The Foundation Ukraine together with Andrij Robotetskyy prepared a short guide to the world of business for migrants. In this article you will find important aspects about the choice of the legal form and form of taxation of the enterprise and important issues at the stage of registering your own business.
The number of foreigners who live in Poland is constantly increasing. In just 7 years, the number of immigrants running their own business has increased by nearly 55 percent. According to ZUS data, for the second quarter of 2019, 18,784 foreigners run their own business in Poland. It is also the highest value in the history since ZUS keeps such register.
How a migrant can set up a company in Poland (formal and legal requirements, barriers and criteria)?
Nowadays, the lack of Polish citizenship is not an obstacle for a foreigner to run his own business in Poland. However, some legal forms of economic activity have additional requirements for their potential founders. Therefore, in order to set up your own company in Poland you must follow 6 basic steps.
Step 1. Choose the legal form of the enterprise
Depending on whether the entrepreneur wants to run the company alone or with partners, he has a choice of various legal forms. However, two of the most popular among Poles and migrants are sole proprietorships and a limited liability company.
- Limited Liability Company
This legal form is the most attractive for foreigners due to the lack of additional residence requirements.
Share capital: at least 5000 PLN
Registration costs: 375 PLN for setting up a company via an online portal s24 (inelastic partnership agreement) or 1500 PLN for setting up a company, customarily, with a notary (elastic partnership agreement).
Registration time: 24 hours (registration via online portal s24), 14 working days (registration with a notary)
Full accounting system: from 500 PLN per month (depending on accounting office and the quantity of invoices issued during a month)
Insurance premiums (Social Insurance Institution): 0 PLN (in case when the entrepreneur will not be employed in the company)
Corporate income tax: 9% or 19%
- A sole proprietorship
When the taxpayer wants to conduct business in person, this legal form is the most profitable. This type of business is easy to set up and quite cheap to run in comparison with other legal forms. The company is established on the basis of submitting an application for registration in CEIDG. A sole proprietorship is the most suitable for micro and small businesses.
Share capital: not required
Registration costs: free of charge (an application for registration in CEIDG)
Registration time: 24 hours (registration in CEIDG via online portal), 14 working days (registration with a notary)
Single-entry accounting system: from 150 PLN per month (depending on accounting office and quantity of invoices issued during a month)
Insurance premiums (Social Insurance Institution): State support at the beginning – 362,34zł per month (first half of the year), allowances and breaks in ZUS contribution payments – 609,14zł per month (for another one and half of the year), the basic contribution – 1431,48zł (as from 2 years after running a business).
Personal income tax: 17%, 32%, 19%
Unfortunately, in Poland there are certain legal restrictions for foreigners from outside the European Union who want to set up a sole proprietorship. One of the requirements is described hereafter: https://www.ifirma.pl/lp/zakladanie-dzialalnosci-przez-cudzoziemca.
Step 2. Choose the form of taxation
This choice determines the terms on which the entrepreneur will pay taxes. You can change the form of taxation at the beginning of each year by submitting a special application to the Tax Office. More information is available hereafter: https://poradnikprzedsiebiorcy.pl/-formy-opodatkowania-jaka-wybrac.
It is noteworthy that we pay tax on income, i.e. income is decreased by business expenses. On this account running a business requires a documentation of all generated costs such as collecting invoices for the purchase of products or services related to the business.
Step 3. Selection of Polish Classification of Businesses Points
Each type of business is precisely defined by Polish Classification of Businesses points, for example retail sale of alcohol or construction services. Polish Classification of Businesses points should be indicated in the CEIDG application for sole proprietorship and in the partnership agreement or in the S24 entry form regarding a limited liability company. Hereunder, the future entrepreneur can check which Polish Classification of Businesses codes correspond to his type of activity: https://www.biznes.gov.pl/pl/klasyfikacja-pkd
Step 4. Selection of accounting office
A good accountant is an advisor to an entrepreneur in the financial matters, so the success of the enterprise depends also on the choice of an accountant or accounting office. Accounting offices often offer a wide range of services such as the settlement of revenues and costs. Usually, the services also include: opening / closing a business, VAT registration or power of attorney at the Social Insurance Institution
Step 5. Company Registration in CEIDG and S24
To register a company online appropriate applications from the below links should be completed:
Accounting offices which deal with the registration of companies may also help with all formal issues.
Step 6: Opening a company bank account
There are many banks on the Polish market and it is difficult to choose the best one. Details that are worth paying attention to when choosing a bank are: account maintenance fees, loan products or leasing. To match the most convenient offer for your company you can use the bank comparison on the website: https://www.najlepszekonto.pl/ranking-kont-firmowych
Permits, concessions or authorizations – licensed activity
Before starting the activity, it is necessary to check whether an additional license, certificate or concession is required. According to the report of the Polish Academy of Sciences, the Committee for Migration Research for 2019, retail sales are the most popular activities among migrants. Often the retail sale itself also includes alcohols that can only be sold with the appropriate license and approval of the sanitary-epidemiological station. You can find out more about obtaining various permits, concessions or licenses on below website: https://www.biznes.gov.pl/pl/firma/zezwolenia-koncesje-wpisy-do-rejestru/chce-uzyskac-zezwolenie-koncesje-wpis-do-rejestru-dzialalnosci-regulowanej54
Is it worth legalizing your stay on the basis of your own business?
It is worth noticing that business activity is also the basis for applying for a temporary residence card with a validity period of up to 3 years. The process of applying for a residence permit in this case is more complicated than in the case of, for example, a permit based on an employment contract, due to the greater number of documents that must be attached. Nevertheless, it is popular among entrepreneurs from outside Poland. Details on this can be found in the link below:
What are the advantages and disadvantages of running a business in Poland?
– Regarding sole proprietorships – monthly obligation to pay social contributions in Social Insurance Institution
– The need for constant looking for customers. The goal of business is to make a profit. To be able to make a profit, we must sell, to sell, we must have customers, and wining the first customers is not the easiest task.
– No guarantee of stable income.
– Poland is the largest beneficiary of EU funds. Due to that, there are many various programs for business support, development and financing opportunities (including start-up grants, innovation vouchers or funding for research and development projects). You can learn more about this in the link:
– Many business support enterprises, entrepreneurship incubators, business accelerators or programs supporting small and medium-sized businesses give a novice entrepreneur access to expert knowledge for which she or he does not have to pay. You can learn more about the support programs here: https://www.parp.gov.pl/
– Free trade with European Union countries. It means that there are no restrictions related to conducting commercial transactions within the EU, importing or exporting goods and services.
– The operating costs reduce the paid tax. When running your own business, you can deduct the costs of maintaining it from your income, e.g. fuel purchases, subscription bills or renting premises.
How to verify the potential of a business idea and prepare an effective strategy?
Undermentioned actions should be taken before registering a company in order to reduce the risk of failure and increase the chance of success:
– Market and competition analysis
– Choosing your niche (specify what problem you are solving)
– Validation of the business idea (s), e.g. interviews, surveys, observation.
– Defining the business model
– Precise definition of our client (Persona) and determination of the target group
– Defining our unique selling proposition (USP)
– Preparation of a marketing strategy
– Building a team
– Defining the strategy and cost of acquiring customers
– Preparation of the budget
– Obtaining financing
Very useful tools which let us describe our business model, define the client or conduct competition analysis are:
1) Business Model Canvas (https://businessmakeover.eu/tools/business-model-canvas )|
2) Persona (https://businessmakeover.eu/tools/persona )
3) Competition analysis (https://businessmakeover.eu/tools/competitor-analysis)
We wish you success in establishing and running your own business and encourage you to contact the Foundation Ukraine specialists on our social media pages.
Facebook: https://www.facebook.com/CUKR.Wroclaw/ and https://www.facebook.com/fundacja.ukraina/.
The ReSTART project is co-financed by the National Asylum, Migration and Integration Fund Program and the state budget.