Combining full-time employment with self-employment – legal and practical aspects

Full-time employment combined with self-employment is a model of professional activity that has been gaining popularity in Poland in recent years. On the one hand, it provides the financial security and stability that come with an employment contract; on the other, it allows for the development of one’s own business and the diversification of income sources. In practice, however, combining these two paths involves a range of legal, tax and organisational regulations, knowledge of which is essential to avoid the risk of breaching the law and to optimise financial obligations.

Full-time employment and self-employment – legal and practical basics

Polish law does not prohibit simultaneous employment under an employment contract and running a sole trader business (JDG). This possibility stems from the principles of freedom of economic activity and freedom of work; however, restrictions arising from individual employment contracts, sector-specific characteristics or specific legislation are important to bear in mind.

Non-competition clauses and conflicts of interest

The most significant restriction remains non-competition clauses, which are increasingly common in employment contracts, particularly in sectors requiring the protection of know-how, business relationships or confidential data. This clause prohibits an employee from engaging in activities that compete with the employer’s business, both during the term of the employment relationship and after it has ended. A breach of this prohibition gives rise to liability for damages and, in practice, may lead to serious financial consequences.

A conflict of interest may also arise without a formal clause if the scope of the employee’s business activities overlaps with the employer’s business profile or if company resources are used for the purposes of the employee’s own business. Such situations are assessed under the provisions on unfair competition and the Labour Code, and civil and disciplinary liability cannot be ruled out.

Statutory and sector-specific restrictions

In certain sectors, particularly in the public sector, an employee’s engagement in business activities requires prior consent from their superiors or is entirely prohibited. Such restrictions apply, for example, to civil servants, certain groups of teachers or law enforcement officers. Failure to comply with disclosure obligations may result in disciplinary sanctions or even dismissal.

Unregistered business activity as an alternative

A full-time employee may carry out so-called ‘unregistered business activity’, i.e. minor gainful activity not requiring registration with the CEIDG, provided that monthly income does not exceed 75 per cent of the minimum wage (from July 2024 – PLN 3,225 gross). Such activities do not require notification to ZUS, keeping full accounts or paying social security and health insurance contributions. Income from this source is declared in the annual tax return as income from other sources.

This arrangement is ideal for testing a business idea or supplementing your salary. Once the income limit is exceeded, you must register the business within 7 days and switch to a fully-fledged sole trader (JDG) status, with all the associated record-keeping and tax obligations.

Social security contributions – what do you need to know when combining a full-time job with a sole trader business?

From the perspective of a full-time employee who sets up a sole trader business, the way in which ZUS contributions are paid is of key importance. If, under their employment contract, they receive a salary at least equal to the national minimum wage, they pay only the health insurance contribution from their sole trader business. The remaining social security contributions (pension, disability, accident and sickness) are covered by the employer. If their earnings from full-time employment are lower, full ZUS contributions must also be paid from the business.

The amount of the health insurance contribution depends on the chosen form of taxation:

• Tax scale – 9% of income, not less than the minimum contribution (in 2025: 314 zł per month).
• Flat-rate tax – 4.9% of income, also with a minimum threshold.
• Lump-sum scheme – contribution dependent on income level (from 314 zł to over 1,384 zł per month).

From 2022, the health insurance contribution can no longer be fully deducted from tax, which has significantly affected the profitability of running a business whilst also being in full-time employment.

Reliefs for new entrepreneurs

Those setting up a business for the first time can benefit from the so-called ‘start-up relief’ for 6 months (no social security contributions, only health insurance), and for the following 24 months – from preferential, reduced ZUS contributions. However, these benefits do not apply to those who set up a business providing services to their current or former employer in relation to the duties performed in their full-time role.

Taxes when combining full-time employment with self-employment

Income from full-time employment is taxed according to the tax scale (12% and 32%) and settled by the employer through PIT advance payments. A business offers a choice of three forms of taxation:

• Tax scale – progressive PIT; income from full-time employment and self-employment is aggregated, which may result in moving into a higher tax bracket (once the annual threshold of 120,000 zł is exceeded).
• Flat-rate tax – a fixed rate of 19 per cent, without the option of joint filing with a spouse or claiming tax allowances, available exclusively to business owners who do not provide services to their current or former employer in a scope that overlaps with their employment contract.
• Lump-sum tax on recorded income – a simplified scheme for specific sectors, with rates ranging from 2% to 17%. Entrepreneurs cannot claim tax-deductible expenses, and a two-year waiting period applies if this scheme is chosen and services are provided to a former employer.

Annual tax returns require the submission of the relevant PIT returns:

• PIT-36 – for those settling their tax under general rules (including both full-time employment and sole traders).
• PIT-36L – for sole traders taxed at a flat rate.
• PIT-28 – for sole traders on a flat-rate scheme.

If the business is taxed at a flat rate or under the lump-sum scheme, two separate tax returns must be submitted (one for the sole trader, the other for the full-time employment).

Costs and organisation of running a business whilst in full-time employment

The costs of running a business include not only social security contributions (ZUS) and taxes, but also expenses related to bookkeeping, the purchase of equipment and marketing services. Entrepreneurs may deduct reasonable and properly documented business expenses, which allows them to reduce their tax base. Under the flat-rate scheme, it is not possible to deduct costs.

To keep your finances in order, it is recommended that you open a business bank account, although there is no formal obligation to do so until transactions exceed 15,000 zł. Keeping business and personal finances separate simplifies accounting and minimises the risk of accounting errors.

Accounting and tax returns

As the business grows, so does the volume of documentation and the complexity of tax returns. An entrepreneur can manage their own accounts using online software, or outsource this to an accountancy firm. It is worth using an entrepreneur’s calendar and tools to monitor tax and ZUS deadlines to avoid penalties and interest.

The most common mistakes and risks associated with combining full-time employment with self-employment

• Failure to analyse the terms of the employment contract, particularly regarding the non-competition clause.
• Failure to meet reporting obligations to ZUS and the tax office.
• Incorrectly accounting for business expenses or mixing them with private expenditure.
• Exceeding the limits for tax reliefs or generating income from unregistered business activities.
• Failure to plan working hours, leading to burnout and health problems.

Time management and maintaining a work-life balance become a particular challenge for those combining a full-time job with running their own business. The law does not regulate an entrepreneur’s working hours, which in practice leads to extended working hours and the risk of neglecting one’s private life.

Self-employment and annual leave and sick leave

In the event of illness, a sick note (L4) from a full-time job entitles the employee to sickness benefit paid by ZUS, provided the employee is covered by sickness insurance. For sole traders, sickness benefit is payable only if they voluntarily pay this contribution from their business income – something which is not compulsory for full-time employees, but is an option. During unpaid leave from full-time employment, full ZUS contributions must be paid from the sole trader’s business.

Summary

Combining full-time employment with running your own business can be an attractive option if you value financial security, wish to develop your own business and, at the same time, do not want to give up the benefits of full-time employment. However, this model requires good organisation, knowledge of the regulations and regular monitoring of your obligations towards ZUS, the tax office and – where necessary – your employer.

• Before setting up a business, carefully review your employment contract and any sector-specific regulations.
• Determine the optimal form of taxation, taking into account any restrictions on providing services to your current or former employer.
• Ensure you keep accurate records of expenses and submit tax and ZUS returns on time.
• Keep your business and personal finances separate by using different bank accounts.
• Plan your working hours to avoid burnout and ensure you get enough rest.

From the perspective of an employee considering setting up a sole trader business whilst in full-time employment, it is worth starting with an unregistered business or a business incubator if the scale of planned income is small. Subsequently, as the business grows, the transition to a fully-fledged sole trader business should be carefully considered in terms of tax optimisation, making use of available tax reliefs and compliance with current labour law.