How to start a company via Internet - step by step instructions
Setting up your own business is still associated by many people with the need to fill in a multitude of applications and forms, submit them to various agencies, and maybe even pay related fees. In fact, things are much better – you can start a business for free and without leaving your home! This guide will help you learn how to prepare and complete an application online.
Image acknowledgement: Samantha Borges, source: unsplash.com
Business activity can be carried on in many forms: As a future entrepreneur, you can choose self-employment, a partnership along with several types of partnerships and limited companies. We will discuss below the procedure for establishing a business in the first of these forms; the one which is most common for people just starting their business adventure. It should be stressed that self-employment does not mean that you have to run it on your own. There has to be one owner of the business who would be the one to decide whether and how many employees to hire.
You can set up a business by submitting an application to be entered into the Central Register and Information on Economic Activity (form CEIDG-1). In order for the process to run smoothly, you should prepare in advance a package of the information and tools that are required.
Basic data on the applicant
As with any form, you will start with your details. In addition to your name and surname, you will need to provide your date and place of birth, your parents’ names, citizenships, type, series and number of identity document and your address. The latter is linked in to identifying a competent tax office for tax purposes. Your bank details will be required as well for these settlements. After registering a business, you will be able to set up a separate business account; however, this is not required for self-employment. PESEL (personal identification number) must be provided by Polish citizens and foreigners who were assigned a number. NIP (tax identification number) and REGON (business statistical number) numbers are required. However, you do not need these numbers if you have not run a business previously; in such case the application for entry into the Register will at the same time constitute an application for the assigning of these numbers.
Information on the business
Gathering these details should not cause any problems. However, you should spend a bit more time on preparing information about the planned business. The name of the business is required. Pursuant to regulations, it should contain the entrepreneur’s name and surname; thus, Shoe shop alone will be insufficient. In this case the full name should be , for example, Shoe Shop Mikołaj Zelówa. Moreover, a business name may not mislead a potential customer in respect to the nature of the business activity. The abbreviated name may contain 31 characters maximum and is provided for ZUS (Social Insurance Institution) purposes. If the business name is not specified, you should enter your name and surname here.
As in the above example, the name may, but does not have to relate directly to the type of the business activity being carried on. The type of business activity is specified, however, in a respective field using PKD (Polish Classification of Economic Activities) codes. You can use a code finder or browse the full list of these codes to assign an appropriate code to your business. In the first instance, you need to enter the code of the dominant type of business activity; namely the one that generates the greatest revenues. You don’t need to specify any additional codes if you will not be conducting other type of activity. These codes can be added later if the business profile changes.
The contact details are next. The primary details concern the correspondence address and other forms of contact (telephone number, email, website address). If it is intended that the business will operate in a specific location, like a brick-and-mortar store, you should specify its address as well. This applies also to potential additional locations: offices, local offices and branches. Where you have no specific place of business, because, for example, you provide services directly to customers, or you and your employees perform your duties remotely, just tick the applicable box.
You will also need to declare the anticipated number of employees, including the entrepreneur himself/herself (therefore, if you do not plan to hire anyone, enter 1 in this field) and the date of commencement of activity. This date is important because of the requirement to pay social insurance contributions that arises on that very date.
Selection of the form of taxation
Generation of income is always associated with the requirement to pay taxes. You can chose one of four forms of taxation when setting up self-employment. The default taxation is on general principles, i.e. with rates of 17% for annual income up to PLN 85,528 (the rate applicable until the end of 2021) and 32% for income above that threshold. By choosing this form of taxation, you the business’s income will be settled together with any other income that you will have accrued in a given year, for example from employment contracts or freelance assignments. You will also be able to benefit from the available tax relief, and be taxed together with a spouse or a child.
A flat-rate tax is a more advantageous solution for a business whose annual income exceeds the second tax threshold. Its rate is 19% and does not change whatever the income earned. However, when choosing this option, you will not be able to settle together any other income and benefit from the majority of forms of tax relief.
Lump-sum tax on registered income is a simplified form of taxation. This option can be chosen by anyone conducting a non-agricultural business activity. It is not available to pharmacy operators, foreign currency traders, traders in parts and accessories for motor vehicles and manufacturers of products subject to excise duty (except for electricity from renewable sources). Lump sum tax rates vary - from 2 to 17% and depend on the type of activity performed. At first glance, it seems that this form of taxation is more beneficial. However, you must take into account that all company revenue is taxed, not just income. This means that the tax base cannot be reduced by tax deductible costs. An additional limitation is the maximum annual revenue applicable to this form of taxation, which amounts to EUR 2 million (slightly over PLN 9 million). If you would like to choose this method of settling accounts with the tax authorities, make sure to familiarise yourself with the act and its review.
Fixed-amount tax (a tax card) is the simplest form of taxation for entrepreneurs. However, it can only be chosen by those who operate in the strictly defined areas of manufacturing, trade and services, employ a limited number of employees, as well as by persons engaging in selected freelance professions in the field of health care and veterinary care. Every year, the fixed monthly rate of the tax due is established by the head of the tax office pursuant to the table, taking into account the scope of activity, the size of the town and the number of employees. Therefore, the level of the tax under this form of taxation is unrelated to generated revenues. In accordance with the proposed changes, from 2022 it will no longer be possible to opt for a tax card. This option will remain open only for businesses which were taxed in this manner in 2021.
Tax settlements are directly related to the issue of who will be handling the bookkeeping at your business. You can do it yourself, of course. However, if you don’t have experience in this area it may appear difficult and time consuming. In that case online tools such as Banqup can be very helpful. Larger businesses usually employ their own accountants, but this is a costly solution and therefore probably not accessible for people just starting their own business. Outsourcing the bookkeeping function is a much cheaper solution. In that case, you will need to enter the details of a selected firm in the form.
After proper preparation, filling in the application will not cause you any problems. You can do it in three ways. The best way is to go website biznes.gov.pl. The creator available on that website will guide you through all the stages, ask for the required information and create a finished application including the necessary attachments. You can also complete the form yourself directly on the website of the Central Register and Information on Economic Activity; however, you will need first to create the account on that website. Some banks also offer the option of setting up a business through their portals, but it is a less comprehensive solution that requires the submission of additional applications, for example to ZUS.
When submitting the application online you must of course also sign it. The easiest way and one that involves no costs is to use the Trusted Profile. If you don’t have one yet, you can easily create it via Internet. Another solution involves a qualified electronic signature. It is not a free solution, but unlike the Trusted Profile, it can also be used for other matters, such as remote signing of contracts. If you have an ID card with electronic layer and appropriate reader connected to the computer, you can authenticate the application this way.
Starting self-employment via the Internet is not difficult. If you devote some time getting prepared and considering some key issues, the entire process will go quickly and smoothly. You can do it from the comfort of your home and it is completely free.
And when your business is up and running, Banqup will help you with efficient administration of your business.