SELF-EMPLOYMENT IN 2023

Running your own business in 2023 offers far greater opportunities to earn a high income than working in a permanent job. Of course, there are certain sectors where specialists are in very high demand.

There is a very high demand for people with IT skills and for psychotherapists. Without setting up their own business, they can earn as much as several thousand a month.

However, if you feel that what you want to do in life is run your own business, go for it. Start by working out how much it will cost you each month and whether you’ve already built up sufficient savings. This is all the more important now, when rising electricity prices are the biggest problem facing Polish entrepreneurs. Let’s get down to specifics!

The running costs of a sole trader business and its legal form

A sole trader business is the simplest and most popular choice amongst Polish entrepreneurs. It can work very well, not only if you want to run the business on your own.

If you decide you want to expand further, with a sole trader business you can easily hire staff to take on some of your responsibilities. However, you must always bear in mind that, without exception, as a sole trader you are liable for the business’s debts with all your personal assets.

Below, we have put together a summary of the basic running costs of a sole trader business for you.

Setting up a business step by step – costs

Many entrepreneurs are particularly daunted by the initial costs of running a sole trader business. In this case, these fears are completely unfounded. It all starts with registering your business.

• All you need to do is submit the CEiDG-1 registration application.
• At the same time, you’ll be entered into the National Court Register, which involves being issued with a NIP number.
• It is also compulsory to register with the National Official Register to obtain a REGON number, and with the Tax Office to be issued with a NIP number.
• It is also essential to register with the Social Insurance Institution (ZUS) to become a contributor. That’s all the formalities sorted.

Now, at last, it’s time for the first piece of good news. You won’t have to pay anything for all these registrations and procedures. Yes, registering a sole trader business in Poland is completely free of charge.

Unfortunately, the situation is much worse in the case of a limited liability company. In that case, you’ll need to have saved up enough money to cover the initial capital contribution, the fee for registration with the National Court Register (KRS), the publication of the entry in the Trade and Services Gazette (MSiG), the tax on civil-law transactions, copies of contracts and the notary’s fee.

How much does it cost to run a sole trader business?

Initial costs:

• Having a company stamp made – up to a few dozen zlotys.
• Opening a business bank account – costing from a few to a dozen or so zlotys per month.
• Bookkeeping – the exact cost depends mainly on the legal form, the tax regime and the volume of documents generated. However, in the case of a sole trader business, this is very often between 200 and 400 zlotys per month.

Business costs in 2023 and taxes

The amount of tax depends on which tax regime you choose. You have the following options:

• Taxation under general rules – two rates: 12% up to an income threshold of 120,000 zł and 32% above that amount.
• Flat-rate tax – you pay 19 per cent tax regardless of your income.
• Lump-sum tax on recorded revenue – the amount payable to the tax office is calculated not on income, but on revenue.

Monthly costs of running a sole trader business – contributions

Health insurance contributions depend on the form of taxation you choose. Under the tax scale, they amount to 9 per cent of your income. Under the flat-rate tax, they are 4.9 per cent. Under the lump-sum scheme, however, there are as many as three different contribution brackets.

Social security contributions also vary depending on how long you have been running your own business. The full ZUS contribution this year is 1,124.23 zł. New entrepreneurs do not pay any ZUS contributions at all for the first six months, and for the following two years the contribution is much lower.