You’re in Poland. You want to do business. You have an idea, energy, and perhaps even some start-up capital. But before you rush to conquer the market, let’s talk about the most boring yet most important thing — taxes and registration. If you’re thinking right now, “I’ll figure it out later,” know this: that’s exactly how the most epic failures begin. Don’t want to be the main character in someone’s “how I lost it all” story?
Then read carefully.
Spółka vs Działalność gospodarcza: Choose Your Side
So, you have two main paths: sole proprietorship (Działalność gospodarcza) and limited liability company (Spółka z o.o.). And no, these are not just different names. They are fundamentally different approaches to doing business.
Działalność gospodarcza (Sole Proprietorship):
- For whom: For lone wolves, freelancers, masters of their craft who don’t plan to build an empire right away. This is your personal business, where you are the king, the god, and the accountant.
- Pros:
- Fast and cheap: You can register a sole proprietorship online in half an hour for free. No notaries, no share capital, no extra bureaucracy.
- Simplicity: In most cases, bookkeeping is extremely simple. You can do it yourself if you’re not afraid of numbers.
- Full control: You make all decisions, there’s no one to argue with, and no one to share with. Your money is your money.
- Cons:
- Liability: This is where things get unpleasant. You are personally liable for all your assets. If your business goes under, you could lose your apartment and car. Seriously.
- Taxes: You pay taxes on all your income, and they can be quite high, especially if your business takes off. Plus, don’t forget about ZUS (mandatory social insurance contributions), which can be an unpleasant surprise.
- Investors: Attracting investors to a sole proprietorship is almost impossible. Who would invest in your “scooter” if you could fall off with all the assets tomorrow?
Spółka z o.o. (Limited Liability Company):
- For whom: For those who think big. Those who plan partnerships, attract investment, and want to separate personal assets from company assets.
- Pros:
- Limited liability: The biggest plus. The company is a separate legal entity. If something goes wrong, you only risk your share capital. Your personal assets are safe.
- Attracting investment: Investors love LLCs. They are reliable, understandable, and structured. It’s easy to sell shares, issue new ones, and scale up.
- Image: “Spółka z o.o.” sounds more solid and inspires more trust among large partners and clients.
- Cons:
- Complexity and cost: Registering an LLC is a quest. You need a notary, share capital (even if minimal), and it will take time and money.
- Bookkeeping: You’ll definitely need an accountant. LLC accounting is more complex and requires a professional approach.
- Double taxation: This is the biggest trap. First, the company pays corporate income tax (CIT), and then, when you decide to distribute dividends, you pay personal income tax (PIT) on them.
Conclusion: If you’re just a freelancer testing an idea, start with a sole proprietorship. If you’re planning a serious business with partners and investments right away, don’t skimp, register a Spółka z o.o.
Tax Systems: How Not to Give the State More Than You Should
After you’ve chosen the form, it’s time to decide how you’ll share with the state. In Poland, there are several options, each one a numbers game.
- Flat Tax (Podatek liniowy):
- Rate: Fixed 19%. Period.
- For whom: For those whose income confidently exceeds 120,000 PLN per year.
- Pros: No matter how much you earn, the rate doesn’t change. Everything above 120,000 won’t be taxed at a higher rate, unlike the general system.
- Cons: You can’t use tax deductions (e.g., family allowance), and you can’t file jointly with your spouse.
- General Rules (Zasady ogólne):
- Rates: 12% up to 120,000 PLN income, and 32% on everything above.
- For whom: For those with income under 120,000.
- Pros: Here, you can use deductions and file jointly with your spouse, which can be advantageous.
- Cons: High tax rate if you suddenly start earning a lot.
- Lump-Sum Tax (Ryczałt ewidencjonowany):
- Rates: Vary from 2% to 17%, depending on the type of activity.
- For whom: For those providing services and having minimal expenses. For example, IT specialists, designers, and copywriters.
- Pros: You pay tax on income, not profit. No need to bother with expense accounting. The rate can be very low.
- Cons: You can’t deduct expenses from the tax base. If you have high costs (equipment purchase, rent), this option is not for you.
Our advice: If you’re a freelance IT specialist, a low-rate Ryczałt will probably be your best friend. If your business has high costs (e.g., manufacturing), a flat tax or general rules will be more profitable. Do the math.
5 Ways to Legally Save on Taxes
Now that you know the basics, let’s figure out how not to overpay, even if you choose the most “expensive” scheme.
- Invest in development. If you buy new equipment, software, or pay for employee training, these are your expenses. Expenses reduce the taxable base. Your business grows, but taxes don’t. Win-win.
- Use tax reliefs. Poland offers many reliefs, for example, for IT companies (IP Box), for those engaged in R&D (ulga B+R). Study them. Don’t be lazy.
- Don’t forget about ZUS. In the first six months, you can make symbolic contributions (Ulga na start), and then for two years, reduced ones (Mały ZUS). This is not a joke, it’s real savings.
- Consider depreciation. If you buy expensive equipment (like servers or a car), you can spread its cost over several years. This allows you to gradually reduce the taxable base, not all at once.
- Hire employees with disabilities. You can get significant subsidies from the state for this. Plus, it’s a great way to do something good.
Bottom line
Business in Poland is not only about products and clients. It’s also about a smart approach to finances. Choose the right registration form and tax system, take the time to understand the details, and you won’t overpay. After all, it’s better to spend that money on growing your business than on the state’s well-being.
Have you already decided which path you’ll take?