Running your own business is the dream of many people taking their first steps in the job market or who already have experience of providing duties for other people and companies. However, before deciding to be solely self-employed or change to a company form, it is important to consider when it pays off. Find out what types of business there are and choose the one that best suits your needs.
Type of business - what do you need to know before you decide?
Polish law provides for the possibility of doing business both independently and with partners. The first way of providing services, also known as a B2B (business to business) contract, is becoming increasingly popular in many industries. However, there are situations where it is better to remain a full-time employee.
People who want to run a business with partners or whose individual business has started to generate high revenues are in a different position. In such cases, the type of business may change over time. What form the business takes will depend on the amount of capital. Moreover, as one type of company transforms into another, new responsibilities arise and the responsibilities of the owner or partners change.
Individual economic activity - what is it?
Self-employment is currently the most popular type of business. This is not surprising, as it really pays off for many individuals. The prerequisite for experiencing the benefits of B2B cooperation is first and foremost a sufficiently high level of income from the de facto employer business partner. These compensate for the costs of the business resulting from the need to pay taxes and social security contributions.
The individual form of economic activity offers the greatest benefits when starting out for a new company. In such a case, an entrepreneur may count on taking advantage of the so-called start-up relief, thanks to which it is not necessary to pay social insurance contributions for six months, as well as the so-called Small Social Insurance Fund, i.e. preferential rates for entrepreneurs earning small revenues. Such privileges are not available to those who decide to set up a business and continue working for their current employer.
It is worth remembering that, contrary to what is often said, registering a business does not require too many formalities. A budding entrepreneur should first go to the municipality or city office to obtain an entry in the business register. It is also necessary to visit a branch of the Central Statistical Office, which will issue a REGON number. Other administrative bodies to which the fact of establishing a company must be notified are the tax office, the Social Security Office and the Sanitary Inspectorate. The entrepreneur is also required to open a company account with a bank.
Before reporting to the authorities, it is also important to know what the business profiles are. Each is assigned a code indicating what the self-employed person does. The choice of the Polish Classification of Activities is a legal obligation for every entrepreneur. All categories are published on the government website, so you can easily find the right type of activity in the PKD. 
What are the types of companies and what are their characteristics?
Running a business with two or more people requires the registration of a company. Small businesses can benefit from simplified forms of bookkeeping and thus reduce the costs of running the business. The type of business of a company depends, among other things, on its turnover. It also affects the liability of the partners.
Civil partnership
A civil partnership is the simplest type of service or manufacturing business. Each partner contributes his or her own assets to it. The advantage of this type of organisation is the low cost of registration. There is no need to pay the cost of a notary's service to certify the establishment of the company. It is sufficient to report the fact to the local authority. In addition, the partners have a choice of all types of VAT taxation, which reduces accounting expenses. All partners have the right to represent the company.
However, running a civil partnership involves a lot of responsibility. This type of company activity becomes problematic in situations of debt. Then creditors may demand enforcement of debts both from the company's assets and from the partners' private money, real estate and other tangible assets. It should also be borne in mind that if the turnover of the last two years has reached at least €800,000 net, the civil partnership must be converted into a general partnership.
Partnership
Similar in form and liability is the partnership. Here, too, all partners can represent the company. In the case of capital companies, it is possible to appoint a management board. The regulations of the Commercial Companies Code apply to such an organised enterprise, and not the Code of Civil Procedure, as is the case with civil partnerships.
The founders are required to submit an application for the registration of the company to the National Court Register. The aims and types of business activities of this type are usually limited to areas of the economy such as law and medicine. In other words, the partners in such companies are mainly professionals. Like persons running a civil partnership, they are obliged to be liable to creditors with all their assets.
General Partnership
Civil partnerships, partnerships and general partnerships are in many respects quite similar types of business. They are not legal entities and the partners contribute their funds to them. The general form, like the partnership form, is governed by the Commercial Companies Code. The company must also be registered with the National Court Register. The representatives of the company are all the founders. They may elect from among themselves the persons authorised to represent the company. No one forfeits this opportunity, with the exception of the court, which may declare such a prohibition.
The advantage of a general partnership over a civil partnership and a partnership is the more limited joint liability of the partners' assets. Enforcement of debts first concerns the assets of the company. It is only if the debt cannot be recovered that the owners' private funds are seized. Furthermore, in accordance with the definition of this form of business, openness is required. The full name of the company, as registered in the KRS, must include the name of at least one of the partners.
Limited partnership
The list of smaller business activities categorised as services and manufacturing of goods is rounded off by companies represented by partners called limited partners. As in the case of partnerships and general partnerships, the representatives of these limited partnerships can be all the co-owners or a proxy of their choice.
This form of business is popular because of the more secure framework of financial obligations. The co-owners themselves determine the amount that can be enforced by creditors if necessary. This does not mean that a limited partnership is the golden mean. The law requires limited partners to keep detailed accounts. Performing this duty in small companies may prove too costly, making it a better option to set up a civil partnership, partnership or general partnership. 
Type of business - when to use a lawyer?
Larger businesses require more complex methods of organisation. They also involve higher amounts of business. Depending on what type of business it is, periodic or ongoing legal services may be required. This applies to two types of companies - limited liability and joint stock companies.
Limited liability company
The limited liability for such companies refers to the share capital, i.e. the contribution made by the shareholders. Its purpose is to protect creditors against the insolvency of the company. Its minimum amount is PLN 5,000. Importantly, it may include not only financial means, but also other material goods. The amount of share capital must be included in the company's articles of association, which are certified by a notary public.
However, a visit to the notary's office is needed not only for this, but also for the incorporation of the limited liability company itself. The absence of an official document means that the company de jure does not exist. In other words, its possible activities are illegal. The owners are furthermore obliged to keep full, not simplified, accounts.
Public limited company
Major companies in industrial, service, commercial and other activities often decide to go public. The issue of shares certifying the right to part or all of the company's ownership offers an opportunity not available to other types of companies. It is the chance to raise funds from shareholders. In return for the financial contribution, the company undertakes to increase the profits paid to them in the form of dividends.
A joint-stock company must be established with a notary public. In general, the broad scope of business activity results in a minimum share capital of PLN 100,000. The law also strictly defines the legal representatives of the company. These are the members of the management board elected by the supervisory board. Importantly, shareholders are not liable to creditors with their own assets. Legal and accounting complexities mean that joint-stock companies generally use the regular services of law firms and accounting offices. Often, instead of outsourcing services, they choose to create their own departments to handle legal and financial services.
Can the type of business be changed once it has been established?
Changing the type of business is not only possible, but sometimes necessary. The simplest way is to liquidate a sole proprietorship and form a company with another individual. Another way, which is more financially advantageous, is to make a contribution-in-kind, i.e. an in-kind contribution to the company. This may be the entire business. If the owner does this before the formal liquidation of the business, he does not have to pay VAT on the physical inventory. This term covers, for example, the company's equipment and the goods it sells.
The business can also be sold to a company that is a legal entity. In this case, however, income tax must be paid. The last way is to convert a sole proprietorship into a limited company. In contrast to the need to convert a civil partnership with a net turnover of more than €800,000 into a general partnership, all other methods are voluntary.
The answer to the question of what type of business to choose is quite simple. In the case of limited income, a sole proprietorship, civil partnership, partnership or general partnership will suffice. The higher costs of running limited partnerships and limited liability companies mean that it is worth thinking about changing the legal form of a business only when it becomes successful. The most important thing is that, thanks to the wide variety, everyone can match the type of business to their capabilities and needs.
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