Establishing individual business activity (jednoosobowa działalność gospodarcza) by one natural person is a basic form of business operation in Poland. The process of launching and operating such a business, including registration, is relatively easy. This makes individual business activity appropriate for self-employed persons, i.e. those operating independently, with little or no involvement of third parties.
Who can operate an individual business activity?
An individual business activity may be established only by natural persons with legal capacity, including the capacity to act on their own behalf and the capacity to sue and be sued (e.g. having reached age 18).
A foreigner may establish and operate a business under the same rules as a Polish citizen if the foreigner is:
- A citizen of a member state of the European Union or the European Economic Area, or
- A citizen of another country holding, inter alia:
- A Polish permanent residence permit
- A long-term EU residence permit
- A temporary residence permit, for example in connection with joining family members legally present in Poland
- A temporary residence permit, and married to a Polish citizen residing in Poland
- A temporary residence permit for the purpose of conducting business activity, issued to continue business already conducted on the basis of an entry in the Central Registration and Information on Business (CEIDG), or
- A valid Pole’s Card (Karta Polaka).
Foreigners may take up business activity in Poland without meeting the foregoing requirements, or other requirements, exclusively as partners or shareholders in a limited partnership (spółka komandytowa), a joint-stock limited partnership (spółka komandytowo-akcyjna), a limited-liability company (spółka z ograniczoną odpowiedzialnością), or a joint-stock company (spółka akcyjna).
Is it necessary to conclude any contract or gather a certain amount of capital before launching a business?
Unlike operating through a partnership or company, operating individual business activity does not require conclusion of contracts, payment of share capital (e.g. minimum cash or in-kind capital contribution to a company) or other such formalities.
Nonetheless, it is recommended that anyone planning to open individual business activity have a certain amount of funds at their disposal for launch and further operation of the business.
Depending on actual situation on the market an individual may seek for attractive financing provided by district job agencies (non-returnable one-off funds to start the business or low-interest loans – less than 1% per year), however these are usually reserved only for Polish citizens or foreigners holding a Polish permanent residence permit.
How is an individual business activity registered? Is it possible to operate more than one business?
An individual planning to operate a business in Poland must register the business with the Central Registration and Information on Business (CEIDG).
The application may be filed online at the CEIDG website (with a qualified electronic signature or trusted signature under the e-PUAP system), or completed by hand and filed with the municipality where the person plans to operate the business. If the application is filed by an attorney or by certified mail, the signature and thus the identity of the business owner must be confirmed in the application by a notary.
The application must include, among other things, the name of the business (at least the first and last name of the operator), the date for launch of operations, and the scope of the business, based on the codes used in the Polish Classification of Activities (PKD).
A declaration that no prohibitions have been imposed on the business operator by law or by legal and administrative authorities (e.g. a ban on conducting a specific type of activity) must also be enclosed with the application.
It is not permissible for the same individual to register multiple individual business activities. The business operator may obtain only one entry in CEIDG, but it is possible to conduct different types of activity under the same entry.
What are the costs of registering a business and how long does it take?
There is no filing fee.
If the application is correctly filed, as a rule the entry will appear in CEIDG the next business day. A registration certificate may be downloaded from the CEIDG website.
Who represents the business and is responsible for liabilities arising from operation of the business?
The individual business operator represents the business personally, but it is also possible for the operator to issue a general power of attorney or a power of attorney to perform specific actions.
The business operator is liable with all his or her assets (including personal assets) for obligations arising from operation of the business. The business operator’s spouse is jointly and severally liable for such obligations along with the business operator if they maintain joint marital property, not severed by any agreement or final judicial ruling.
What are the tax, accounting and employment obligations in the case of operating an individual business activity?
The business operator will automatically be issued a tax number (NIP) and statistical number (REGON) upon registration of the business in CEIDG. The NIP number is provided for example on invoices, while the REGON number is used for statistical purposes.
The business operator may select one of several available forms of personal income taxation, i.e. according to the tax scale, the flat-rate tax, lump-sum tax based on recorded revenue, or the tax card. An annual tax return is filed using official forms.
It is possible to obtain a VAT number if the person plans to operate a business involving trading in goods.
Registration of the business operator as a remitter to the Social Insurance Institution (ZUS) occurs automatically along with registration of the business. However, the operator must independently register himself and his employees as insureds. This can be done online or in writing on the CEIDG form.
Can an individual business activity be operated within an ordinary partnership with other individual businesses?
No, these are separate institutions. While registration of an ordinary partnership (spółka cywilna) is also made by filing an application with CEIDG, the process for registering and operating such a partnership entails more formalities.
More information on operating in the form of partnerships and companies will be found in subsequent articles in the series “Opening business in Poland.”
Łukasz Śliwiński, attorney-at-law, Daria Goliszewska, M&A and Corporate practice, Wardyński & Partners