Entrepreneurship is something that many people dream of. On the one hand, it provides an opportunity to work for yourself, to discover yourself and your potential and to achieve good profits. On the other hand, the process of starting and running a business can be complicated and confusing, especially in a foreign country.
Today we will tell you how to open a sole proprietorship in Poland, what you need to know about it and much more. Stay with aksis and enjoy the article!
What is the JDG?
JDG means «Jednoosobowa działalność gospodarcza». In simple words, it is an analog of the Russian, Belarusian and Ukrainian sole proprietorship. That is, it is an individual officially engaged in entrepreneurial activity. So far everything sounds very simple, doesn't it? But this is just the beginning - it gets more interesting. Let's get to know it!
Let us point out the strengths of sole proprietorship, among which are:
- Simplicity and short terms of official registration;
- You choose your own form of taxation (we will talk about it below);
- No restrictions on the part of partners, as you work for yourself;
- The possibility of simplified accounting (not in all cases);
- No need to have a certain capital to start;
- No restrictions on rights (you can use benefits and a personal bank account).
The cons of sole proprietorship are much less than the pros, but they are still there:
- Liability for debts falls entirely on you;
- Limited activities (sole proprietorship is not available for all activities);
- You cannot divide the business because it is a natural person and cannot be sold or gifted. The only thing is that you can manage it yourself or transfer the management by power of attorney to another person.
What taxes does an entrepreneur pay in Poland?
Obviously, in addition to the rights of a sole proprietor, there are also duties. The main obligation of a sole proprietor to the state of Poland is to pay all taxes and fees. In the European Union, the payment of taxes is closely monitored, so you will have to honestly fulfil the duties.
As we have already written above, that a sole proprietor in Poland can choose his own form of taxation. This is very convenient, because different sole proprietorships can differ significantly. One, for example, may have thousands of turnovers every day, and the other practically does not get any profit. Today there are such options of taxation for sole proprietorships in Poland:
- If the sole proprietor's income does not exceed 20 thousand euros per month, the tax is 18% monthly;
- If the sole proprietor's income exceeds 20 thousand euros per month, the tax is 32% monthly;
- 19% tax (no difference in income);
- If the sole proprietor's income does not exceed 250 thousand euros per calendar year, the tax is between 3 and 20% (the exact figure depends on the type of activity and is assigned by the tax office);
- Floating tax rate on the tax card (the exact figure is assigned by the tax office);
- Individualized terms (this option is available only for certain types of activity).
Who can start a sole proprietorship in Poland?
One of the significant advantages of a sole proprietorship in Poland is that this form of business can be opened by many individuals:
- Polish citizens;
- EU and EFTA citizens;
- Foreigners residing in Poland on the basis of a residence permit, Pole card or EU resident card;
- Foreigners with refugee status in Poland;
- Persons under the protection and protection of the RP;
- Foreigners on the basis of Poland.Business Harbour visa;
- Citizens of Belarus holding a humanitarian visa;
- Foreigners holding a residence permit on the basis of study;
- Family members from a Polish marriage.
The other main requirements for starting a sole proprietorship include being of legal age and having no criminal record. However, there are cases when it is impossible to register a sole proprietorship. This is due to the types of activities that are not allowed for individual entrepreneurs and all available activities are prescribed in this register. Not allowed:
- Engage in insurance or banking;
- Raise animals, plants and farming;
- Engage in sports clubs.
Registering a sole proprietorship (JDG) in Poland. Two current ways of registering a business activity
Here we come to the most interesting part of our article. As you may have already realised, in 2023 you can set up a sole proprietorship in two ways and it is much easier to do so than other forms of business.
→ Registering a sole proprietorship (JDG) online.
In this case, you will need to create a Trusted Profile «Profil Zaufany» (we told you how to do it earlier in this article). The very registration of you as a sole proprietor is done through the state portal Centralna Ewidencja i Informacja o Działalności Gospodarczej CEIDG.
On the CEIDG website you need to log in and confirm your identity by SMS. Next, you will have to fill in the form for opening a sole proprietorship, which must be filled out in Polish. This is the most important moment, as no mistakes can be made. The form contains information about the applicant, including document numbers and PESEL (if any). Information about the business you intend to run must be entered honestly.
After you have filled in all the required fields of the form, click on the «Dalej» button. If there are any errors in the form, the service will point them out to you, and if there are no errors, your application is sent for consideration. As practice shows, the consideration is quite fast and in a few days you can find your name in a special register. As an IE pays taxes for itself and its employees, you will need to register with ZUS within one week. Registration of a sole proprietorship is free of charge.
→ Registering a sole proprietorship (JDG) offline.
In this case, instead of a Trusted Profile, you will need to have an ID document. The procedure is essentially the same as online. Here you just have to come to the city or municipality office in person, take the form on the spot, fill it out and give it to the staff.
What are the alternatives to a sole proprietorship in Poland?
Many residents register a sole proprietorship because it is one of the simplest forms of entrepreneurship. But there are other forms that may be suitable for you:
- Unregistered business. If your income does not exceed 2700 PLN per month, you may not register a business at all, but only keep simplified accounting records and pay taxes. We explained more in our article.
- Spółka (analog of Russian LLC). It's a company that anyone can start.
- Business Incubator. In simple terms, it is an intermediary between you and your client. A three-party contract is signed and the business incubator takes a commission for its services.
Conclusion
Summarizing this article, we can highlight the key points:
- Sole proprietorship is an ideal option for those who wish to start a business in Poland.
- One of the advantages of a sole proprietorship is the choice of tax rate, which can vary from 18 to 32%.
- It is possible to set up a sole proprietorship both online and offline.
