Tax and Accounting Duties for Enterpreneurs in Poland - How to Navigate the Regulations with Confidence

Why Sole Proprietorship Remains the Most Popular Choice

A sole proprietorship (Jednoosobowa Działalność Gospodarcza, JDG) is the form of business activity that has long been the most popular among Polish entrepreneurs. Its main advantages include independence and full control over all aspects of the business, a simple organizational structure, and flexibility that allows for quick adaptation to market changes.

The greatest benefit of a sole proprietorship is undoubtedly the low start-up cost – setting up the business is free of charge and requires only registration in the Central Register and Information on Economic Activity (CEIDG). The entrepreneur also maintains full control over profits and enjoys the simplicity of decision-making without the need to consult business partners.

Taxation in a Sole Proprietorship - Choose the Right Tax System for Your Business

An entrepreneur running a sole proprietorship currently has three main forms of taxation to choose from:

• Progressive tax scale – with rates of 12% for income up to PLN 120,000 and 32% for income above this threshold, with a tax-free allowance of PLN 30,000. This form allows the use of various tax reliefs, such as internet or family allowances.
• Flat tax – a fixed rate of 19% regardless of income level. This option is beneficial for entrepreneurs whose annual income exceeds PLN 120,000, as it avoids moving into the higher tax bracket. The entrepreneur may also classify PLN 12,900 of paid health insurance contributions as deductible expenses or deduct it from the taxable base.
• Lump-sum tax on registered income – with rates depending on the type of business activity, ranging from 2% to 17%. Under this system, the tax is levied on revenue without the possibility of deducting business expenses.

The choice of taxation method must be reported no later than February 20, and in the case of new entrepreneurs – at the time of registering the business. Importantly, this deadline may shift depending on when the first revenue in the tax year is generated.

Accounting Obligations in a Sole Proprietorship - Simplicity Above All

Entrepreneurs operating a sole proprietorship (JDG) have significantly simplified accounting obligations compared to companies. Depending on the chosen form of taxation, they keep one of the following:

• Tax revenue and expense ledger (KPiR) – for entrepreneurs taxed under the progressive scale or flat tax.
• Revenue register – for entrepreneurs taxed under the lump-sum system on registered income.

The ledger may be kept in either paper or electronic form. Currently, printing the KPiR is not required; it is sufficient to store it electronically, provided that the accounting software allows the printing of all data in accordance with the official template.

ZUS Contributions in a Sole Proprietorship - Reliefs for New Enterpreneurs

Every entrepreneur running a JDG must register with the Social Insurance Institution (ZUS) within 7 days of starting their business activity.

In 2025, the following preferential contribution schemes are available:

• “Ulga na start” (Start Relief) – exemption from paying social security contributions for the first 6 months. Only the health insurance contribution remains, which for entrepreneurs taxed under the progressive scale amounts to 9% of 75% of the minimum wage.
• Preferential ZUS – for the following 24 months, contributions may be paid on a reduced assessment base. In 2025, with a minimum wage of PLN 4,666, the base is PLN 1,399.80. Social contributions amount to PLN 442.90 with voluntary sickness insurance or PLN 408.60 without it.
• “Mały ZUS Plus" (Small ZUS Plus) – for entrepreneurs with annual revenues not exceeding PLN 120,000. The assessment base is determined based on the average monthly income from the previous year, but it cannot be lower than 30% of the minimum wage or higher than 60% of the projected average wage.

Settlement Deadlines in a Sole Proprietorship - Enterpreneur's Calendar

Entrepreneurs running a JDG must comply with strictly defined tax payment deadlines:

• PIT advances – by the 20th day of each month for the previous month, or by the 20th day of the month following the quarter if quarterly PIT settlement is chosen.
• VAT – by the 25th day of each month, or by the 25th day of the month following the quarter if quarterly VAT settlement is chosen.
• ZUS contributions – by the 20th day of each month.
• Annual tax return – by April 30 of the following year.

If the advance tax payment does not exceed PLN 1,000, the taxpayer may be exempt from making the payment for that period.

Consequences of Errors in a Sole Proprietorship – What to Avoid

Running a sole proprietorship (JDG) improperly can result in serious consequences. Operating without official registration is subject to a fine, which in Poland may reach tens of thousands of PLN. In extreme cases, courts may even impose a non-custodial sentence. 

The most common mistakes, however, are far less dramatic but equally risky: choosing the wrong form of taxation, failing to keep up-to-date cost documentation, or overlooking available tax reliefs. Late payment of social security (ZUS) contributions leads to interest charges, and in cases of long-term arrears, ZUS may impose an additional penalty of up to 100% of the unpaid contributions.

Limited Liability Company - Business with Limited Risk

A limited liability company (Spółka z ograniczoną odpowiedzialnością, Sp. z o.o.) is one of the most popular forms of doing business in Poland. It is particularly valued because the liability of shareholders is limited to the amount of their contributions. The company requires a minimum share capital of PLN 5,000 and can be established by one or more individuals.

The cost of setting up a Sp. z o.o. depends on the method of registration. Using the s24 online system, the cost is approximately PLN 375, while the traditional method through a notary costs around PLN 936. Under the s24 system, shareholders pay only PLN 250 for registration, PLN 100 for publication in the official court gazette (MSiG), and PLN 25 in stamp duty (PCC). 

However, it is important to note that the online system allows only a simplified standard company agreement. If you anticipate the need to amend the articles of association in the near future, it may be better to prepare a tailor-made agreement right away to safeguard the company’s interests for years to come. Here, the support of a tax advisor and legal counsel can be invaluable.

Tax and Accounting Obligations of a Limited Liablility Company

Sp. z o.o. is a corporate income tax (CIT) payer – generally at 19%, or 9% for small taxpayers. Profit distributions to shareholders are subject to an additional 19% dividend tax, which results in double taxation of income.

Unlike sole proprietorships, a limited liability company must maintain full (double-entry) accounting records, regardless of the level of revenues. Starting January 1, 2025, companies will be required to keep their accounting books exclusively using computer software.

Moreover, companies with revenues exceeding EUR 50 million will have an obligation to submit their accounting records in the electronic JPK_CIT format (Standard Audit File for Tax – Corporate Income Tax).

Other Forms of Doing Business in Poland - A Brief Overview

Simple Joint-Stock Company (prosta spółka akcyjna, PSA)
Introduced in 2021, the PSA requires a minimum share capital of just PLN 1, making it particularly attractive for startups. It is characterized by flexibility in shaping shareholders’ rights and simplified decision-making procedures.

Limited Partnership (spółka komandytowa)
Since 2021, a limited partnership has been subject to corporate income tax (CIT), which results in double taxation of profits. However, mechanisms for deduction are available for general partners. A limited partnership is also required to maintain full accounting records.

Registered Partnership (spółka jawna) and Civil Partnership (spółka cywilna)
A registered partnership is the simplest form of commercial partnership, with no minimum capital requirement, where all partners are fully liable with their personal assets. A civil partnership, on the other hand, does not have legal personality and is tax-transparent, meaning that each partner is taxed individually on their share of income.

The Most Common Mistakes Made by Enterpreneurs - and Consequences

Among the most frequent mistakes made by business owners are:

• Choosing the wrong form of taxation – failing to adjust to current income levels may lead to higher tax liabilities.
• Improper cost documentation – missing invoices may prevent the deduction of expenses.
• Overlooking tax reliefs – many businesses fail to take advantage of available deductions.
• Errors in tax returns – such as incorrect addresses, misreported figures, or missing information from payers.

These mistakes can result in a range of penalties:

• Errors in JPK_VAT filings – a fine of PLN 500 for each error that prevents transaction verification.
• Late payment of ZUS contributions – interest on arrears plus an additional penalty of up to 100% of the unpaid contributions.
• Serious tax offenses – fines ranging from PLN 1,555.30 to PLN 44,792,640, or imprisonment of up to 5 years.

How to Minimize Risk?

Outsourced Accounting – a Safe Harbor in a Sea of Regulations

Outsourcing accounting allows entrepreneurs to focus on growing their business while leaving day-to-day bookkeeping, tax filings, and documentation in the hands of professionals. Delegating these tasks to an external accounting firm translates into significant cost savings – up to 40% compared to maintaining an in-house finance team. The company no longer has to invest in recruitment, training, software, or office space, nor does it face risks related to staff absences or turnover.

Another key benefit of outsourcing is process automation. Modern accounting firms use advanced systems that reduce the risk of human error and speed up document processing. Business owners gain access to up-to-date tools and expertise without the need to constantly monitor changes in legislation themselves. Importantly, professional accounting firms assume full responsibility for the accuracy of tax settlements and hold comprehensive professional liability insurance (PLI) that protects clients against potential errors.

Tax Advisory – Strategic Guidance in a Complex Legal Environment

Tax advisory goes far beyond the technical aspects of bookkeeping. A licensed tax advisor is an expert whose role is to interpret tax regulations, optimize liabilities, and represent clients before tax authorities or administrative courts. In practice, the advisor analyzes the company’s individual situation, recommends the most advantageous form of taxation, assists with applications for binding tax rulings, and advises on business planning and restructuring.

In 2025, tax advisory takes on even greater importance. Frequent changes in regulations, new reliefs (such as R&D relief, IP BOX, and the Estonian CIT regime), and an increasing risk of tax audits mean that expert support not only helps avoid costly mistakes but also enables businesses to leverage available, lawful tax optimization opportunities. A tax advisor can also mediate with tax authorities, negotiate repayment terms, and represent clients in disputes – giving entrepreneurs a real advantage in dealings with the tax office.

It is worth emphasizing that tax advisory is a task-specific service – it is used in defined situations such as planning investments, changing the legal form of the business, or preparing for a tax inspection. Ultimately, it is not only about ensuring compliance and security but also about achieving measurable savings and gaining strategic support in making critical business decisions.

Focus on What You Love

In a market where change is constant and regulations can surprise even the most experienced, an entrepreneur doesn’t have to be a lone sailor navigating a stormy sea of taxes and accounting. It pays to make use of modern tools, expert knowledge, and professional support that not only help you stay afloat but also allow your business to truly thrive. Instead of spending energy tracking every new interpretation or worrying about the accuracy of your paperwork, you can focus on what really drives your business – innovation, relationships, and growth.

Don’t be afraid to seek professional support – it is not a sign of weakness, but of maturity and courage in decision-making. The future belongs to those who know how to delegate wisely and invest in the security of their company. Give yourself the comfort of knowing that tax and accounting matters are in the best hands. With that peace of mind, even the most complex regulations will no longer feel like obstacles, but rather stepping stones on your path to success.