related to setting up an advertising agency, you need to focus on the right equipment. You will definitely need a computer - at least one desktop and at least one laptop. Most of the specialists that will be hired already have their own equipment. When offering advertising photography, a camera is necessary, and advanced filming equipment, i.e. a camera and a drone, is an expense only for agencies with a wide offer.
Software will also be a certain expense - the employed graphic designer should have their own photo processing programs, and IT specialists and positioners own operating systems, but it may happen that you will have to buy the original software necessary for work.
Who needs a good advertising agency?
Everything depends on the offer to be presented by the advertising agency. You can act alone or gather many specialists, the composition of the team depends on the scope of services. However, it is worth knowing which specialists will be necessary:
positioner - a good SEO specialist will allow you to provide positioning services on the web,
copywriter - buzz marketing, inbound marketing, content marketing, word of mouth campaigns, mailing and many other forms of written marketing require the services of a professional copywriter,
developer - creating websites, websites, mobile applications, customer management systems and other advanced network solutions, needs at least one good programmer,
marketer - client's path, business development paths, market analysis? If you want to have access to advanced knowledge in the field of marketing, you will need a marketing specialist,
graphic designer - the basis of the creation department. A good graphic designer will create a logo, banner, graphic identification, website design and even a visualization. If you want what the advertising agency creates to be of a high standard, the services of (good) graphics will be necessary,
photographer - advertising photography, corporate photography, product photography, professional photography requires a professional photographer,
editor - entering the spot and video advertising market requires a good editor, in most agencies he is also a cameraman,
Social Media Manager - specialist in facebook, twitter, snapchat, internet forums, blogs and more, a good social worker will promote the most demanding client of an advertising agency on every social platform.
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Formalities related to the employment of employees in an advertising agency
A contract for specific work is a popular form of employment of the above-mentioned specialists. By signing such an agreement, the person accepting the work undertakes to perform a specific work, and the person ordering the work, in return for receiving it, to pay remuneration. A mandate contract is a form of employment similar to a specific task contract, but despite many common features, they differ significantly in their legal effects. The aforementioned contracts are regulated by the Civil Code and therefore are called civil law contracts.
The differences between the aforementioned contracts are described in the article Contract of mandate and contract for specific work.
The future employer may also hire specialists under an employment contract regulated by the Labor Code.
Marketing in an advertising agency
Regardless of the powerful tools that will be available later, you should first invest in a good website that will adequately present the offer of the advertising agency and at the same time will represent it well. Over time, you can start using your own services - positioning, PPC advertising (Adwords, Adsense, etc.), word of mouth campaigns and a good sales department.
An advertising agency is a business that is easy to set up, cheap to maintain, but extremely difficult to develop. It does not require great expenditure, formalities or risk, the key to success is determination, experience and professionalism. Today, a quarter of a century after the transformation, the first advertising agencies are growing into business giants, and the market is still open to new entrepreneurs.
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