Just having a remarkable business idea is not enough to turn it into a full-blown venture. It demands immense dedication, smart work, hard work, and of course, the skin to endure the red tape involved in the process. Riding on this roller coaster of establishing a venture consistently and patiently will at last bear the fruit you awaited so long.
Have you been thinking about Poland to locate your venture? Appreciative, indeed! The country is situated in an advantageous location in Europe which allows easy access to the global market. Thanks to its location, the country has enjoyed preserved and healthy business relationships with countries of the EU such as the UK, France, etc. Furthermore, its favorable geographic location has made the import and exports business highly enticing to people here. While another sector of entrepreneurs and business people find the food sector alluring in Poland. Cheap labor and rigorous manufacturing activities in the country also make Poland an attractive option for basing a business here.
Although starting a business anywhere is an overwhelming job, especially when you have to deal with a mind-numbing amount of paperwork. You can’t help it. However, the process can definitely be made less of a nuisance by knowing about the regulations, legal obligations, process, formalities, etc., involved in launching a venture in Poland. And here, we have it covered for you!
To start a business in Poland, you will have to go through certain general steps, which we shall walk you through here. After coming up with a profitable business idea, you will need to select a company structure that will directly impact other requirements, such as minimum share capital. Thereafter, you have to choose a compelling business name, which needs to be original. You can perform a preliminary check for the name’s availability before finalizing it. After these procedures come the need to set up a business bank account where you will have to deposit minimum share capital followed by company registration. For registering a business, the Articles of Incorporation and business bank account are asked, and then the company gets listed in the National Court Register.
Let’s parse through different aspects of starting a business in Poland in detail further.
Process of setting up a business in Poland
The flourishing economy of Poland unleashes immense opportunities for new businesses and startups. Furthermore, the country offers benefits like tax incentives, cheap labor, investment, etc. To launch a venture in Poland or anywhere, you first need to conceive a solid business idea, conduct in-depth market research, and prepare a compelling business plan. Furthermore, you would then go forth to get your business registered, understand its taxation system, open a business bank account, and so forth. Here is a detailed guide to help you understand what the process of starting a business in Poland looks like. Read on!
- Prepare a strong business plan: The foremost perk of preparing a robust business plan is that it will acquaint you with the market. You will come to learn the market size, about your competitors, demand and supply of product/ service, budget, craft marketing strategies, and so forth. Moreover, you will have to present a business plan to convince investors who are interested in associating themselves with your venture. Thereby allowing your business more opportunities to grow.
- Choose the legal structure of the business: Entrepreneurs need to choose a legal business structure when registering a business in Poland. It is selected in a way such that it best fits the business requirements. The main types of company structures in Poland are:
- The joint-stock company:
- The sole trader
- The partnerships
- The limited liability companies
- Representative office
- Branch office
- Limited joint-stock partnership
- Professional partnership
- Select the PKD codes: PKD codes indicate the kind of activity your business will engage in. PKD stands for Polska Klasyfikacja Działalności, and its role is to navigate the industry in which a business will function.
- Register your business: As you get your Articles of Incorporation drafted and have opened a bank account for business purposes, the company will be registered at the National Court Register.
- Get your KRS number: After your company gets registered, you need to procure the KRS number, which is then registered for various tax purposes. Once you get the KRS number, you will need to acquire a NIP number. Before registration, however, you need to deposit a paid-in minimum share capital which is PLN 5000 in Poland.
- Understand taxation in Poland: Income tax and corporate tax in Poland are set at 19 percent, while VAT is 22 percent. Businesses that have a turnover of less than €10.000 are immune from making VAT payments. However, as the company’s turnover reaches above €10.000, you have to make a tax declaration, which is followed by paying taxes correspondingly. To keep your bookkeeping in order and abide by taxation regulations, companies can rely on a competent accountancy office for a fixed monthly price.
Hiring Employees in Poland
Now you know how to start a business in Poland, and as the business develops, you will need to hire employees and staff to manage different operations of the company. However, the process of treating and recruiting labor and employees is governed by the employment and labor laws of a country that one needs to become familiar with. With experienced consultants like Zimyo by your side, your HR-related tasks will be completed in an efficient manner.
Here, we have collated important entitlements and regulations that you need to know as an employer. Read on!
- Trial Period/Probation Period: The trial period in Poland cannot exceed the duration of three months. An employment contract for a probation period is finalized in a scenario when initiating an employment relation. The employer or/ and employee wishes to become familiar with the conditions, obligations, and environment of the workplace. Once the trial period is over, either of the parties can close another employment contract for a probation period except in the case when an employee is recruited to carry out another job role. This contract can be concluded once again after the duration of three years from the expiry of the earlier employment contract or from the termination.
- Leave and Holidays: Employees of a company are entitled to receive paid annual holidays for 20 to 26 days. Holiday leave is provided on the working days. If the employee sends an application, the holiday leave can be divided into parts while ensuring that holiday leave doesn’t last for 14 days in a row. Besides holiday leave, employees are entitled to take leave from work on public holidays and Sundays. In Poland, currently, 13 public holidays exist. If an employee is struck by a disease, injury, or accident and remains so for at least 33 days and those employees who have reached the age of 50 years are entitled to get 80% of their pay. If illness occurs during pregnancy, remuneration stays 100%.
Those with serious or moderate disabilities are entitled to receive extra 10 days leave from work. This right is functional for the employees who have worked for at least one year in the company and are classified in the official disabilities category. The employee is allowed 2 days’ leave in the event of childbirth, employee’s wedding, or the mourning of a child/ spouse or close kin. At the same time, one day leave is allowed if the employee’s child is getting married or the employee has to attend the funeral of a brother, mother-in-law, father-in-law, grandmother, grandfather, etc.
- Maternity Leave: Maternity leave is allowed to the employee irrespective of the duration of the service to the company. A female employee is entitled to get maternity leave for up to 20 weeks for childbirth. In the case of multiple births, this leave period may be extended. Before the anticipated date of delivery, female employees can take leave for up to 6 weeks. After exhausting all 14 weeks of leave post-delivery, female employees can choose to abandon the remaining part of maternity leave.
- Termination of Services: Termination of employment contract is done solely on the reasons enlisted in the Labor Code. Thus, the parties involved in the contract cannot set the grounds for terminating the contract. Employers, as well as the employee, should state the reason for termination of services without notice. If the employment contract is terminated with a notice, it should clearly mention the grounds of termination.
The employment contract can be terminated instantly due to following reasons:
- Violating fundamental employee duties.
- Committing a crime that renders it impossible to continue the job.
- Through a fault, the employee loses the authorization needed to perform the job.
Furthermore, employment contracts can be terminated due to an employee’s prolonged and unexcused absence from work.
- Pension: Currently, three segments exist in the pension system of Poland, namely, the Social Insurance Agency, Open Pension Funds, Individual Retirement Accounts, and the Employee Pension Schemes. Here, the first and second segments, aka pillars, are mandatory, while the last segment is optional.
At present, women’s retirement age is 60 years, while it is 65 years for men. A person can apply for a retirement pension only after reaching this age limit. Those performing jobs of special character or under special conditions are entitled to receive bridge retirement pensions. Men get a pension at 60 years of age, while women can get it at the age of 55.
- Work Hour Norms: As per the standards, in Poland, a workday cannot stretch beyond eight hours a day and 40 hours a week in a typical five-day workweek. Weekly work time cannot surpass the limit of 48 hours, including overtime. Overtime is acceptable only under two circumstances:
- A mission is meant to protect human lives/ health, the environment, or property.
- For employer’s exclusive requirements which justify overtime work.
Every employer must provide an eleven-hour uninterrupted rest period to the employees in 24 hours. In a calendar year, as per the Labor Code, the number of overtime hours cannot exceed 150 hours annually.
How easy is it to conduct business in Poland?
Launching a business in a country that hardly allows space for it to grow is the last thing one would wish. Although an entrepreneur does take certain risks when starting a venture, throwing caution to the wind when deciding on location is definitely something they won’t prefer doing. It is pragmatic here to research the economy and how enabling the environment of a country is for establishing a business.
The responsibility of studying and collating diverse factors that contribute to the overall ease of doing business in a nation is upon the World Bank. This body has published the Doing Business report every year since 2003. This report mentions the ranks of individual indicators such as getting electricity, paying taxes, enforcing contracts, etc., which are then used to estimate the overall EODB rank and score of a country.
Here, we have laid out everything that conveys about the environment of Poland for starting a business according to the Doing Business report 2020. The country was, though, got 40th position among other 189 countries that were compared and scored 76.4 out of 100. Let’s dig in further!
- Starting a Business: You can’t simply conceive an idea and get to laying bricks, building offices and warehouses when starting a business. There’s a lot to be done before that. You need to register a business, reimburse a set paid-in minimum capital, and of course, spend some or more time doing that. The Doing Business looks at the number of procedures, amount of red tape, time, costs, etc., involved in establishing a business. Poland received 128th rank in this sub-index while scoring 82.9 among other 189 economies. In 2014, the country eliminated the requirement of registering a new business at the National Sanitary Inspectorate and National Labor Inspectorate.
- Managing Permits: Business permits exist to manage the safety, appearance, and structure of the business. They are proof that your business operates legally while abiding by regulations and ordinances. The more hassling it is to acquire permits for a venture, the more hostile an environmen
t is for starting a business. Thus, Doing business considers managing permits as one of the factors when assigning an EODB rank to an economy. Poland got 39th position while scoring 76.4 out of 100 in the comparison made between other 189 nations. In 2014, Poland eliminated the need to get a description of the geotechnical paperwork of the land, thereby rendering the process of managing permits smoother.
- Getting Electricity: Electricity is line-of-life for any venture, even a tiny kiosk rigged on the street selling burritos & hot dogs. Acquiring connections with the electricity grid in a country requires time and cost, and one has to fulfill certain requirements and undergo many procedures. The easier it is to procure electricity connection for a business, the higher an economy’s rank in the Getting Electricity sub-index. The Doing Business also investigates the reliability and supply of electricity in a country along with the transparency in its tariffs. Poland was given the 60th position according to the Doing Business report 2020. In 2015, the country lessened the expenses involved in getting new connections by revising the fee structure.
- Getting Credit: You may manage to a certain extent the cost of operating a business by getting finances from acquaintances and family. However, you can’t go far like that. At a point, you will find your business in need of hefty amounts which only credits can satisfy. The Doing Business, therefore, also considers Getting Credit as one of the indicators of the EODB index. It looks at the strength and efficacy of credit reporting systems and also movable collateral laws. Poland managed the 37th position in this sub-index while scoring 75 out of 100.
- Managing Payroll: As the company grows, the number of employees and staff also increases. Therefore, integrating an efficient payroll management system is necessary to facilitate the company in paying salaries on time. Payroll management, however, is not limited to this act as it involves contributing to other crucial activities like social security, unemployment tax, and income tax. Payroll management services offered by Zimyo will help you with this administrative job by reimbursing staff and employees.
- Paying Taxes: Every business has to pay taxes set by the government. Paying taxes is another indicator considered by the Ease of Doing business to grasp how conducive an environment in a country is for setting up a business. It regards the time, cost, and a number of formalities one has to fulfill before, during, and after filing taxes. Poland received 77th rank while scoring 76.4 out of 100. In 2016, the country introduced an online system for filing and paying transport tax and VAT, thereby streamlining the process of paying taxes. However, it was also made expensive by raising the contributions to the National Disabled Fund compensated by employers and transport tax.
- Enforcing Contracts: This is yet another indicator considered by the Doing Business when calculating the overall EODB rank of an economy. Here, it probes the cost, number of procedures, and time it takes to settle a business-related dispute legally, as well as gauging the efficiency and strength of judicial processes. Poland received 55th rank among other 189 countries while it scored 64.4 out of 100. In 2008, the country adopted stringent procedure rules to enhance the efficiency and speed of court proceedings, thereby rendering enforcing contracts easier.
- Resolving Insolvency: Businesses may face insolvency, and to settle it efficiently, strong and smart regulations are required. The Doing Business uses resolving insolvency as one of the indicators of estimating the overall EODB position of an economy. It assesses the time, cost, number of procedures, and recovery rate needed to resolve commercial insolvency. Poland bagged 25th position in this sub-index while scoring 76.5 out of 100. The country adopted lower limits on the pay of trustees and tightened the procedure by tightening professional requirements, thereby improving the insolvency resolution process.
Poland is increasingly offering creative and innovative methods to experiment and test various forms of products. This is unfurling a wide gamut of technological opportunities in the country. Top businesses that enjoy the most scope in Poland today are tourist guide businesses, laundry businesses, daycare, antique furniture furbishing companies, shopping mall play centers, first aid kits businesses, in-home senior care businesses, and virtual IT service businesses.
Zimyo is a leading HR and Payroll management services provider in Poland with multiple years of experience. The company helps businesses hire the best talent and takes care of the financial requirements of employees, such as advances or credit for a hassle-free work experience.