Legal Eye: Be small, but tough

In fact, the law requires the government to create "favorable conditions for the functioning and development" of small business. 

Enough of the theory. Although small may be beautiful, it's not always easy. While promises are made of easing the difficulties of small business in Poland, for the most part small businesses must navigate through the same bureaucratic hoops and paperwork as larger businesses. Even now, though, small business can take advantage of a few simplifications.

More choice in starting up

If you've dreamed of becoming your own boss, you have choices on how to declare yourself open for business. The easiest is to register as an entrepreneur. All you need to do is visit your local gmina office, fill out the appropriate forms and pay zł.100. The government has grand plans to simplify this process even further, including allowing this to be done electronically. However, the deadline for implementing this and other reforms has recently been postponed until October 2008. 

Declaring yourself as an entrepreneur is a good first step if you are thinking slow and steady.  If your plans are grander, you will want to consider setting up a company. Here a whole range of options becomes available, from the simple sole proprietorship, to partnerships to limited liability companies. One of the main factors in this decision should be whether you want to separate your business assets from your personal ones. If so, typically, a limited liability company is the best choice for a small business.

One major disadvantage of a limited liability company is the minimum share capital requirement of zł.50,000. Remember, though, that this sum does not have to be in cash. You can make in-kind contributions of goods, licenses, know-how or other assets.

Under the radar

When it comes to adhering to law, we lawyers are conservative by nature. However, various provisions of Polish law allow small businesses to forgo certain obligations otherwise applicable to business. 

While labor costs are a significant burden for small business, the Labor Code does make a number of concessions in favor of small business. For example, businesses employing less than 20 employees do not need to implement work or wage by-laws or to create social funds. If you have less than 50 employees, you don't need to create a work council. Finally, it takes a minimum of 10 employees to create a labor union.

If you experienced difficulty in ordering a taxi at the end of a year, it's because of another relief offered to small business. Small businesses with yearly sales of less than the equivalent of EUR 10,000 (zł.38,700) do not have to pay VAT.

EU funds and other programs

A number of programs and offers are available to small business, including access to financing. Before seeking assistance, you must classify your business. The two main elements are the number of employees and net sales. Generally speaking, a micro enterprise has less than 10 employees and net sales of not more than the equivalent of EUR 2 (zł.774) million. For a small enterprise the applicable numbers are 50 employees and net sales of EUR 10 (zł.38.7) million; for a medium enterprise, 250 employees and sales of up to EUR 50 (zł.194) million.

Judith Gliniecki is a partner with Rymar and Partners. E-mail: j.gliniecki@rymar.pl