ZUS CONTRIBUTIONS IN A COMPANY

ZUS contributions in a business

Compulsory ZUS contributions are the most common obstacle to setting up your own business. Many people associate these costs with eating into a significant portion of their income. Of course, incurring costs is an unavoidable part of running a business, but when you’re just starting out, you can take advantage of certain reliefs.

Social security contributions comprise pension, disability, accident and sickness insurance contributions. The Social Insurance Institution (ZUS) collects health insurance contributions and transfers them to the National Health Fund (NFZ). By paying sickness insurance contributions, you can later access treatment through the National Health Fund and public clinics. Pension contributions entitle you to a retirement pension, disability pension contributions to a disability pension, and accident insurance contributions, as the name suggests, provide cover in the event of an accident. Paying contributions to ZUS is therefore very beneficial, not only for those in full-time employment but also for the self-employed.

What are the options for paying ZUS contributions?

Polish entrepreneurs have several options when it comes to paying ZUS contributions. Much depends on what stage of running their business they are currently at. The available options therefore depend largely on the stage of their business:

• the entrepreneur is just starting out,
• is restarting their business,
• has completed the preferential ZUS period,
• is generating high revenue,
• is eligible for insurance under several schemes,
• is retired.

Start-up relief

This is a scheme worth taking advantage of when first starting a business. The start-up relief allows you to pay only health insurance contributions for 6 months. For the first six months, the entrepreneur is therefore exempt from social security contributions. The amount of the contribution is calculated individually on the basis of income earned. Opting for the start-up relief is voluntary; if you decline it, you will no longer be able to benefit from this preferential scheme. This type of relief is available to those who are just setting up a business or resuming one after a break of at least 60 months. The start-up relief allows for an initial reduction in costs whilst the business is in its development phase, at a time when revenue is still low and investment expenditure is high.

Preferential social security contributions

This is the next stage available to individuals once the start-up relief has ended. For the next two years, they can pay reduced social security contributions. This period also allows them to maximise their income whilst keeping costs down. These contributions are usually calculated on the basis of 30 per cent of the current national minimum wage. The preferential terms apply to social security contributions. Health insurance continues to be paid based on income earned.

Mały ZUS plus

Mały ZUS plus is another form of contribution scheme designed to support small businesses. To qualify, your annual income must not exceed PLN 120,000 in the tax year, whilst continuing to operate your business. This scheme is for those who do not benefit from the start-up relief or preferential ZUS contributions. Furthermore, such a person must not carry out work for a former employer or hold a tax card. To join Mały ZUS Plus, you must submit the relevant declaration within 7 days of the tax obligation arising or changing. You can benefit from ‘Small ZUS Plus’ for a maximum of 3 years. After this period, you must switch to standard ZUS rates. However, it is worth bearing in mind that you can re-enrol in ‘Small ZUS Plus’ after two years have elapsed.

Standard ZUS

Paying full ZUS contributions is a nightmare for business owners who have been operating in the market for some time. They are obliged to pay both social security and health insurance contributions. Full ZUS contributions are calculated on the basis of 60 per cent of the average monthly salary. The downside of the ‘large ZUS’ scheme is that contributions cannot be reduced, for example, whilst the entrepreneur is receiving benefits.

How can you pay lower ZUS contributions?

This is a question that virtually every entrepreneur asks themselves. One available solution is to take advantage of the opportunities offered by business incubators. These are thriving organisations that help newcomers taking their first steps in business to spread their wings. The ‘Firma dla Każdego’ Foundation allows freelancers to be exempt from ZUS contributions, as it enables them to be paid on the basis of a contract for specific work. Potential clients sign contracts with the incubator and are vetted by it. Payment to the self-employed is made via contracts for specific work. This is a secure arrangement, particularly for those just starting their own business. The Foundation’s provision of legal personality enables the conclusion of reliable contracts and ensures payment for the work carried out. Freelancers therefore earn money on the basis of a contract with the Foundation and the specific-task contracts they enter into, thanks to which they do not have to pay social security contributions. This represents a significant simplification in both formal and financial terms.

See also: What is a business incubator?