Sole Proprietorship in Poland

Poland is one of the premier locations for companies willing to enter the European single market. The country ranks first in Central and Eastern European investment projects. It also ranks 40 out of 190 economies on the 2020 Ease of Doing Business Report by the World Bank. 

Poland has one of the most resilient economies in the European Union and a GDP of 679.44 billion USD in 2021. Furthermore, the country also has a robust domestic labor market, which encourages businesses worldwide to establish in this country.  Companies can establish their presence in the country to leverage its low labor cost and tax incentives. 

Setting up a sole proprietorship in Poland is a relatively simple process and requires a basic understanding of the relevant laws and norms. Continue reading to understand how to register a sole proprietorship in Poland. 

Do You Have to Register Your Sole Proprietorship in Poland?

A sole proprietorship is a business form with one owner liable to pay personal income tax on the profits earned from the business entity. Anyone can set up a sole proprietorship in Poland, regardless of nationality. 

It is necessary to register a sole proprietorship in Poland to conduct operations legally in the country. Non-EU citizens can set up and register for a sole proprietorship if they meet specific business criteria. 

Companies can register their sole proprietorship by filling CEIDG-1 form issued by the Central Register of Information on Economic Activities (CEIDG). 

Benefits of Sole Proprietorship in Poland

A sole proprietorship in Poland comes with its benefits, which are as follows:

• Easy to set up: One of the most significant advantages of a sole proprietorship in Poland is its simplicity. This type of business requires much less paperwork to establish. Furthermore, the paperwork for registering a sole proprietorship in Poland can be carried out online without any hassle. 
• Affordable: The cost of setting up a sole proprietorship in Poland is meager. Firstly, there is no fee required to register this type of business. Furthermore, even though there is a sole proprietorship tax in Poland (that lasts for only the first two and half years), the rates are pretty low:

1. 1. 350 PLN for the first six months
   2. 550 PLN per month for the rest of the 24 months
   3. Minimal assets: Unlike other business models, a sole proprietorship has no minimum asset or capital to be maintained. Furthermore, there is no minimum investment amount, either.

Documents Required for Registering Your Business in Poland

To successfully set up a sole proprietorship in Poland, companies must submit the following documents, along with their filled-out and duly signed CEIDG-1 form:

• Specifications of the sole proprietor 
• Citizenship proof
• Date of birth
• Sole proprietor’s business/residence address
• PKD code
• Company name
• Contact details
• Income tax payment form
• Date of starting operations

Other Criteria for Registering a Sole Proprietorship in Poland

In general, permanent residents of Poland, the EU, and the USA can easily set up a sole proprietorship in Poland. Foreigners who do not fall under this category can also register a sole proprietorship in Poland on the provision of one of the following residence documents:

• Residence permit for long-term EU resident
• Permanent residence permit
• Refugee status
• Poland Business Harbor Visa
• Temporary residence permit granted for full-time studies
• Temporary residence permit granted to an individual residing in Poland due to family reunification
• Subsidiary protection (protection for individuals who want asylum but do not qualify as refugees)
• Temporary residence permit and marriage contract granted due to marriage with a Polish citizen
• Permit to stay on humanitarian grounds
• Temporary residence permit for economic activity (only granted to allow continuation of economic activity after registering with CEIDG)

In addition, foreigners who satisfy the following conditions can also set up and operate a sole proprietorship in the country:

• Have a valid Pole’s card
• Are granted temporary protection in Poland
• Are family members joining the citizens of the state

How to Register a Sole Proprietorship Company in Poland 

To register your sole proprietorship company in Poland, you will have to follow the given steps:

• Check your eligibility: To successfully set up a sole proprietorship in Poland, you must ensure you are eligible. 
• Choose your form of accounting: Next, you will have to hire an accounting office to carry out your financial responsibilities. After choosing one, you must also pick your form of accounting documentation. The options for types of documentation are-

1. 1. Revenue and expense ledger
   2. Accounting books
   3. Other registers
   4. Accountancy document not maintained
   5. It is essential to note that accounting documentation must be maintained by businesses earning over 1.2 million Euros every year. Additionally, individuals following flat tax or progressive tax with an income of fewer than 1.2 million Euros yearly can maintain a revenue and expense ledger.

• Finalize your company name: Decide your company’s name to register as a sole proprietor. In Poland, sole proprietors must have the owner’s name as part of their company names.
• Select your PKD code: A PKD code lets the government know what business you are operating. You can easily select a PKD code for your company for free from a PKD code list.
• Choose your income tax form: Overall, four types of tax systems exist for entrepreneurs in Poland. These four types are tax scale, lump sum on registered income, flat tax rate, and fixed tax amount or tax card. Let a tax advisor guide you on which taxation form will work most in your favor.
• Check for VAT liabilities: Companies earning more than PLN 200,000 per year must register for VAT. The VAT rates are either 5%, 8%, or 23%.
• Decide your tax-paying frequency: While registering for a sole proprietorship, you can choose your income tax payment frequency. You can either choose to pay on a monthly or quarterly basis. In general, new business owners choose to pay their income taxes every quarter. 
• Setting up your bank account: In the case of a sole proprietor, you can either open a new bank account in your company’s name or continue using your account. However, you should be the only one operating the account in the latter’s case.  
• Registering with CEIDG: Finally, you can register with CEIDG. In this step, you must provide all the necessary documents and the signed registration form. After completing this step, you can easily run your sole proprietorship in Poland.  

How Multiplier Can Help You

Multiplier is a global SaaS-based PEO-EOR platform that helps companies to set up and streamline their payroll services. Here at Multiplier, we provide a solid infrastructure to employ talent and manage them. Furthermore, you can efficiently run your sole proprietorship with our efficient payroll processing and management. You can pay and engage freelancers worldwide with our one-click payroll services.