The amount of social security contributions for self-employed individuals

Running your own business has a number of significant advantages, but also some unpleasant drawbacks. Among the latter, the costs associated with running your own business are most frequently cited, particularly the costs of social security contributions (ZUS) for sole traders. In this article, we’ll explain this issue in more detail, setting out all the social security contribution rates for sole traders.

ZUS for new sole traders? Setting up a business and ZUS contributions: the ‘Start-up Relief’!

If you are setting up your own business for the first time, or are doing so again after a break of at least 60 months following the suspension or termination of your business activity, and you will not be carrying out for your former employer the work you did for them in this or the previous calendar year, you can take advantage of the so-called ‘Start-up Relief’.

The Start-up Relief consists of a 6-month full exemption from social security contributions, namely:

• Pension contributions,
• Disability insurance contributions,
• Accident insurance contributions,
• Sickness insurance contributions.

Whilst you are benefiting from the Start-up Relief, you are therefore only required to pay health insurance contributions. The amount of the health insurance contribution depends on the chosen form of taxation.

In the case of the tax scale and the flat-rate tax, the basis for calculating this contribution will be your income from the previous month. With a tax card, the basis for calculation is the minimum wage. With the flat-rate tax on recorded income, this basis depends on the income earned.

Failure to pay social security contributions has consequences. If, during this period, you fall ill, have a baby, or are caring for a sick family member or a child, you will not receive:

• Sick pay,
• Maternity benefit,
• Care allowance,
• Rehabilitation benefit.

The six-month exemption from social security contributions under the Start-up Relief scheme is calculated from the start of the next calendar month. The exception to this is when you set up your business on the first day of the month. In that case, that month will already be taken into account.

However, the Start-up Relief is by no means compulsory. You may voluntarily opt out of it at any time.

What are the ZUS contributions for a sole trader in 2024? Contributions based on the preferential assessment basis

If you make use of the 6-month start-up relief or opt out of it early, you are eligible for a further concession. This involves paying contributions based on a base not lower than 30 per cent of the minimum wage. You can use this preferential assessment base for a further 24 months, provided that:

• You do not currently run, and have not run, any other business in the 60 months prior to setting up your business;
• As part of your business, you do not provide services to a former employer for whom, prior to starting your business (including in the current or previous calendar year), you carried out activities that fall within the scope of your current business.

Do you pay social security contributions based on the preferential assessment base? Here is how much your contributions will be from July 2024 to December 2024:

• Pension insurance contribution: 251.81 zł (19.52% x the assessment base, currently 1,290 zł);
• Disability insurance contribution: 103.20 zł (8% x the assessment base, currently 1,290 zł);
• Accident insurance contribution: 21.54 zł (1.67% x the assessment base, currently 1,290 zł);
• Voluntary sickness insurance contribution: 31.61 PLN (2.45% x the assessment base, currently 1,290 PLN);
• Total amount payable with any sickness insurance: 408.16 PLN;
• Total amount payable without voluntary sickness insurance: PLN 376.55.

Social Insurance Institution (ZUS) contribution rates for self-employed persons: Mały ZUS Plus

Following the ‘Start-up Relief’ and a 24-month period of a preferential contribution base, you have the option to benefit from further reduced social security contributions.

Mały ZUS Plus, as the scheme is called, is aimed at entrepreneurs:

• Who carried out business activities in the previous calendar year for at least 60 calendar days;
• whose income from non-agricultural business activities carried out in the previous year did not exceed PLN 120,000.

How much are the social security contributions under Mały ZUS Plus?

The assessment basis depends on the average monthly income from business activities in the previous calendar year.

However, it cannot be less than 30 per cent of the minimum wage, nor can it exceed 60 per cent of the projected average monthly wage.

As the calculations are somewhat more complex in this case, it is best to use the ZUS calculator (https://eskladka.pl/), which has been specifically designed for this purpose, to obtain accurate figures.

You can benefit from the lower ‘Mały ZUS-Plus’ contributions for a maximum of 36 months within any consecutive 60 calendar months.

How much for ZUS? Sole trader 2024. How much is the ZUS contribution for self-employment without any reliefs?

Are you not eligible for any of the reliefs and exemptions described above? In that case, you must pay social security contributions based on a contribution base that is no lower than 60 per cent of the projected average monthly wage.

From January 2024 to December 2024, you will pay the following in this case:

• Pension insurance contribution: 916.35 PLN (19.52% x the assessment base, currently 4,694.40 PLN);
• Disability insurance contribution: PLN 375.55 (8% x the assessment base, currently PLN 4,694.40);
• Accident insurance contribution: 78.40 PLN (1.67% × the assessment base, currently 4,694.40 PLN);
• Voluntary sickness insurance contribution: PLN 115.01 (2.45% × the assessment base, currently PLN 4,694.40);
• Amount of the contribution to the Labour Fund and Solidarity Fund: 115.01 PLN (2.45% x the assessment base, currently 4,694.40 PLN);
• Total amount payable with any sickness insurance: PLN 1,600.32;
• Total amount payable without voluntary sickness insurance: 1,485.31 PLN.

Are you thinking about setting up your own business, but worried about the running costs?

The ‘Firma Dla Każdego’ Foundation is Poland’s top-rated business incubator, supporting the entrepreneurial dreams of both Poles and foreign nationals. It does this by enabling business ideas to be realised without the need to set up a company or incur social security costs.

Are you thinking about starting your own business but worried about the cost of social security contributions? We’ll make your business dreams come true today!

Sources:

• https://www.zus.pl/baza-wiedzy/skladki-wskazniki-odsetki/skladki/wysokosc-skladek-na-ubezpieczenia-spoleczne
• https://www.zus.pl/-/ulga-na-start-preferencyjna-podstawa-dzialalnosc-nieewidencjonowana-jakie-sa-warunki-uprawnienia-i-skutk-1
• https://biznes.gov.pl/pl/portal/00284
• https://www.zus.pl/-/-small-ZUS-Plus-in-2023-explanations-with-examples?p_l_back_url=%2Fsearch-results%3Fquery%3Dma%25C5%2582y%2BZUS%2BPlus
• https://eskladka.pl/
• https://firmadlakazdego.pl/wady-i-zalety-prowadzenia-dzialalnosci-gospodarczej/
• https://firmadlakazdego.pl/koszty-firmy-jednoosobowej-w-2023-roku-jak-wysokie-beda/
• https://firmadlakazdego.pl/czym-jest-inkubator-przedsiebiorczosci/
• https://firmadlakazdego.pl/