How to Register a Sole Proprietorship in Poland

Sole proprietorship, Jednoosobowa działalność gospodarcza, JDG – all these refer to a form of business in Poland that allows for independent management of operations without the need to establish a separate legal entity.

This is the easiest legal option for being self-employed in this country. At the same time, this form of employment involves certain risks.

In this guide, we have compiled practical recommendations for registering and terminating a Polish sole proprietorship. You will also find information about the benefits of this step and the key requirements you’ll need to meet.

Understanding Sole Proprietorship in Poland

A sole proprietorship is a form of business where it is owned and managed by one person – an individual entrepreneur. At the same time, it does not require establishing a legal entity distinct from the business owner.

This type of employment is rightfully widespread in Poland, particularly among small business entrepreneurs. The reason lies in its flexibility and relatively simple registration procedure.

However, if you choose to start a JDG, it’s important to keep in mind a key downside of this business model – the entrepreneur bears unlimited liability.  That means the owner is personally liable for all the company’s obligations.

Who Can Open a Sole Proprietorship in Poland?

To be able to become an individual entrepreneur in Poland, you must fall into one of the following categories:

1. EU or EFTA citizens. Citizens of the European Union and the European Free Trade Association can freely establish a JDG in Poland without additional permits or restrictions.

2. Citizens of non-EU countries. If you are a citizen of a country that is not part of the European Union – don’t worry. You also have the opportunity to register a Jednoosobowa działalność gospodarcza. However, certain status is required for this.

You can open a JDG in Poland if you have:

• a permanent residence permit in the country (Karta Stałego Pobytu);
• EU long-term resident status (Karta Long-Term Rezydenta UE);
• a temporary residence permit (Karta Czasowego Pobytu) with the right to work;
• a Pole’s Card (Karta Polaka);
• a Poland Business Harbour visa (intended for IT specialists);
• a PESEL number with the UKR mark (for citizens of Ukraine who arrived in the country after February 24, 2022).

All these individuals have the legal right to stay in Poland and conduct business in the country. However, requirements may vary depending on the category. Therefore, to avoid unnecessary issues, it’s better to consult professional lawyers on registering a Polish sole proprietorship.

Key Benefits of a Sole Proprietorship in Poland

If you are considering a jurisdiction for establishing and conducting business in the European market, Poland is definitely a worthy option. Poland company formation offers entrepreneurs the following advantages:

1. Simple registration procedure. How to open a sole proprietorship in Poland? If desired, it can even be done online. There is a Central Registration and Information on Business (CEIDG) portal for this. Moreover, it’s completely free of charge.

Thus, at the initial stage, you can avoid unnecessary paperwork and burdensome fees.

2. Full control over the business. When registering a JDG, you will single-handedly control all operations and make decisions. This promotes flexibility and the ability to quickly adapt to a changing market.

3. No capital requirements. Unlike other legal forms of Polish enterprises, JDG founders are not required to deposit a specific amount into an account.

4. Favorable tax environment. Polish individual entrepreneurs benefit from simplified taxation schemes. Certain conditions also allow them to apply for reduced tax rates.

Additionally, don’t forget the general advantage of sole proprietorships – income from the business is usually subject to personal income tax (PIT). This helps avoid double taxation.

5. Simplified accounting. In Poland, JDGs are subject to more lenient accounting requirements than other types of companies. This allows for significant savings.

6. Access to social security and medical insurance. As an individual entrepreneur, you are required to pay contributions to Poland’s social security and health insurance system. What does this give you? In the future, you may qualify for certain benefits – including in healthcare, retirement, and in case of job loss.

Considering all the advantages of Jednoosobowa działalność gospodarcza, one can conclude that it is an ideal choice for startups and other forms of small business. You get the opportunity to test your idea without significant capital investment.

Essential Documents for Registering a Sole Proprietorship

To become an individual entrepreneur in Poland, you will need to provide the following documents:

• Valid identification. If you are a citizen of Poland, it is enough to present a dowód osobisty – the national identity card. Non-residents will need a passport or another identification document.
• PESEL number. This applies to Polish citizens or foreigners who have been assigned one.
• Tax Identification Number (NIP). This document is necessary for taxation purposes. If you do not have either a NIP or PESEL number, you will need to apply for one.
• Business registration address. There are no specific requirements for this in Poland. It may be your home address, a rented space, or a virtual office.

Also, to register a JDG, you need to submit a registration form. This can be done in person (at any CEIDG municipal office) or online. If you choose the latter, you will need an electronic signature. It can be obtained through the ePUAP platform – the Polish electronic communication system.

Sole Proprietorship Registration in Poland: Key Steps

How to register a sole proprietorship in Poland? The process takes place in several stages.

Choose Your Business Name

What should you consider? First of all, the name of the company should clearly reflect the nature of your activity – so as not to mislead potential clients. Generally, the name of a JDG must include the entrepreneur’s name or a variation of it.

However, this is not mandatory. You can create your own brand name, provided it does not infringe on someone else’s trademark (intellectual property). To ensure name uniqueness, check the registers of the Polish Patent Office.

Prepare Required Documents

Prepare the set of documents we discussed in the previous section. To recap, this should include an identity document, PESEL number, NIP, and a document confirming the business registration address.

Register at CEIDG

To do this, you need to visit the office in person or apply online, submit the prepared documents, and fill out a special form. The form must include the following information:

• personal data;
• company name;
• type of activity (select the appropriate PKD code based on the EU NACE classification system);
• tax details;
• social security options.

Obtain a NIP (Tax Identification Number)

To interact with the tax office, you will need either a PESEL number or a Tax Identification Number (NIP). If you have not been assigned the former, you must apply for a NIP. To do so, you should contact the Tax Office (Urząd Skarbowy).

An advantage of this jurisdiction is that this can also be done online, without a personal visit to the tax authority.

Register for VAT

This step is relevant if your annual turnover exceeds the VAT registration threshold. Currently, it is 200,000 PLN. Other conditions include engaging in certain activities — for example, the export of goods.

If the threshold is not reached, you can still voluntarily register as a VAT payer. This may be useful for reclaiming VAT on business expenses.

In any case, to register, you must submit the VAT-R form to the Tax Office.

Set up ZUS (Social Insurance) Contributions

As previously mentioned, Polish individual entrepreneurs are required to pay contributions to the social security and health insurance system. The advantage is that you can independently choose the type of payments you will make. When deciding, take into account your income and personal needs.

To register in the system, submit an application to the Social Insurance Institution (ZUS). This can be done in person or via the online portal.

Open a Business Bank Account

This step is not mandatory for Polish entrepreneurs. However, it is still recommended. Such a step will allow you to separate business and personal finances, and also simplify accounting and tax reporting.

Opening an account in Poland requires submitting the following documents:

• certificate of registration in CEIDG;
• NIP number;
• identity document.

When choosing a bank, consider the service fees, available services, and tools.

Tax Rules for Sole Proprietorship Income

When it comes to taxation, Polish individual entrepreneurs have a major advantage. They can choose the method by which their income will be taxed. Usually, the choice depends on the income level and the business sector of the company:

Accounting for Sole Proprietorships

Depending on the level of income and the complexity of the business, Polish entrepreneurs can maintain simplified or full accounting.

Here is the main information regarding the specifics of this process:

1. Simplified accounting. Most entrepreneurs in Poland are required to keep the KPiR – Book of Revenues and Expenses. This method is sufficient for small and medium-sized businesses with income below a certain threshold – usually 2 million PLN.

The main purpose of KPiR is to calculate taxable income based on the difference between the company’s revenue and its expenses.

Note: For JDGs that have chosen lump-sum taxation, KPiR is not required, as tax for them is calculated solely based on revenue.

2. Full accounting. If your income exceeds 2 million PLN, you must maintain full accounting. This involves preparing balance sheets, profit and loss statements, and keeping records of all assets and liabilities. In general, this resembles the accounting typically done by corporate entities.

It is recommended to entrust accounting to an experienced specialist. This ensures timely submission of reports and guarantees compliance with tax regulations.

Suspending Sole Proprietorship Activity in Poland

We have already covered how to register a sole proprietorship in Poland, but there may be situations when you need to suspend operations.

Suspension of JDG activity is advisable when you are currently not engaged in any commercial activity but plan to resume it in the future.

This step allows you to:

• suspend the payment of taxes and social insurance contributions;
• avoid current obligations to file tax declarations and fulfill other operational requirements;
• retain business registration.

Suspending sole proprietorship activity in Poland involves several steps:

• Change your company data on the CEIDG portal. Log into your account and indicate the desired period of suspension (up to 24 months).
• Submit an application for suspension. This can be done online on the same portal.
• Suspend contributions to ZUS. This step is optional. However, if you decide to proceed, keep in mind that during the suspension period, you will not be insured.

Once your application is approved and your business is suspended, it is important to ensure that no commercial activity is being conducted.

Closing a Sole Proprietorship in Poland

To close a Jednoosobowa Działalność Gospodarcza (sole proprietorship), you must also follow a specific procedure:

1. Notification to CEIDG. To do this, edit your company profile on the CEIDG portal by selecting the “close business” option. You must also fill out a simple form to officially declare the termination of activity.
2. Form submission.  You can submit the application to close the sole proprietorship online immediately after completing the form. Once the application is reviewed, your company will be removed from the CEIDG register. Other authorities, such as ZUS, will also be notified automatically.
3. Fulfillment of tax obligations and ZUS contributions. It is important to pay all taxes that have accrued during the business’s operation. You must also file final tax declarations. The same applies to ZUS contributions. If you have any outstanding payments, they must be settled.
4. Settlement of other financial matters. Next, it is important to repay all company debts and close the corporate bank account.

Note: Unlike corporate entities, the closure of a JDG does not require a liquidation process. The business is considered closed immediately after submitting the application to CEIDG.

Legal Assistance from Lawrange

The lawyers at Lawrange are ready to provide you with full support during your entry into the European market.

Our company offers:

• 10+ years of experience in international business.
• Expertise in legal matters, accounting, and taxation.
• A personalized approach to each client, taking into account the specifics of their business and individual requests.

Contact our expert to find out how to set up a sole proprietorship in Poland quickly and easily.

Conclusion

Establishing a sole proprietorship in Poland is a relatively simple procedure that can be completed online. Nevertheless, it requires preparation of a specific set of documents, filling out special forms, and interacting with relevant institutions.

To ensure everything goes smoothly, seek support from the experts at Lawrange. We will guide you through every step of your business setup, including company registration, opening a bank account, and consulting on taxation and accounting matters.

Remember: setting up a JDG on your own is possible. However, only with the help of true professionals can you save time and focus on achieving your global business goals.

FAQ

How long does it take to register a sole proprietorship in Poland?

The procedure for registering a Polish sole proprietorship is highly efficient. Typically, it takes no more than 1–3 working days — provided that all requirements are met, and necessary steps are followed.

What are the costs involved in registering a sole proprietorship in Poland?

The registration of a sole proprietorship in Poland is free of charge. However, there may be additional expenses. For instance, consider the cost of opening a corporate bank account and administrative fees. In the future, be prepared for ZUS contributions, which amount to approximately 1,400 PLN per month.

Can a foreigner register a sole proprietorship in Poland?

Yes, it is possible. Citizens of the EU and EEA can do so without additional permits or restrictions. If you are a citizen of a non-EU country, you must have legal grounds to conduct business activity in Poland. For example, permanent or temporary residence, EU long-term resident status, a Poland. Business Harbour visa, etc.

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