"ABC" OF THE ENTREPRENEUR – SETTING UP A BUSINESS

Did you know that?

The primary act of law for the future entrepreneur is the Act on Entrepreneurs of March 6, 2018. However, as early as on March 31, 2009 the first proposals were introduced to facilitate setting up a business. The so-named "single window" was introduced, which enabled that all actions related to registering the business activity of a sole trader were made under a single application, thereby the formalities of registration were reduced as much as possible.

Who can become a sole trader?

It must be:

• an adult,
• a person who has capacity to perform acts in law.

The person does not have to be a citizen of Poland; it is sufficient that they are citizens of a member state of the European Union or the European Economic Area, while the persons outside the EEA must have a residence title, in order to set up a business equal to that set up by Polish citizens.

One person can set up only one business, while the scope of the business is not limited.

How is the business registered?

The registration is by a single action. It is sufficient to submit online an application on a form, which is then automatically sent to GUS [Central Statistical Office], US [Tax Office] and ZUS [Social Insurance Institution]/KRUS [Farmers' Social Security Fund].

Registration of business activity step by step

STEP 1

The person who intends to set up a business must specify the name under which they will operate. It must include at least the first and last name of the person concerned; a fancy name or a description of the activity can be added (in this respect, there is freedom). The permanent business address must also be indicated and, in addition, an address for service and additional business addresses may be indicated. It is important that the person has a legal title to the property (e.g. ownership, lease, lending for use agreement).

STEP 2

The next step is to correctly identify the Polish Classification of Activity [PKD], which is the 5-character symbol under which one indicates the type of activity performed. One should take due note of the fact that the first of the indicated codes (if there are several, there are no restrictions in this respect) should specify the main area of activity of a given business.

Are there any exceptions to the necessity to register a business?

Yes, there are several. One is when:

• the income from the activity will be small and, more precisely, in each month the income will not exceed 75% of the amount of the minimum wage in force in the given year (from 1 July 2023, and until 30 June 2023, 50% of the amount of the minimum wage)
• agrotourism activity by farmers, wine production by farmers, agricultural retail activities or activities of a rural housewives' association.

What one should bear in mind?

It is important to remember that certain types of business activity may require concessions, permits, licences or other authorisations. The most common reason for a restriction on business activity are issues relevant to the functioning of the state, including security and public interest. Also, restrictions on business activity may arise from the profession of an entrepreneur.

It that all?

Before registering own business, every entrepreneur must also choose a form of taxation and check whether they have to pay VAT. The form of bookkeeping must also be decided, as well as the bank account the entrepreneur will use. These issues will be discussed in detail in the next article.

Even though to start business one does not have to have any capital, and submission of an application is also free of charge, one has to reckon with the necessity to pay social security contributions, regardless of the income obtained. However, it is possible to obtain the so-called 'Start-up Relief', as well as a reduction in the rate to a preferential basis for 24 months.

In the application for registration of business activity, it is also possible to indicate an agent, who will have the right to represent the entrepreneur within the scope specified in the power of attorney, as well as a successor administrator, which we will discuss in further articles in the series ABC of the Entrepreneur.

Above, we have indicated the most convenient form of submitting an application, i.e. online, by use of a trusted profile or a qualified signature. However, let us not forget about the possibility of submitting the application in person at a given community or town/city office.

I invite you to read further articles on business activity.