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A company without ZUS: is this possible? As a business owner you have probably asked yourself this question. We have good and bad news. The bad news is that running a business involves an obligation to pay contributions. The good news is that there is one exception: a limited liability company with at least two shareholders.
Who must pay ZUS contributions?
Everyone running a business must pay ZUS contributions from the first day. New business owners may use reliefs, but only for a limited time. The obligation covers not only sole traders registered in CEIDG but also partners in general, professional and limited partnerships and shareholders of single-member limited liability companies. A limited liability company is an interesting example in the context of ZUS contributions.
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A single-member limited liability company: a company without another shareholder
The Polish dictionary defines a company as “a contractual association of two or more people established for a common, usually economic, purpose”, suggesting at least two shareholders. In reality, a company can have only one. A single-member limited liability company may be created by:
- Converting a sole proprietorship into a company
- A shareholder acquiring shares in an existing company
- A shareholder establishing a company alone.
Converting a sole proprietorship into a company may seem like a way to avoid ZUS. The legislature anticipated this: a natural person who is the sole shareholder is expressly regarded as conducting non-agricultural business activity.
It is different when there are more shareholders: a limited liability company with more than one shareholder is exempt from ZUS contributions. Establishing a company with at least two shareholders is therefore a lawful way to have a company without ZUS.
Looking for an accounting firm to manage your company?
TaxCoach provides comprehensive accounting, financial and tax support tailored to your business. We offer ongoing accounting as well as financial planning, reporting and tax optimisation. Draw on our team's experience and work with a dedicated chief financial officer (CFO) to make sound business decisions.
Limited liability companies and taxes: key facts
A limited liability company pays corporate income tax (CIT) on income, meaning revenue less business costs. The standard rate is 19%, but a company meeting certain conditions may use the preferential 9% rate, known as small CIT.
What about double taxation?
A limited liability company pays income tax twice and is therefore subject to double taxation.
- First, it pays tax on profit at 19% or the preferential 9% rate
- Second, income tax is paid when dividends are distributed to shareholders; the rate is also 19%.
Can double taxation be avoided? Yes. Employee remuneration is a company cost. If a shareholder works for the company under an employment, mandate or specific-task contract or by appointment, that remuneration reduces the tax base.
Another popular approach involves contracts between shareholders and the company, concerning premises rental, translations, consulting or other services. Another way to transfer money other than dividends is a specific-task or mandate contract with copyright transfer, for example commissioning an article describing the company.
Accounting for companies
A tax adviser's role is to propose solutions reducing the client's taxes and contributions. Operating as a limited liability company is a lawful and popular approach among Polish businesses. At least two shareholders are required for exemption from ZUS contributions.
Advice does not end with proposing conversion. The adviser must also address double taxation: the company pays CIT on income, then shareholders pay tax on dividends. There are ways to transfer earnings in another form, avoiding double taxation while increasing tax-deductible costs.
We invite you to use the services of the TaxCoach accounting firm in Poznań. Our qualified legal advisers and accountants will help optimise your taxes.
- Regardless of business form, we offer tax planning and optimisation. After understanding clients' development plans and expectations, we help select the most beneficial tax form and make full use of available reliefs and preferences.
- We advise on all taxes, including PIT, CIT, VAT, PCC and inheritance and gift tax.
- We help clients understand complex tax rules and plan effective action compliant with current law.
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TaxCoach's tax advisers provide professional advice, audits, representation before administrative courts and ongoing tax support. Our accounting firm also handles HR and payroll, company secretarial services, company formation and operations, comprehensive accounting, financial advice, break-even calculation, pricing, financing assistance, business plans and controlling.
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