How to Start a Sole Proprietorship? Step-by-Step Guide Explained.
Learn how to effortlessly start a sole proprietorship in Poland, choose the right tax system depending on the nature of your business, and register your business with the state organization ZUS.
Establishing a sole proprietorship is the first step towards your professional independence, and if you are a foreigner, it is the first step towards legalizing your work and stay. In Poland, this procedure may seem complex, but our practical guide will help you overcome any difficulties.
Below you will find a detailed description of the step-by-step registration of a sole proprietorship, which will help you successfully start your own sole proprietorship.
1. Determining the Legal Form
Before starting the registration process, decide which legal form of conducting business suits your needs best. . In the case of a sole proprietorship, two forms of running are popular: a lump-sum taxed business or a business taxed under general rules.
They differ in the basis of taxation, method of cost accounting, tax procedures, and flexibility.
The basis of a lump-sum taxed business is determined based on a specified percentage rate applied to the revenues generated from the business activity. The entrepreneur pays a fixed amount of tax regardless of the actual costs incurred in running the sole proprietorship. There are professions for which this form of taxation is very advantageous; however, it is not suitable for everyone.
In the lump-sum form, you do not have to prove the costs incurred to reduce the tax base. Due to its formula, lump-sum taxation is usually simpler in terms of tax procedures, and lump-sum entrepreneurs have less complicated reporting obligations. The biggest advantage of this legal form is its independence from the level of costs, especially if your costs are really low, because the tax is fixed and easy to predict.
In the case of taxation under under general rules, , the tax base is determined based on the difference between revenues and costs of obtaining revenues. The entrepreneur pays tax on profit, which is calculated based on a detailed financial analysis done every month. This is a good form for companies that want to invest in their development while employing staff.
An entrepreneur taxed under general rules is obliged to prove and document all costs incurred in connection with the business activity, which entails more extensive financial documentation. Only costs of obtaining revenues are taken into account when calculating the tax.
The advantage of taxation under general rules may be a more fair settlement, as the tax is directly linked to the actual costs of conducting business.
2. Registering Business Activity in CEIDG
The Central Register and Information on Economic Activity (CEIDG) is the place where you will register your company.
ZSetting up a sole proprietorship involves registration in CEIDG, so it is necessary to have a Trusted Profile. If you don't have one yet, you need to create it. You can do this on the ePUAP website. Thanks to the trusted profile, it is possible to fill out the online application and sign it digitally.
In some cases (depending on the type of activity), it may be necessary to pay a tax fee. Information on this can be found on the CEIDG website.
Before submitting the application, familiarize yourself with the information available on the CEIDG website and consult with a tax advisor (Global Select), to ensure that all required information has been correctly entered. Also, remember that procedures may change.
After registering the activity in CEIDG, documents confirming the registration will be available in the system. You can download them electronically.
3. Tax Identification Number (NIP) and REGON
After registering the activity, you will receive a Tax Identification Number (NIP) and, in some cases, a National Economy Registry Number REGON. These numbers are necessary for conducting legal business activity in Poland for identification in administrative and tax systems.
NIP is a number assigned to each taxpayer in Poland. It is used to identify taxpayers during all transactions and tax operations. It is assigned by the tax office upon the taxpayer's request or automatically when the entity is entered in the National Court Register (KRS).
REGON is an identification number assigned to business entities in Poland. It is used to identify entities in the national economy registry. It is assigned by the Statistical Office upon the entrepreneur's request or automatically in certain cases.
4. Social Insurance Institution (ZUS)
To be able to pay pension, social, and health insurance contributions, it is essential to register your business with the Social Insurance Institution (ZUS).
To register, again a a trusted profile will be required. In the ZUS service menu, find the appropriate form „Declaration of Commencement of Activity”. Fill out the form providing necessary information about the entrepreneur, address data, type of activity, etc.
Sign the form using the Trusted Profile, and then submit the completed and signed form in the ZUS system. The signing process may vary depending on the chosen authentication method.
After submitting the form, download the declaration submission confirmation. This is an important document confirming registration with ZUS, thanks to which you will obtain social and health insurance.
Check the status of your registration in the ZUS system. After some time, you should receive confirmation of the declaration acceptance and the ZUS identification number (NIP ZUS).
5. Accounting and Taxes
It is important to track all tax payment deadlines and contributions to avoid severe financial penalties..
Every organized business activity has a revenue and expense book as well as an accounting book, which allows tracking the costs of conducting business, including income tax and VAT.
Every business activity should have a business account. This is one of the most important tools necessary for conducting business. With it, you can operate the revenues from the business activity. Such an account can be opened together with the start date of business activity in any reputable bank.
However, it is most advantageous and best to use companies specializing in accounting. Decide whether you want to manage accounting yourself or entrust it to a professional accounting office - Global Select offer.
6. . Business Management - Marketing and Customer Acquisition
The name of the company matters. Entrepreneurs must take care of a recognizable name when establishing a company. It is generally accepted that it does not have to be directly related to the business activity, but it must inspire customer confidence.
After completing the registration formalities, focus on acquiring customers. Build the image of your sole proprietorship online. Create a website related to the established activity, ensure presence on social media, and promote your services. This will positively impact the development of your company and increase brand awareness.
Various benefits may be available from conducting business activity. Credit opportunities, providing services in other UE, countries, and even subsidies for entrepreneurs conducting sole proprietorships. WIt is worth exploring new opportunities or subsidies for such activity.
7. Summary
Setting up a business can be quite a challenge, but with our practical guide, you will gain confidence and necessary knowledge. Remember to be systematic in fulfilling formalities and don’t hasitate to consult with professionals if needed.
Also, remember to check our offer, if you encounter any complications.
Our company provides services for setting up sole proprietorships and limited liability companies (including for foreigners). We select the tax system tailored to your services, taking into account operating costs. We handle accounting settlements for Tax Offices and ZUS contributions, and legalize the work of your employees.
Starting a sole proprietorship does not have to be associated with complicated bureaucracy.
We will guide you through the process of establishing your own company step by step, from registering your business activity in CEIDG, choosing the form of activity, to supervising registration statuses. Additionally, we will ensure to check for any possible benefits available for starting your business.
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