The procedure for setting up a business itself currently boils down to an entry in the Central Register and Information on Business Activity. However, running a business involves other obligations imposed on the employer. The most common of these are related to the payment of tributes to the state in the form of social security contributions and taxes.
Social insurance, popularly known as Social Security contributions, are contributions for future retirement, eventual pension and ongoing medical care. The main problem for many, especially start-up entrepreneurs, is that contributions are a fixed amount that has to be paid every month, regardless of the income received. Taxes, on the other hand, are primarily income tax and VAT. The former is familiar to most people, as it is paid on all income, irrespective of its source, with the proviso that if you run a business, you have to pay advance payments yourself. The situation with VAT is even more interesting, as everyone pays it when making purchases, but only entrepreneurs settle accounts with the tax authorities. At the same time, not every company pays VAT at all.
In contrast, the procedure itself for registering a company and starting a business is done by submitting an application to the CEIDG. This can be done either in person or electronically. The latter can be done through the CEIDG website using a trusted profile, or through the electronic banking of many banks. In addition to basic information about oneself (name, surname, address, date of birth, etc.) and the company to be established (name, address, etc.), the entrepreneur must also specify the form of taxation and what the company will do.
ZUS - what is worth knowing?
Anyone running a non-agricultural business activity is obliged to pay ZUS contributions (farmers settle with KRUS). Mandatory contributions are those for pension, disability, health and accident insurance. Sickness insurance, on the other hand, is voluntary (however, one should not give it up without thinking). It is worth noting at the same time that registration with ZUS does not take place automatically after the establishment of a business: it is necessary to report its opening to ZUS, which can also be done "on paper" or electronically via the ZUS portal.
Social insurance in ZUS should be reported within 7 days from the date of commencement of economic activity or directly when submitting the CEIDG application. The whole procedure consists in providing the office with one of the forms: ZUS ZUA (for entrepreneurs who are subject to social insurance and health insurance) or ZUS ZZA (for those subject only to health insurance). Individuals setting up a business have a choice of three options for reporting for social insurance:
- Start-up allowance - consists of paying only the health contribution for the first 6 months of operation,
- Preferential ZUS contributions - can be applied for a further two years after the start of the business; they consist of paying contributions on a reduced basis (i.e. a reduced amount, based on the minimum wage),
- General Social Security - contributions paid from the full base (i.e. the full amount calculated in relation to the current average salary).
start-up relief is not available to those who, as part of their business, provide the same services that they have provided to their employer for the last two years (in other words, those who have moved from full-time to self-employment within the same workplace). Entrepreneurs benefiting from the relief must also declare that they have not carried out any other non-agricultural economic activity for the last 60 months. Start-ups almost always opt for the lowest possible contribution, although it should be mentioned that paying a lower Social Security contribution entails receiving the lowest benefits in the future.
Deadlines for the settlement of social security contributions
Every budding entrepreneur should familiarise themselves as soon as possible with the most important information concerning Social Security. ZUS is strict and has a long memory (arrears can be collected even after 10 years). The basic information is the deadlines for the payment of ZUS contributions: individuals, paying contributions only for themselves, must do so by the 10th of each month. On the other hand, if an entrepreneur also reports his/her co-workers or employees to the office, the contributions for them must be paid by the 15th of each month.
VAT - what do you need to know?
VAT is value-added tax. First of all, it is important to know that not every entrepreneur is forced to pay VAT. Certain forms of economic activity are exempt from this obligation, as well as companies that do not reach a certain level of turnover. It is important to familiarise yourself with the current guidelines on this subject, as the details may change here. It is also worth noting that a sole trader may choose to pay VAT even if they are not obliged to do so. Some entrepreneurs find it cost-effective to do so, due to the deductibility of VAT.
Registration for VAT is done by submitting a VAT-R form to the Tax Office. This can be done by an entrepreneur at three different stages of business activity: at its commencement, in the course of its operation, or after exceeding the turnover limit in a given tax year (for this year it is PLN 200,000). Submission of an application to register as a taxpayer is mandatory if the entrepreneur plans to carry out activities outside the country.
Taxpayers accounting for VAT are required to settle it by the 25th of each month (for the previous month).
