Starting a business or company in Poland can be one of the best decisions you can consider making since Poland has a very vibrant economy. Also, it’s strategically located in central Europe, which makes it a very attractive option for doing business.
But before you start your business, you have to choose the type of business you want to register correctly. Failure to do so can ensure that you incur additional legal obligations, have higher tax rates, or get some operational restrictions.
So, it’s essential that you choose the right type of business and company to register in Poland. Read on to learn more about these types of businesses and companies.
Sole proprietorship
If you are starting a business alone, such as an online shop, the business entity for your company registration is a sole proprietorship. This business entity is simple to set up and manage. Also, there is no minimum capital requirement.
The main disadvantage of a sole proprietorship is that you’ll be personally liable for the obligations and debts of your business. So, if your online shop accrues a lot of debt, you’ll be fully responsible for paying off the debts.
It is because, with a sole proprietorship, you don’t have to create a legal entity. Instead, all your business dealings will be in your name.
Limited Liability Company (Sp. Z.o.o.)
The most popular type of company registration in Poland is the limited liability company. It includes businesses like IT start-ups with several founders. For you to register this limited liability company, you’ll need to have a minimum capital of PLN 5,000 (€1,080).
What’s more, unlike the sole proprietorship, the company’s founders are not personally liable for the company’s debts. So, if you register your manufacturing company or IT Start-up under this business entity, your personal finances will be protected.
Joint Stock Company
If you want to attract investors, scale, go public, or start a large business, like a manufacturing company, then a joint stock company is ideal. To register this company, you’ll need to have a minimum capital of PLN 100,000 (about €21,500).
This capital is higher than that of a limited liability capital. The best thing about starting a joint stock company is that your business can raise significant capital through share issuance.
Limited Partnership
The limited partnership is ideal for businesses of any scale. It can be an online shop or an IT start-up with several founders. This type of business has no legal personality but has judicial and legal capacities.
Also, unlike joint stock and limited liability companies, it has no minimum capital requirement for registration. However, there needs to be at least two founders: a general partner and a limited partner.
The general partner has unlimited liability. On the other hand, the limited partner can be liable for a specific amount.
Bottom Line
When you go to register your company in Poland, you have to choose the right business type. The right choice can help prevent additional tax rates and operation costs. This is because the tax rate for a sole proprietorship is different than that of a limited liability company. So, you need to choose wisely to prevent any future mishaps.