Setting up a company – the conditions and documents necessary to register a business
The year 2016 was record-breaking in terms of establishing business activities. In the country on the Vistula at that time, 337 thousand. new companies. Enterprises are the driving force of GDP, so setting up a business should, in principle, be simple. The legislator went to the entrepreneurs’ hand and for some time the company can be registered in one window. The most important element of the company establishment procedure is the CEIDG – 1 form.
Data needed to set up a company:
- Social Security,
- NIP (if the applicant does not have a number, it will be issued after submitting the application),
- residential and registered address,
- personal account number (a business account can be opened after submitting the application.
One-man business and civil law partnership – differences
One of the forms of running a company is a sole proprietorship. Numbers – NIP and REGON are assigned to the name of the company owner. Interestingly, after unregistering the numbers are not deleted. They can be used when setting up another company.
The owner of a sole proprietorship is responsible for all enterprise receivables. It is worth emphasizing that if the property separation has not been established, the spouse is also responsible for the resulting debts.
Running the company is the responsibility of the owner. However, there is the possibility of establishing powers of attorney under which third parties may represent the interests of the enterprise – e.g. an accountant at the Tax Office.
At least two people are needed to establish a civil law partnership. A natural or legal person may become a partner. The REGON number is obtained from the Central Statistical Office. The Tax Identification Number in the Tax Office. After the dissolution of the company, the numbers are irretrievably deleted.
An own element is a necessary element of a civil law partnership. Each of the partners is required to contribute part of their property, the contribution does not have to be in the form of cash – it can be e.g. mobility in the form of a car. Earned profits and liability for debts are attributed equally to each partner (unless the articles of association provide otherwise). The partners are responsible for all outstanding liabilities with all their assets.
The company’s affairs may be managed by any of the partners. In this case, it is also possible to establish a power of attorney for a third party.
CEIDG-1 form – a key application to set up a business
The most important application necessary to establish a company is CEIDG-1. With the submission of the application, the business is registered. In the case of civil law partnerships, each partner must submit an application separately. The document can be completed traditionally or using a special wizard. Completing the online application is free. Interestingly, there are several options for submitting the form:
- at the commune or district office,
- electronically using a qualified signature (secured or not),
- by registered mail (a signature is required, which is notarized).
The CEIDG-1 form is a key element of business registration. The application has several functions:
- pursuant to it, an entry in the REGON register and NIP may be obtained,
- by completing the form the applicant specifies the form of taxation,
- the form is also a notification or a change to the declaration for the payment of contributions to the Social Insurance Institution,
- is also a statement about continuing insurance for farmers.
Registration at the Tax Office
The next step is to register the company as a VAT payer. To this end, a special VAT-R form should be submitted to the Tax Office. It is worth noting that the partners of a civil law partnership are obliged to regulate formalities related to civil law tax (PCC 3). What’s more, the company’s founders have to make a payment of 0.5 percent. own contribution. Time for payment is 14 days from submitting the application.
Forms of taxation – which option is the best?
An important element of the CEIDG-1 application (paragraphs 18 and 19) is the choice of the form of taxation. If the applicant does not specify the form, the resulting income will be taxed according to general principles.
There are four tax options:
- Taxation on general terms – the taxable amount is income (the difference between income and tax deductible costs). The amount of tax is set at 18 percent. for income below PLN 85,528. For higher amounts the rate is 32 percent. Advantages of the solution are concessions – e.g. family and construction relief, expenses for the Internet,
- flat tax – as in the case of general taxation, the tax base is the difference between income and expenses. The tax rate is fixed and is 19% regardless of income.
- flat-rate tax on recorded revenues – the tax base is income, but without deducting costs. Total revenue may not exceed 250,000 euro. In this case, the taxpayer has five rates to choose from: 3 percent, 5.5 percent, 8.5 percent, 17 percent and 20 percent This form of taxation requires simplified revenue records. In addition, the entrepreneur is required to store proof of purchase and must maintain a list of fixed assets. This type of taxation is dedicated to entrepreneurs who show low income.
- tax card – a characteristic feature of this form of taxation is the fact that the amount of tribute is determined individually with the Tax Office. The amount of tax depends, among others depending on the type of services performed, the number of inhabitants of the town where the business is conducted or the age of the taxpayer.
Problems of young entrepreneurs – high competition and lack of financial liquidity
Unfortunately, not all businesses are successful. Almost 80 percent companies collapse during the first two years of operation. Most enterprises close in the Mazowieckie and Śląskie voivodships. The reason for this is high competition on the market, legal restrictions and insufficient funds for development.
According to a study carried out by Business Link in 2014, every fourth Polish company had to close down due to limited access to external financing.
External financing – a way to grow your business
The best-known forms of business financing are loans and non-bank loans to companies. The interest rate is relatively low. Loan amounts are higher than loans. The downside of the banking option are the requirements. An entrepreneur who wants to use a banking product must have a positive credit history and very high BIK scoring. Young companies will not take out the loan either. Typically, banks require that operations have been in operation for at least a year. Also in case of problems with arrears, companies can use loans to pay US tax.
On the other hand, loan companies grant slightly lower amounts. The interest rate is higher than at the bank. However, credit history and scoring are of little importance. What’s more, the application procedure is simplified, which means you can get the money you need the next day after submitting the form. Additionally, it is possible to enter interest into the costs of running a business. Non-bank institutions grant loans to companies on the first day of their operation
Leasing is also an interesting solution. This is a form of lease. Most often, movable property is leased in the form of vehicles. Tax benefits are a plus of the solution. This form is an interesting alternative to a car loan.
Trade credit is a less known form of investment financing. This is nothing more than an extended payment period for the purchased goods. The advantage of the solution is maintaining financial liquidity and low cost of commitment.