WHAT IS AN ENTREPRENEURSHIP INCUBATOR?

Business incubator – what is it?

A business incubator is an organisation that lends its legal status to people who have an idea for a business but do not wish to register their own company. This makes running a business much easier, quicker and, above all, less risky.

How does a business incubator work?

Anyone who wants to test their business idea can join a business incubator. Therefore, upon signing a cooperation agreement, the beneficiary becomes part of the organisation – that is, an organised part of the enterprise – which has all the opportunities afforded by running one’s own business. These include activities such as:

• issuing VAT invoices
• claiming business purchases as expenses
• signing B2B contracts with business partners
• taking part in tenders
• hiring staff

All profit generated within the business incubator is paid to the Beneficiary on the basis of civil-law contracts signed with them, such as a contract for specific work or a contract of mandate. The entire collaboration can take place remotely. The incubator does not charge any commission or take any share of the profits, but only a fixed monthly fee (usually 300 zł).

What taxes are payable within a business incubator?

In a business incubator, just as in any business activity, you must pay taxes, i.e. VAT, PIT and ZUS.

VAT must be paid on every sale that is not exempt from this tax on the basis of the nature of the goods or services, e.g. foreign language tuition. In most cases, the VAT rate is 23 per cent, but lower rates – such as 5 per cent or 8 per cent – do sometimes apply. This depends on the type of activity carried out.

Personal income tax (PIT) is a tax paid on one’s earnings. The amount payable depends on many factors, such as one’s status in the labour market, age and the type of services provided. The most common rate is 8.5 per cent, which is available to those in the so-called liberal professions who create original works, e.g. programmers, graphic designers, musicians, translators, etc.

Social security contributions (ZUS) are paid by people who are not covered by a contract for specific work and who are not students under the age of 26.

Is it even worth it?

A business incubator is the most cost-effective option for members of the so-called liberal professions (freelancers). They are covered by contracts for specific work, for which the PIT rate is 8.5 per cent. Pupils and students up to the age of 26 do not pay any PIT or ZUS at all.

In the above cases, the total costs of running a business within a business incubator amount to 300 zł per month and 8.5 per cent PIT. Compared to running your own business, where social security contributions (ZUS) amount to over 1,500 PLN a month and personal income tax (PIT) is usually 17 per cent, the savings are truly significant.

You can find more information here or on Wikipedia.

To sum up: with the help of a business incubator, your start-up is within reach.

See also: How can the Kraków business incubator support you?