Service Business

Establishing a company

Polish law enables potential entrepreneurs to run a business taking into account many solutions regarding the possible forms of its establishment. Depending on the type of business, the expected amount of income, as well as the size of the project, each entrepreneur must decide which of the possible forms of business will be appropriate for his company. It often happens that entrepreneurs make such a decision without getting acquainted with all available forms. Therefore, this article will present the most important information from the point of view of the founder of the company regarding the legal possibilities of establishing a company in Poland.

Forms of business

The basic forms of running a business that are included in legal regulations are individual business activities and companies. Individual activity is, in other words, a one-man enterprise. On the other hand, companies are a specific group of legal forms that can be divided into civil law companies and commercial law companies. The main criterion for such a division is the legal acts regulating the activities of entities. In the case of civil law companies, it is of course the civil code, while in the case of commercial companies, it is the commercial companies code. A further division can also be made, which separates the companies into partnerships and capital companies. However, this division results from the entities having or not having legal personality, and also distinguishes between the purpose for which the companies are established, namely limited companies may be established for any legally permissible purpose, while partnerships only for an economic purpose. Partnerships without legal personality are: general partnership, partnership, limited partnership and limited joint-stock partnership. Capital companies, in accordance with the provisions of law, include a limited liability company and a joint stock company.

Individual economic activity

Let us start discussing the forms of running a business with a sole proprietorship, in other words from individual business, which is commonly considered one of the simpler forms of running a business. It can be established by natural persons who are 18 years of age and who have legal capacity. It can also be run by natural persons who do not have Polish citizenship, who reside in the Member States of the European Union or the European Economic Area. Registration of sole proprietorship from January 1, 2012 is carried out via the network.

Registration of sole proprietorship

The procedure is as follows. To register a company, you must complete an application for entry in CEIDG - Central Register and Information on Economic Activity. The application is available in the form of an electronic form on the domains www.ceidg.gov.pl or BIP of the Ministry of Economy. The basic data that is needed to correctly complete the form are: PESEL, NIP number, address and type of business activity specified by PKD codes. The validity of the application is confirmed by the signature of the applicant. This requirement meant that there are in fact three ways of submitting an application.

The first one is for those who want to go through the entire registration process online and thus decide to use an electronic signature. Getting it is possible with two solutions. The first is to obtain an electronic signature. This is related to a considerable cost that must be incurred to purchase a signature. The electronic signature service is provided, among others, by institutions such as the Polish Security Printing Works or the National Clearing House. However, in order to reduce the cost, people setting up a business can use a trusted profile. Access to it, unlike the electronic signature, is free of charge, but it involves completing an application for creating a profile available on the ePUAP internet platform (electronic Platform of Public Administration Services), and then going to the commune to confirm its identity. If we already have the option of signing the application electronically, we register, complete the application and send it via the Internet. Subsequently, we receive confirmation that the application was correctly filled in or about any errors that need to be corrected.

The second option to submit an application is to complete and send an anonymous application available on the CEIDG portal. By performing these activities, the code assigned to the given application will be generated electronically.You should write down the code number or print the form and then go to the appropriate commune office with it within 7 days, where you personally sign the application for business registration.

The third option is the traditional route. You should download the application in the commune or electronically, fill it in and then submit it to the commune. It is also possible to send the completed application to the commune by post, however, it is connected with the necessity to attach a notarized signature, and therefore this way generates costs.

The commencement of operations through entry in CEIDG should take place on the day of sending / submitting the application, no later than the next day. On the other hand, the entrepreneur has the option of setting a different start date. The entrepreneur has 7 days from the date of sending the application to make changes to the data regarding a given application.

At the time of commencement of business, the applicant's tax identification number is the identification number of the business activity in the CEIDG database, which means that the tax identification number of the natural person submitting the application becomes the entrepreneur's tax identification number.

The application for entry in CEIDG also allows the applicant to request:

for entry into the National Official Register of National Economy Entities (REGON) or its change;
for notification of the ZUS contribution payer or its change or continuation of farmers' social insurance in KRUS;
choosing the form of taxation from the legally entitled ones: personal income tax, tax card, lump sum on recorded income;
for a registration application or its update in the field of tax on goods and services (VAT-R).

The last item - the VAT-R form is attached, however, only to an entrepreneur who independently submits an application to CEIDG, who also has an electronic signature verified with a qualified certificate.

After submitting the application, it should be expected that the decision on granting the REGON number will be sent by post to the address indicated in the application, as well as confirmation of the application to the Social Insurance Institution - ZFA form. The entrepreneur will also be informed about the need to submit a form regarding contributions that he will pay for himself: ZZA (only health insurance) or ZUA (social and health insurance) within 7 days of starting the business. If the entrepreneur hires new employees, it is also necessary to submit the form within 7 days from the date the employee starts work. It should also be remembered that if the enterprise employs employees, it is obliged to report the place and type of activity to the National Labor Inspectorate. The deadline for this application is 30 days from the start of business or employment of the first employee. Some types of business activity also require notification to the sanitary inspector - Sanepid. The entrepreneur has 14 days to do so from the date of commencement of activity.

The last step in the procedure for setting up an individual business should be checking whether concessions, licenses or other permits are required to conduct a specific activity.

To sum up, the process of registering a sole proprietorship is free of charge. The costs may be generated when the applicant wants to use an electronic signature or deliver the application by post - notarial confirmation of the signature, or when he attaches the VAT-R form to the application, on which a stamp duty in the amount of PLN 170 is charged.

Pros and cons of individual economic activity

As with any form of enterprise operation, individual activity has its advantages and disadvantages. Taking up a business is free of charge, it is relatively easy to register and, importantly, does not require meeting any capital requirements. The benefits of running an individual business include the ability to independently manage your own enterprise, set obligations and make changes related to your business profile. Another advantage is the possibility of using simpler forms of financial and accounting settlements. Natural persons running a business may settle accounts with the Tax Office on the basis of the book of revenues and expenses or use the flat-rate forms of taxation. The main disadvantage of running an individual business is the scope of responsibility taken by the founders of a one-man enterprise. They are liable without limitation for the company's obligations with both the company's property and personal property.

In the life of some entrepreneurs, after some time of functioning, there comes a time when they think about transforming an individual business into another form - a company. The choice of the form of running a business requires an analysis of the characteristics of each type of company. Some require a certain amount of share capital, while others require a differentiated approach to responsibility.

Characteristics of partnerships

General partnership

Share capital required: none.

Who can be a partner: a natural person or a legal person.

Liability for the company's obligations: The partners are jointly and severally liable with the company with all their property.

The form of bookkeeping: a book of revenues and expenses, a registered lump sum or keeping full accounting (obligatory when net revenues in 2011 exceed PLN 5,293,440).

Form of taxation: taxpayers are only individual partners of the general partnership, and therefore they are subject to personal income tax (proportional to revenues or flat tax); the company in this case is not a taxpayer.

Taking into account the form of taxation, it should also be mentioned that the choice of taxation at a flat rate involves taxing in this form all income from economic activity.

Benefits:

The company may be represented by any partner, but it is possible to exclude a partner from representing the company in the contract;
The financial risk is distributed among all partners;
The content of the articles of association may be freely formulated.

Defects:

The general partnership does not have legal personality, which entails the partners' liability for the partnership's obligations;
The partners' civil liability towards third parties covers the entire property of the partners and their families;
Limiting financing to shareholders' contributions;
Obligation to prepare annual financial statements and submit them to the National Court Register, which involves additional fees;
Obligation to have a cash register with an annual turnover greater than PLN 20,000 for taxpayers starting their business in a given tax year or in excess of PLN 40,000 for entities that continue to operate.

A partnership

Share capital required: none.

Who may be a partner: a natural person authorized to practice a liberal profession.

Responsibility for the obligations of the company: each of the partners is responsible for their own actions and is not liable for the obligations of the company arising from the exercise of the freelance profession by other partners and for obligations arising from the actions or negligence of persons employed by the company and under the management of another partner.

The form of bookkeeping: a book of revenues and expenses, a registered lump sum or keeping full accounting (obligatory when net revenues in 2011 exceed PLN 5,293,440).

Form of taxation: taxpayers are only individual partners of the company, and therefore they are subject to personal income tax (proportional to revenues or flat tax); the company in this case is not a taxpayer.

Benefits:

It is possible to limit a partner's liability to the scope of his own actions;
It is possible to combine ideas and capital of many people;
Protection of the name of the partner company;
It is possible to run an enterprise in a larger dimension than that provided for in a civil partnership, which should be transformed into a general partnership by submitting it to the registry court by all partners, if the net income of the civil partnership in each of the last two financial years has reached the value of PLN 5,293,440.

Defects:

The company may be established only by freelancers, such as: attorney, pharmacist, architect, statutory auditor, insurance broker, tax advisor, accountant, doctor, dentist, veterinarian, notary public, nurse, midwife, attorney-at-law, patent attorney, property appraiser and a sworn translator;
Articles of association in the form of a notarial deed (cost according to the notarial fee), entry in the commercial register and its announcement;
Sometimes unfavorable taxation of natural persons.

Limited partnership

Required share capital: none, only the limited liability is present, the amount of which is limited by the liability of the limited partner, however, it is not treated as a real share capital.

Who can be a partner: a natural person or a legal person, provided that there must be at least two persons, one of which will be a limited partner and the other a general partner.

Liability for the partnership's obligations: at least one partner (general partner) is unlimitedly liable for the partnership's obligations towards its creditors, and the liability of at least one partner (limited partner) is limited.

Form of bookkeeping: obligation to keep full bookkeeping.

Form of taxation: the taxpayers are partners, not the company, and therefore the personal income tax is applicable.

Benefits:

There is a possibility of limiting the liability of some partners;
Both the general partner and the limited partner settle accounts with the PIT tax office. With regard to VAT, the taxable person is the company;
The scale of the limited partnership's operations is not limited in number;
It is possible to appoint a general partner of a limited liability company. for tax optimization;
A profitable form of business activity for partners with different capital potential.

Defects:

Full, joint and several liability of some partners for the obligations of the company;
Costs of the notarial deed (costs according to the notarial fee) as well as the entry in the commercial register and the announcement in the MSiG;
Full accounting requirement;
The different rights and obligations of general partners and limited partners and its consequences.

partnership Limited by shares

The required share capital: PLN 50,000.

Who can be a partner: a natural person or a legal person, provided that there are at least two of them, of which at least one is a general partner and at least one shareholder.

Responsibility for the obligations of the partnership: general partner - is responsible for the obligations of the partnership towards creditors without limitation, and the shareholder - is not responsible for the obligations of the partnership. Moreover, a shareholder may represent the company only as an attorney or proxy.

Form of bookkeeping: obligation to keep full bookkeeping.

Form of taxation: the company itself is not a taxpayer of income tax, its partners who are subject to taxation according to general rules have the status of a taxpayer.

A partner of a limited joint-stock partnership, who is a legal person, should add to his income taxed on general terms, income from participation in the partnership.

However, if one of the partners of a limited joint-stock partnership is a natural person, the rules of the act on personal income tax apply to that person.

An interesting fact is that currently, according to the regulations, the income (income) of a capital company being a shareholder of a limited joint-stock partnership is subject to taxation on the day of receiving the dividend. Thus, the income attributable to the shareholder during the financial year is not subject to taxation. This allows the capital company to defer taxation of income until it is paid out to the shareholder.

Company governing bodies: supervisory board and general meeting, but the appointment of a supervisory board that exercises permanent supervision over the company's operations is required in companies where the number of shareholders exceeds 25.

Benefits:

For the shareholder - disclaimer of liability for the company's obligations;
The possibility of raising capital through the issue of shares - the possibility of development;
For general partners - decisive influence on the activities of the company without the necessity to participate in the coverage of the share capital;
Possibility of financing capital-intensive ideas for which the originator does not have the resources and invites a group of people (shareholders) to finance.

Defects:

High required minimum share capital PLN 50,000;
Full accounting requirement;
Shareholders act on behalf of the company only as proxies;
The costs of the notarial deed (notarial fee), entry in the commercial register) and its announcement in the MSiG (tax on civil law transactions of 0.5% of the share capital should be paid on the statute).

Capital companies and their features

Limited liability company

Required share capital: the minimum is PLN 5,000.

Who can be a partner: one or more persons, with the exception of a partnership established solely by another single-person limited liability company.

Liability for the obligations of the company: partners are not liable for the obligations of the company, and if enforcement against the company would prove ineffective, members of the management board are jointly and severally liable for its obligations with all their assets.

Form of bookkeeping: obligation to keep full bookkeeping.

Form of taxation: corporate income tax.

Company governing bodies: The management board (it may be composed of partners or persons from outside their circle), whose task is to run the company's affairs and represent it. In companies whose share capital exceeds PLN 500,000 and there are more than twenty-five shareholders, there is an obligation to appoint a Supervisory Board or an Audit Committee.

Benefits:

Disclaimer of a partner's liability for the company's obligations;
It is possible to raise capital by acquiring a new partner;
It is possible to cover the share in the capital with a contribution in kind (machines, devices).

Defects:

Required share capital, which, however, has significantly decreased in recent years (PLN 5,000);
No possibility to conclude employment contracts with members of the management board who are also partners without appointing a proxy or supervisory board;
Limited ability to sell shares.

Joint-stock company

Required share capital: The share capital of the company should amount to at least PLN 100,000. The nominal value of shares cannot be lower than PLN 0.01.

Who may be a partner: one or more persons, excluding a one-person limited liability company.

Liability for the company's obligations: the company is liable with all its property, shareholders are exempt from liability and are not liable for the company's obligations.

Form of bookkeeping: obligation to keep full bookkeeping.

Form of taxation: corporate income tax.

Company governing bodies: The supervisory board exercises permanent supervision over the company's activities. It also appoints the company's management board, whose task is to represent the company and manage its affairs. The most important body of a joint-stock company is the general meeting of shareholders (GMS), which takes the most important decisions about the company and appoints the supervisory board.

Benefits:

It is possible to raise capital on the capital market by issuing shares or bonds;
No liability of shareholders for the company's obligations;
Ability to do business on a large scale;
Having a rightful personality - partners are not liable for the company's obligations, only the company itself with its assets;
The credibility of the company and its easy verification by potential contractors and shareholders;
Possibility of establishing a joint-stock company by foreigners.

Defects:

High nominal share capital required;
No impact on the company's operations by smaller shareholders;
The need for a supervisory board, irrespective of the number of shareholders;
Necessity to keep full accounting;
Usually, it is necessary to employ specialized legal, financial and managerial services.

Of course, the listed advantages and disadvantages of companies are a field for consideration and it cannot be ruled out that in individual situations, disadvantages will become advantages or vice versa.

Company registration procedures

A company is registered, with the exception of a civil law partnership, at the appropriate economic division of the district court in which the company's registered office is located. Only a civil law partnership is registered, similarly to a sole proprietorship, in CEIDG. Partnerships must be registered in the National Court Register within 7 days of signing the contract (limited partnership, general partnership, partnership) or establishing the articles of association (limited joint-stock partnership) of the company. Capital companies have a longer time to register. It is 6 months from the signing of the company's articles of association (limited liability company) or drawing up the articles of association (joint-stock company).

Registration of a partnership

Companies register with the National Court Register upon application. The forms are available on the websites of the Ministry of Justice or the National Court Register. And so, for each type of company, the following forms are assigned:

KRS W01 Application for registration of an entity in the register of entrepreneurs - general partnership, partnership, limited partnership;
KRS W02 Application for registration of an entity in the register of entrepreneurs - spółka komandytowo - akcyjna;
KRS W03 Application for registration of an entity in the register of entrepreneurs - limited liability company;
KRS W04 Application for registration of an entity in the register of entrepreneurs - joint-stock company.

Additionally, a number of attachments are required to be attached to the applications. For partnerships, the additional required documents are:

company agreement,
specimen signatures of persons authorized to represent the company (including appointed proxies) submitted to the court or certified by a notary public,
the entitlement of each partner to practice a liberal profession (in the case of a partnership),
proof of payment of the court fee for entry into the register (PLN 500).

A limited joint-stock partnership should also attach:

Company statute,
Notarial deeds on taking up shares,
Declaration of all general partners that payments for shares and in-kind contributions required by the statute were made in accordance with the law,
A document confirming the establishment of the supervisory board (if required) with specification of its composition,
Permission or proof of approval of the statute by a competent public authority, if they are required for the establishment of the company,
A declaration made by the general partners in the form of a notarial deed regarding the amount of the acquired share capital of the company, in a situation where the articles of association specified the amount of this capital "for a fork".

Additionally, in individual cases, please fill in the following attachments selected from the list:

KRS-WA Branches, field organizational units,
KRS-WH Method of establishing the entity,
KRS-WB Partners of a general partnership or general partners of a limited joint-stock partnership,
KRS WC Partners of a limited partnership,
KRS WD Partners,
KRS-WK Bodies of the entity / partners authorized to represent the company,
KRS-WL Proxies, attorneys of a cooperative, state-owned enterprise, research and development unit,
KRS-WM Object of activity,
KRS-ZN Financial reports and other documents,
KRS-WG Share issues (applies to a limited joint-stock partnership).

Capital companies - registration

Capital companies, on the other hand, as an attachment to the application for registration of an entity should submit:

articles of association in the form of a notarial deed (2 copies - may be the original and a copy) (LLC);
company statute (joint-stock);
specimens of signatures of management board members or submitted to the court; confirmation of payment of the court fee;
a rental or lending agreement on the basis of which the company's registered office is indicated;
NIP 2 - application to the Tax Office;
RG 1 - application to the Statistical Office (if the scope of PKD does not fit on one form, additionally RG-RD);
ZUS ZPA (application to ZUS) or a declaration of not employing employees; statement of the management board on the capital injection;
list of shareholders;
surnames, first names and addresses of board members;
a document confirming the establishment of the company's governing bodies, detailing their personal composition.

Additionally, the joint-stock company attaches:

notarial deeds on establishing a company and taking up shares,
proof of payment for shares confirmed by a bank or brokerage house, made to the account of the company under organization,
permission or evidence of approval of the statute by the competent public authority (if required for the establishment of the company).

In certain cases, you should also complete selected forms, the templates of which are provided by the National Court Register:

KRS-WA Branches, field organizational units,
KRS-WH Method of establishing the entity,
KRS-WG Share issues,
KRS-WK Bodies of the entity / partners authorized to represent the company,
KRS-WL Proxies, attorneys of a cooperative, state-owned enterprise, research and development unit,
KRS-WM Object of activity,
KRS-ZN Financial reports and other documents.

In special cases, when:

a foreigner is a partner, additionally we enclose a "Statement on the lack of a social security number";
there is only one partner (sole proprietorship limited liability company), additionally we enclose "Data of the sole partner";
the nature of the conducted activity requires it to be reported to the labor inspection and sanitary inspection.

Registration of the company in institutions other than commercial court

The remaining stages of company registration include:

application of the company to the statistical office on the RG1 form, to which, in the case of many specified objects of activity, we also fill in Annex RG-RD,
tax office, NIP-2 application and if the company registers as a VAT payer, before making the first taxable activity, it should report VAT registration through the VAT-R declaration club for EU VAT-RUE VAT payers,
opening a bank account and registering the company with the Social Insurance Institution on the ZUS ZPA forms.

As already mentioned in the article, all applications can be submitted in one window of the relevant department of the regional commercial court, provided that they are submitted in person. If the application is sent to the National Court Register by e-mail, registration in other offices will have to be made in person.

Registration of a limited liability company via the Internet

The first step to registering a company via the Internet is to create an account in the system provided by the Ministry of Justice (https://ems.ms.gov.pl/). An account must be created by each of the partners, not only the person submitting the application.

When registering, we provide the name, surname, date and place of birth, PESEL number, type and number of the identity document. In the case of a legal entity, the name, NIP number, registered office address and REGON number should also be prepared. Everyone must also provide their e-mail address and set a login and password. After logging into the system, the registration application is completed. In the form, please provide the address and details of the district court, the articles of association, a list of shareholders and contributed shares.

The registration procedure ends with the signing of the application by the applicant and the partners using an electronic signature for this purpose, as well as payment of the fee in the eCard system. After completing all the steps, the application will be sent to the competent court.

The differences generated by establishing a company via the Internet are:

the possibility of establishing a company without a notary;
registration within 24 hours, provided that the application is correctly filled in; share capital in the amount of min. PLN 5,000 must be brought in cash, and not, as in the case of traditional application, non-cash contributions are also accepted and the possibility of paying them only after submitting the application, but no later than 7 days;
no possibility to use the one-stop-shop principle, the need to submit other applications to other offices in person.

Registration time

Private Limited company. established via the Internet within 24 hours of sending a correctly completed application is already registered. On the other hand, the traditional way means that the court has 14 days to do so, although it happens that this period is longer.

Costs related to the registration of the company

In Poland, company registration procedures are gradually being improved and efforts are made to minimize the required formalities and at the same time reduce costs. Currently, the expenses related to the registration of the company are as follows:

entry in the register of entrepreneurs PLN 500;
changing an entry in the register PLN 250;
deletion from the National Court Register PLN 300;
announcement of an entry in the register in the Court and Economic Monitor PLN 500; changes to the entry in the Ministry of Foreign Affairs and Administration PLN 250;
information on the deletion in the Ministry of Foreign Affairs and Administration PLN 250;
acceptance of documents in the National Court Register PLN 40;
VAT-R registration fee PLN 170;
the price of the contract in the form of a notarial deed cost about PLN 900-1100 (for a limited liability company with a minimum cap of PLN 5,000 and two partners who are Polish citizens);
notarized authentication of signatures of management board members - PLN 20;
copy of the articles of association of a limited liability company - PLN 6 for each started page of the text.

Other forms of business

There are also other specific forms of business, which are not included in the basic division, and which are allowed by Polish law. It is a sole proprietorship that includes capital companies, but they have one owner. It should also be mentioned here about a joint venture classified as a commercial law company, which may be established by a Polish company together with a foreign company constituting owners jointly contributing capital to the company. New solutions that are also applicable today in the Polish realities are the so-called Limited liability companies limited partnership. They are not included in the basic groups because their operation is in fact based on the operation of two companies, which, however, properly combined with each other, give the possibility of tax optimization as well as limiting the liability of partners of a limited partnership (both a limited partner and a general partner, which is in the basic form of a limited partnership). has unlimited liability).