One-person business - what is worth knowing?

Thinking about starting your own business, but not quite sure how to do it? Are you terrified of running around offices and wading through the maze of procedures? It's easier than you think. We explain what a sole proprietorship is and what you should know if you want to start one.

Business activity - basic definition

According to the provisions of the Law on Entrepreneurs of March 6, 2018, a business activity is "an organized profit-making activity performed on its own behalf and continuously." To fully qualify an activity as a business, the following prerequisites must be met:

• profit-making purpose,
• continuity of performance,
• repetitive activities,
• The organization of work and the places where it is carried out,
• performance on its own behalf,
• own management and responsibility,
• Bearing the direct risks associated with the activities performed.

How to set up a sole proprietorship (JDG) ?

You don't have to walk through offices to get the paperwork done - today you will set up a company online. In the so-called one-stop shop on biznes.gov.pl you will be efficiently guided through the entire process. Information about the start of your business will be forwarded to the Social Security and the tax office. Of course, you can also set it up in person at a city or municipal office by submitting the appropriate applications.

Before starting online registration, prepare your data and documents, it will make it easier to fill out the application:

• Name, surname, parents' names, date and place of birth,
• type, series and number of identity document,
• PESEL, if you have Polish citizenship or have been granted it,
• all citizenships held,
• TIN and REGON number, if assigned,
• residential and other addresses related to the established business,
• the name of the business to be established,
• abbreviated name,
• PKD codes,
• The number of employees, if you plan to hire them,
• date of commencement of operations,
• information about insurance in Social Security, KRUS or abroad,
• Data of the tax office with jurisdiction over your place of residence.

If you don't have a TIN or REGON, the application for entry in the business register will be at the same time an application for them. TIN and REGON will be automatically completed in your entry - TIN within 1 business day, REGON within 7 days.

You can run a sole proprietorship on your own if you are at least 18 years old. Minors who want to run their own business must be assisted by their legal representatives, which in most cases are their parents. You do not have to be a Polish citizen. Citizens of EU and European Economic Area member states can undertake and carry out business activities in Poland on the same basis as Poles. Citizens of non-EU and EEA countries, on the other hand, must have, for example, a permanent residence permit, an EU long-term resident permit or a temporary residence permit issued for a specific purpose, such as studying in Poland.

Does the business have to be registered with CEIDG?

When setting up a sole proprietorship, you must register with the Central Register of Business Activity and Information (CEIDG). This is nothing more than a register of entrepreneurs conducting sole proprietorships in Poland. Entrepreneurs wishing to become partners in a civil partnership also register there. If, on the other hand, you anticipate making a small income from your business, you do not need to register as an entrepreneur.

You can conduct non-registered activities when:

• income from operations does not exceed 50% of the minimum wage per month (in 2022 it is PLN 3010),
• you are an individual,
• you are not doing business in a partnership,
• you are not engaged in regulated activities that require permits or licenses,
• you have not done business in the last 60 months.

You also do not need to register your business if you are a farmer and:

• You are running an agritourism business,
• producing wine,
• You are engaged in agricultural retail trade.

Benefits of not registering your business:

• You do not need to report the JDG to the CEIDG, tax office and CSO records,
• You do not have to pay advance tax or Social Security contributions,
• as part of your bookkeeping, you only keep simplified sales records.

Advantages and disadvantages of running a sole proprietorship

Like any form of business, a JDG has its advantages and disadvantages. It is the simplest form, easy to register and the least expensive investment.

Advantages:

• You do not incur investment costs in setting up your own business,
• You don't have to create company capital,
• You can easily open, but also suspend or liquidate your business,
• You have a choice of different forms of taxation,
• You incur relatively small accounting service costs,
• You don't have to report in a complicated way.

Disadvantages:

• You are liable for obligations with all your assets,
• You pay your own insurance premiums to the Social Security,
• you must have knowledge of tax laws, although it is good to use the services and advice of a professional accounting firm.

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