Someone who is deciding to set up their own business in Poland must choose their activity’s legal form. It has a significant impact on the costs of running the company, the way it is registered, taxation, and personal responsibility for the company’s obligations. The types of companies in Poland are similar to those in EU countries. There are individual business activities, civil partnerships, and commercial companies, which are divided into capital and collaborations. Below you will discover information about each of them.
Single-person business activity
Currently, the most frequently chosen legal form of conducting business activity in Poland. According to data from 2018, more than 3 million entrepreneurs decided to run this type of company because this is the simplest legal form of business in Poland. The formalities connected with setting up a company are reduced to a minimum, no initial capital is needed, and those who do not exceed revenues of EUR 2,000,000 can benefit from simplified accounting. Besides, an entrepreneur may employ employees. The disadvantages of managing this type of a company include the fact that the entrepreneur is responsible for all his assets for the company’s liabilities. Regardless of whether the company is profitable or not, the firm must pay its penalties to the Social Insurance Institution. One-person business activity is best suited for small and medium-sized companies that are not exposed to high risk.
Civil law partnership
To establish this type of company in Poland, it is necessary to conclude a partnership agreement between entrepreneurs running their own businesses. It has no legal personality, does not pay income tax because its partners produce it. As in the case of a sole proprietorship, it can keep simplified accounting. It is characterized by a simple structure and ease of management, as all partners represent the company. Its drawbacks include taking high risks associated with the joint liability of the partners. Even if only one of them commits, they are all collectively liable for its regulation.
It is governed by the Code of Commercial Companies and Partnerships. Therefore, to establish it, it is necessary to create a written contract of association and register it in the National Court Register. It differs from a civil law partnership because it is possible to create a partnership agreement freely. To run this type of company in Poland, a minimum of 2 shareholders are required, who, unless the agreement states otherwise, is liable with all their assets for the company’s obligations. However, if the company owns its assets, the duties are regulated by these means first. This type of company in Poland is suitable for medium-sized companies operating in low-risk industries.
It is a little bit different type of company in Poland, created exclusively for doctors, architects, and lawyers. A necessary condition for its establishment is to draw up a contract in the form of a notarial deed and register it in the National Court Register. The previous examples do not pay income tax because the partners who pay the tax themselves are obliged to do so. All company members are responsible for the company’s obligations; however, they are not liable for damages caused by the performance of other members. The name of this type of company should include at least one partner.
It is type of business activity in which one of the partners (general partner) is liable for its obligations without any limitations. In contrast, the other partners’ liability (limited partners) is limited only to the sum of their contributions. This is a good idea for people with different financial possibilities. One may have an idea for its implementation and development, while the other may have the necessary financial resources to implement the project. All partners are obliged to pay income tax. During registration, it is essential to draw up a contract in the form of a notarial deed and register the National Court Register company.
Limited joint-stock partnership
It is a combination of two types of joint-stock company and limited partnership. The basis of its functioning is the statute, which is one of the company’s founding elements. Registration takes place by registering the company in the register of entrepreneurs and the National Court Register. To establish this type company, a minimum of 50 thousand zlotys is required, contributing to sharing capital. It is not possible to keep simplified accounting. There are both general partners, as in the case of a limited partnership, and shareholders responsible for separate areas of the company. They are not responsible for financial liabilities, while general partners have unlimited financial liability. The most significant advantage of this type of company is the possibility to raise capital by issuing shares. The disadvantages include the high cost of registration of the company and the necessity to have a minimum share capital.
Limited liability company
This is the most popular type of company in Poland. According to data from the Central Statistical Office, in 2018, 83.4% of all types of companies were limited liability companies. The minimum share capital to establish a company is 5000 PLN, so the shareholders’ financial responsibility is limited only to the amount of contributed money. To set up a company, it is necessary to draw up a written agreement in the form of a notarial deed and enter the company in the National Court Register. Running this type of company, it is necessary to keep full accounting, and therefore it is required to submit financial statements. The most significant advantages of this form of business activity include the partners’ lack of responsibility for the company’s obligations, the possibility of conducting business activity, and having a legal personality. Apart from the commitment to contribute share capital, the complicated process of establishing a limited liability company may also be discouraged by double taxation of income. The company pays income tax, and the part-owners pay it for the second time while paying out dividends.
This type of company in Poland does not differ much from joint-stock companies in other countries in the world. For its establishment, a share capital of PLN 100,000 is required. To establish a company, it is necessary to draw up a written agreement in the form of a notarial deed, make an own contribution, establish a management and supervisory board and make an entry in the National Court Register. As it is commonly known, the advantages of this legal form include the ease of obtaining additional capital through share issues. Its disadvantages include the complicated process of establishment and the necessity to have large share capital.
There are many different types of companies’ legal forms in Poland. Each of them is characterized by various features. Therefore, every entrepreneur starting a business in Poland should consider which of these forms will be the most suitable for him/her. To get to know companies’ legal documents in Poland in the best possible way, it is also worth visiting the government website Business in Poland.