How to Register a Sole Proprietorship (Jednoosobowa działalność gospodarcza – JDG) in Poland

In Poland, registering as a sole proprietor, referred to as Jednoosobowa działalność gospodarcza (JDG), is one of the simplest paths to legal self-employment. It's especially popular with freelancers, consultants, and small traders for its low cost and fast, largely digital process.

Starting a JDG typically takes under 24 hours, all handled through the government-run CEIDG system. That said, individuals must navigate choices like tax structures, ZUS (social insurance) contributions, invoicing, and bookkeeping.

The key challenges are figuring out the right tax regime and managing social security costs, which can significantly exceed income tax. But the benefits of no share capital requirement, streamlined setup, and full control make it a compelling structure for new entrepreneurs.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Poland?

In Poland, a sole proprietorship is called Jednoosobowa działalność gospodarcza (JDG). Under this model, an individual conducts continuous, profit-driven business activity under their own name. It’s not a separate legal entity, so business liabilities extend to your personal assets.

How does a sole proprietorship (JDG) work in Poland?

JDG vs other business structures in Poland

Step-by-step guide: How to register as a JDG in Poland

Step 1: Check eligibility

You must be at least 18 years old and a Polish or EU/EEA citizen to be eligible to register as a JDG. Foreign nationals in Poland are also eligible as long as they have a valid visa and passport.

Step 2: Choose your business name

You must use your legal name as the business name. Additionally, you are allowed to add a descriptive phrase to your business name for branding purposes.

Step 3: Gather required documents

You'll need:

• National ID or passport
• Visa and work permit
• PESEL (or application for one), Tax ID (NIP)
• Business address in Poland
• A profile on the CEIDG portal, potentially with ePUAP or trusted profile for digital signature

Step 4: Register via CEIDG

Complete the registration online through the CEIDG portal. You can also opt to register in person. The process is free, and entry is shared automatically with tax, statistical, and ZUS (social security) authorities.

Step 5: Post-Registration Obligations

• File monthly or quarterly taxes according to your selected tax regime (progressive, flat, lump-sum). If you are a VAT payer, you must charge VAT on your invoices and maintain detailed VAT records.

• Register and begin paying mandatory ZUS contributions covering health insurance, social security, and Labor and Solidarity Funds. For new JDGs, a start-up relief exempts them from paying social insurance and Labor and Solidarity Funds for the first six months.

• Maintain clear accounting and business records for tax purposes. The requirements for bookkeeping depend on your selected tax regime.

Financial and tax obligations for sole proprietors in Poland

Income tax options (PIT):

• Progressive scale: 12% on annual taxable income up to 120,000 PLN and 32% for income over 120,000 PLN

• Flat rate: 19% on net profit

• Lump-sum scheme: Tax rate between 2–17%, which is based on gross revenue and depends on your business activity type

ZUS (Social Security) Contributions: Standard monthly contributions cover pension, health, labor fund, and other insurances. New JDGs may qualify for exemption from social insurance and Labor and Solidarity Fund contributions for the first six months.

After an initial six-month period, you may qualify for Preferential ZUS, which allows JDGs to pay reduced amounts for social security contributions for 24 months. After the preferential period, you will be required to pay the full ZUS contributions.

VAT (Value Added Tax): Standard VAT rate is 23% and applies to eligible businesses that exceed the annual turnover threshold of 200,000 PLN. Businesses subject to VAT registration in Poland include foreign businesses trading or storing goods, freelancers, importers and exporters, e-commerce businesses, and businesses providing services to Polish customers.

If you are a foreigner providing taxable goods and services in Poland, you must register for VAT regardless of whether you pass the turnover threshold.

A separate business bank account is required for JDGs who are VAT payers.

Recordkeeping: JDGs filing taxes through the lump-sum system, you are required to keep a simple record of income.

For JDGs filing taxes through the progressive and flat rate tax regimes, you are required to keep more extensive financial records using the Księga Przychodów i Rozchodów (KPiR - Book of Revenues and Expenses). Record all income and expenses in the KPiR supported by valid documents (invoices, receipts, etc.). You are also required to keep a depreciation register to track depreciation of your business’ fixed assets.

Launch your contracting career and stay compliant with Deel

Registering as an Jednoosobowa działalność gospodarcza (JDG) gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential bookkeeping tools
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• Spend your earnings in USD with the Deel Card
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