Are you planning to start business activity in Poland? If so, the first step you will have to take is to choose a legal form for your business. In fact, it will be one of the most important decisions, which will have a great impact on the future of your company. Type of company determines issues related to liability, tax settlements and most of all profit distribution. Which company should be established in Poland? What are the differences between particular types of companies? Find out in this article!
It is best to start from general to specific. Business activity in Poland can be conducted in several ways. Companies are divided into partnerships and capital companies. Whats more, partnerships can also be divided into limited partnerships, limited joint-stock partnerships, general partnerships and professional partnerships. However, capital companies are being divided into joint stock companies and limited liability companies.
In case of partnerships – they do not have legal personality, however they have legal capacity. In practice it means that they will acquire rights on their own behalf, including the ownership of real estate or incur obligations. Additionally, a company set up in this form has the ability to sue and be sued. Unfortunately, the burden of the business in case of debts and failures rests on the partners, although a partnership is an independent entity from its partners.
In contrast, capital companies have legal personality. This means that they are 100% separate from their partners in every aspect of their activity. Unlike partnerships, partners are not liable for the debts of such an entity. Capital companies start their business activity as soon as the company is established at the notary’s office. However, at that time they operate as a company in organization, which has to be registered in the National Court Register within 6 months. On the other hand, partnerships start their activity as soon as they are registered in the National Court Register.
In case of every entrepreneur a different approach is necessary. It results from personal conditions and, among others, from the profile of business activity. Before choosing a particular form of a company, it is necessary to analyse what is most beneficial. In particular, it is worth considering the responsibility of partners, issues related to share capital and contributions to the company, as well as rights and obligations of partners. On top of that there is also the tax settlement, which looks a bit different in case of a capital company and a partnership.
It really depends only on you! Each company has its advantages and disadvantages. In the case of a partnership, it can be formed by at least two people, but generally it cannot function if only one partner remains. An exception to this is a professional partnership, where only one partner has the right to exercise a liberal profession, or where there is only one partner left. However, the partnership may then function for no longer than a year. Moreover, partners in partnerships are subject to personal income tax, but the partnership itself is not obliged to pay income tax.
Yes and even more! As far as capital companies are concerned, a sole proprietorship form is possible. Then the sole shareholder exercises all rights, but at the stage of the mentioned company in organization, the sole shareholder cannot perform any actions except for an application to the National Court Register. When it comes to taxes, capital companies are associated with double taxation.
A capital company is a legal entity, and as such, it is required to pay CIT (corporate income tax). The entity has to file tax returns and moreover keep accounting records. In addition, the shareholders are also subject to taxation, and at the moment of profit distribution and dividend payment they have to settle their income and pay PIT.
Autor: Kamil Hupajło
