Limited Liability Company in Poland – pros and cons ep 16

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Limited Liability Company in Poland – pros and cons is this episodes topic. Need more help? Then become for free a member of Business in Poland Mastermind community and/or write me Søren Christensen at info@bizinpoland.com. More info at Biz in Poland.

16 episode of Biz in Poland podcast transcript

Welcome to the 16 episode of Biz in Poland podcast. This episode’s topic is about the pros and cons regarding choosing a Limited Liability as a Company in Poland.

Setting up a Limited Liability Company (LLC) in Poland, known as a “Spółka z Ograniczoną Odpowiedzialnością” (sp. z o.o.), has its advantages and disadvantages. Here are some of the pros and cons:

Pros:

• Limited Liability: The primary advantage of an LLC is the limited liability it offers to its owners (shareholders or members). This means that the personal assets of the owners are generally protected from the company’s debts and liabilities. Shareholders are only liable for the amount they have invested in the company.
• Flexibility: LLCs offer flexibility in terms of management structure and ownership. They can be owned and managed by a single person (a sole-member LLC) or multiple individuals or entities (multi-member LLC). This flexibility allows for various business structures and easier decision-making.
• Ease of Formation: Forming an LLC in Poland is relatively straightforward compared to other business entities. It involves fewer formalities and less paperwork than setting up a joint-stock company (SA).
• Tax Benefits: LLCs in Poland are subject to corporate income tax, but they can choose to be taxed as a transparent entity for tax purposes, which can lead to potential tax benefits, especially for smaller companies.
• Privacy: The ownership of an LLC in Poland is not publicly disclosed, providing a level of privacy for the owners.
• Credibility: An LLC structure can enhance the credibility of your business in the eyes of clients, suppliers, and partners.

Cons:

• Minimum Capital Requirement: While the minimum capital requirement for an LLC in Poland is relatively low compared to other countries, you still need to have a certain amount of initial capital to start the company.
• Administrative Burden: Running an LLC in Poland involves compliance with various administrative and reporting requirements, including regular financial statements and tax filings.
• Corporate Income Tax: While LLCs can benefit from certain tax advantages, they are still subject to corporate income tax, which can be a disadvantage for larger companies with significant profits.
• Complexity for Foreigners: For non-resident individuals or foreign companies, there can be additional bureaucratic hurdles and requirements when setting up an LLC in Poland.
• Costs: There are costs associated with the formation and ongoing operation of an LLC, including registration fees, accounting fees, and taxes.
• Limited Access to Capital: If you plan to raise significant capital through public offerings or have a large number of shareholders, an LLC may not be the most suitable structure, as it limits access to capital compared to a joint-stock company (SA).
• Exit Challenges: Exiting or selling an LLC in Poland can be more complex compared to other business structures.

Before deciding to establish an LLC in Poland, it’s essential to consult with legal and financial professionals who can provide tailored advice based on your specific business goals and circumstances. 

Additionally, the pros and cons may vary depending on changes in the legal and regulatory environment, so it’s crucial to stay updated with the latest information.

Get help with your business in Poland

Therefore become a member of Business in Poland Mastermind group on Facebook. It is for free and we already are over 2000 group members. Bizinpoland.com and Søren Christensen can also help you. Links in the show note.

Thanks for listening. I hope it gave you some insight in the advantages and disadvantages regarding choosing Limited Liability Company form for your business. Good luck with your business and stay tuned for more information regarding doing business in Poland, bye.