It can come as shock to some people looking for work in the city to find out they need to set up their own private company in order to get paid. It seems unusual at first, but it is in fact very commonplace here in Poland. To help you through what appears to be a complicated process, Wroclaw Uncut and Infolink have come together to produce this handy walkthrough guide.
Why do I need my own business?
Unfortunately due to Polish employment law and the high taxation that comes with it, many small and medium sized businesses in the country simply don’t have the cash to employ people via a traditional work contract. If they did, not only would you have to pay your national insurance contribution (or ZUS here in Poland), but they would too. This double wammy costs companies a fortune, and therefore invoicing a private individual for offering a service is a lot more cost effective for them.
What does it mean for me?
Well, ultimately you’ll need to take on a fair whack of responsibility as you’ll have to pay your own national insurance and tax, as well as keep a record of your earnings and costs.
That admittedly doesn’t sound so great, but you do have the advantage of being able to get invoices and claim for costs, which in turn lowers the amount of income tax you pay. Electronic equipment is a popular example. You’ve always needed that 42 Inch LED TV for your language lessons, haven’t you? 😉
Another advantage of having your own business and doing things by the record is that you have access to the public health system. While the Polish national health service is far from being the best in the world, it’s much better than nothing – especially if you have an accident.
A major downside however, is having to pay a fix rate of national insurance, which can be a killer for many freelancers that have a quiet month. Nevertheless, for the first two years new businesses need only pay 50% of the standard ZUS rate. So if you’re not going to be around for the long haul, it could be an option for you.
Who has the right to set up a business?
For several years now the Polish legislate having been trying to simplify the process of setting up a company. Nowadays anyone from the EU, Norway, Iceland, Liechtenstein, Switzerland or the USA can in theory be a sole trader on the same terms as the Polish citizens.
As for people coming from countries other than the above mentioned, unfortunately they cannot operate as a ‘sole proprietorship’. They can however start a limited partnership, limited joint stock partnership, limited liability company or incorporated company. To find out about those, please contact Infolink or visit our office.
OK, so what do I need to set my business up?
To fill out your form you need no longer have a Polish PESEL, as your passport number will do just fine.
In theory, you’ll also need to present a deed of ownership or a contract of lease for the address of your company’s HQ and the correspondence address (both of which could be your home). If you don’t have these documents, then there is a chance that the clerk won’t ask you for them, but unfortunately it is unlikely you’ll get away with it.
If you are planning on staying in Poland for more than 3 months, then you should in theory also register your residence at the urzad wojewodzki. For more on that process, feel free to contact us at Infolink or come to our office.
Right, so what’s next?
There are a number of steps that need to be taken before your business is operational. Let us take you through them as simply as we can:
Step 1: Fill in the form
First you’ll need to fill in the business registration form, which can be accessed in English via this link:
When you click on the link, the website will be in Polish. You can however click on the ‘EN’ button in the top right hand corner of the page. That will open a new page with some check boxes. Keep the boxes that are already checked, then type in the captcha style code at the bottom and choose ‘next’.
Once you’ve done that, all the contents on the business form will be in English. There are a couple of exceptions however, such as ‘Powiat’ (type in ‘Wrocławski’) and Voivodship (type in Dolnoslaskie). Once you’ve completed the form and submitted it, the language will be changed to Polish for legal purposes, and the form converted into a printable format. You can then either print it out directly or save it as a pdf to print it afterwards.
Step 2: Go to the business registration office
Next up is the trip to the business registration office. You can either go to the one on Plac Nowy Targ (above left) or Zapolska street (above right). Take your Passport, completed business registration form and lease agreement/proof of address with you.
If you can’t speak the local lingo, make sure you are with someone who does. The clerks are not obliged to speak English and are often incapable of giving information in anything other than Polish.
The most tricky section of the form is often the need to indicate your business activity by selecting one or more statistical numbers known as PKD codes. To know what codes you should include on your form, see the link here, which has a list of all the codes with English descriptions.
Once the form has been completed and verified you will later receive the statistical number for your company, called a REGON, within 7 days. This number is not all that important for the day to day running of your business. However, to find out what the number is, visit Poland's database website here. Then simply type your surname or company name into one of the correct fields and click 'find'. Your details should then come up on screen, including your REGON.
Step 3: Tax and ZUS offices / accountant
After visiting the urząd miasta office, the next stop is the local tax office (urzad skarbowy) followed by a visit to ZUS, the National Insurance Institution in Poland.
At this point it may be a good idea to find an accountant to whom you can grant the authority to deal with the tax/ZUS offices on your behalf. Admittedly, paying an accountant will be an extra cost . Depending on who the accountant is, monthly fees can be anything from 90-200zl. Of course not all the accountants speak good English, but there are plenty who do. It is also worth noting that the accountancy fee counts as a business cost and a good accountant can help you with tax optimization, as well as keeping you up to date with the latest ZUS rates and other changes to Polish business law. To find a good accountant, we suggest getting a personal recommendation or asking for advice on social media groups or discussion forums.
Once you've found yourself a good accountant and they've got the paperwork rubber stamped, then you're finally ready to go!
If you are determined to save yourself some dough and do it yourself then you certainly can – but it is a complicated procedure and it would be best to contact us at Infolink to learn how to do it.
Step 4: Running your business
Remember that each time you purchase something that can be a business cost (e.g a keyboard, book, mobile phone, travel tickets) you'll need to get what's called a 'faktura' (invoice in English). The total value of these invoices will be deducted from your profit at the end of the month, meaning you'll pay less tax.
You can get these invoices either at the checkout or the after sales point at various shops. In larger shops, it tends to be the at the after sales point where invoices are issued. To fill in the faktura properly, the shop assistant will need to have your business details at hand (i.e name of company, address, NIP/PESEL). For online purchases from Polish shops or Allegro (Poland's version of Ebay), you'll often have the option to ask for a faktura and you can fill in the details yourself. In some cases when a faktura is not available, a normal receipt ('paragon' in Polish) may suffice (e.g if you buy something from another EU country).
Creating an invoice
In the good old days this used to be written via hand and then stamped. Thankfully times have moved on however, and now invoices can be done digitally.
Perhaps the easiest way to do so is to use some invoice creating software or sign in to an online service such as infakt.pl or fakturownia.pl (and others). Such services allow you to create digital invoices and even edit what you've printed to quickly amend mistakes. Unfortunately some of them do ask for a subscription cost and they can take a bit of time getting used to. On the other hand however, they produce clean cut and easy to read invoices that are ready to be emailed to your accountant and clients.
Don't forget you'll need to give your accountant either originals or copies of the aforementioned invoices. The total value of these invoices will be subtracted from your earnings to reveal your profit, which is then taxed. So naturally, as mentioned before, the more costs you have the less tax you'll pay. Your accountant should then contact you with the amount of tax you receive.
Paying National Insurance
Don't forget that each month (before the 10th day) you'll have to pay your ZUS for the previous month, which is best done via your bank's online banking facility. Most online banking systems have a special section for ZUS transactions.
ZUS payments are spread across 3 compulsory and 1 voluntary pillars, each of which has a separate bank account (yes, i know that you're thinking about this annoying process- the feeling is mutual!).
** Figures are for April 2015 and are subject to change! ** Click here for the latest figures
Bank account number: 83 1010 1023 0000 2613 9510 0000
First 24 months: 153,93 zł Thereafter: 754,67 zł
Bank account number: 78 1010 1023 0000 2613 9520 0000
First 24 months: 279,41 zł Thereafter: 279,41 zł
Welfare and sickness fund
Bank account number: 73 1010 1023 0000 2613 9530 0000
First 24 months: 12,86zł Thereafter: 58,20 zł
Paying Income Tax
Every month either you or your accountant should calculate your profit and work out how much income tax should be paid. The bank account you transfer to depends on which tax office is deemed to be your local one. To find that out, simply type the address your business is registered to in the search field on this page on Wroclaw city council's official website. The bank account details and contact information is included for each tax office too.
The easiest way to pay your tax is again online. Just like with ZUS, most online banking services have a facility for tax transfers. Your accountant should provide you with details of what 'PIT' (personal income tax) category you need to pay into. Monthly PIT payments should be made by the 20th of each month.
There is also a yearly tax declaration that needs to be completed by the end of April. Following the declaration you may either receive tax back from the government (yes, it can actually happen) or need to pay more if you hadn't paid enough in the previous 12 months. Again, your accountant should send the declaration out on your behalf (provided it is in the agreement – make sure this is clear when you start cooperation).
Depending on the nature of your business, you may or may not be obliged to add VAT onto your invoice. Many exceptions are true here, so once again it's best to consult your accountant to find out what's appropriate for your business. If you simply a teacher of English for foreign languages, you wont be a VAT payer due to language services being excluded from VAT.
'Freezing' or closing your company, changing details
If you are taking an extended holiday or leaving the country for anything between 1 and 24 months, you can 'freeze' your company to avoid paying those hefty ZUS fees every month. If your company is frozen for longer than 2 years, it will be declared closed.
To freeze your company, you should visit one of the two city offices pictured earlier in the article. Thankfully there is no longer any administration cost for you to do this. The procedure is very much the same as when you set up the company in the first place – in fact you even use the same form. The same is true if you want to close your company or change the details. Click on the link here, and then choose the correct option in toolbar illustrated here on the right.