The decision to start your own business can be extremely difficult. Above all, it involves a great deal of responsibility. Very often, entrepreneurs are not fully aware of the total cost of setting up a business. Therefore, undertaking this task should be very well thought out, planned and calculated.
Cost of company registration
Any costs associated with registering a company are determined by the legal form of business the entrepreneur decides on. The cheapest options will be a sole proprietorship and a civil partnership. In the case of these two forms, registration of the business in CEIDG is free of charge.
However, if an entrepreneur wishes to establish a commercial company, he or she must expect to incur the costs of obtaining an entry in the National Court Register. Registration of an entity in the register of entrepreneurs costs PLN 500. An additional cost is related to the addition of tax on civil law transactions, as this type of company obliges the entrepreneur to sign a civil law contract. The tax rate is 0.5 per cent of the value of contributions made to the company.
Costs related to fiscal administration
The administrative and fiscal costs of setting up a company probably require the largest financial contribution. All such fees are mandatory and the owner is additionally obliged to pay them on time. In the main, tax administration costs depend on the form of business.
This group primarily includes taxes or insurance premiums (ZUS). In some cases, these are also payments to the PFRON (if the entrepreneur does not employ the required number of employees with disabilities). The obligation to pay the due fees, as well as strict adherence to the payment deadline, seems to be a considerable burden. In reality, however, it is not that complicated.
What goes into the administrative and fiscal costs of setting up a company are:
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Income tax
It is not surprising that the state taxes the entrepreneur's income. Depending on the legal form of the business, the business owner can choose one of four forms of taxation: PIT, CIT, lump-sum tax on registered income and tax card.
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VAT
In the event that a company generates revenues of more than PLN 200 000, the entrepreneur is obliged to pay VAT. This means that he is obliged to calculate such tax and then pay it to the Tax Office. Currently, the basic VAT rate is 23 per cent.
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ZUS
Another important and compulsory payment, included in the costs of setting up a business, is the payment of contributions to the Social Insurance Institution. These are related to pension, disability, health and accident insurance - while the contribution to sickness insurance will be voluntary. In 2020, when all contributions are added up, the insurance rate is PLN 1431.48 and PLN 1354.64 without voluntary sickness insurance.
It is worth noting that an entrepreneur who has not been in business for the last 5 years (or this is his/her first business) can benefit from the so-called small ZUS. This means paying reduced social security contributions for 24 months.
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PFRON
The Rehabilitation Act requires that in a company with 25 full-time employees, at least six per cent of the team must be people with disabilities. If a company does not meet these requirements, it must make a monthly payment to the State Fund for the Rehabilitation of Persons with Disabilities.
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Additional charges
The administrative and fiscal costs of setting up a company do not usually end with those related to taxes or social security. Very often, these costs also include the cost of registering a company car (if necessary) or obtaining all the necessary certificates and permits to legally operate a business.
Running costs
When planning to start a business, one cannot only consider the costs that have to go into setting it up. To a large extent, running a business is also about ongoing fees, related to renting an office or premises, purchasing necessary equipment, bookkeeping costs and hiring employees.
