Reduced ZUS contributions for new companies - what is worth knowing?
Registration of a sole proprietorship in Poland is very smooth, one day is enough to complete the formalities. What's more, we can set it up using a trusted profile, so we don't even have to leave the house. Are the reduced ZUS contributions for new companies available to every entrepreneur? What aspects to consider in order to make the registration of the business as profitable as possible for us? We answer!
It is best to register your business on the second day of the month
Running a business requires paying social and health insurance contributions. Pursuant to the current regulations, new entrepreneurs are exempt from the obligation to pay social security contributions for the first 6 full calendar months of running a business, counted from the date of commencement of business activity. This is called relief to start.
Six full months means that an entrepreneur deciding to start a business on the 1st day of the month should count 6 months from the month in which the business was registered. A person registering a company on any other day of the month has 6 months, starting from the month following the month in which the company was established. This is due to the fact that the first month is incomplete, therefore, apart from it, entrepreneurs are entitled to 6 consecutive full calendar months of a start-up allowance. In practice, this means that starting a company on the 1st day of the month gives us 6 months of preferences, and on the 2nd day of the month and each subsequent one - 7 months (including one incomplete).
Therefore, it is best to choose the 2nd day of the month as the day of business registration, because during the start-up allowance, the entrepreneur is only obliged to pay health insurance contributions, and this is indivisible. This means that regardless of which day of the month the company is established, the owner is obliged to pay the full health insurance premium (the health premium for 2020 will be known at the end of January this year).
Reduced ZUS contributions for new companies and a relief to start in practice
Mr. Adrian registered a business on November 15, 2020 and wants to take advantage of the start-up tax relief. How should the 6-month preference be valid?
The start discount is available for the first 6 full calendar months of running a business. Due to the fact that Mr. Adrian started running his business during the month, he should not include November 2020 in the period of the start tax relief. 6 months should be counted only from December 2020, so the preference is granted in the period from November 2020 to May 2021 inclusive.
Reduced ZUS contributions for new companies - when is it possible to take advantage of the start-up relief?
To take advantage of the start discount, certain conditions must be met.
Art. 18 sec. 1 of the Entrepreneurs' Law:
An entrepreneur who is a natural person who undertakes business activity for the first time or resumes it after at least 60 months from the date of its last suspension or termination and does not perform it for the benefit of a former employer for whom, prior to the commencement of business activity, in the current or in in the previous calendar year, he performed activities falling within the scope of his economic activity under an employment relationship or a cooperative employment relationship, he is not subject to compulsory social insurance for a period of 6 months from the date of commencement of economic activity.
Preferential ZUS after the end of the start-up relief
After the end of the start-up relief, the entrepreneur may pay for small ZUS for the next 24 calendar months, counting from the month in which the relief ended.
Preferential ZUS means reduced social contributions, amounting to:
- PLN 265.78 - including the voluntary sickness insurance contribution;
- PLN 245.20 - without the sickness contribution.
The amount of the health insurance contribution for 2021 is PLN 381.81.
Small ZUS may be used by entrepreneurs who meet the following conditions:
- for the last 60 calendar months prior to the commencement of economic activity, they did not conduct any non-agricultural activity,
- as part of their activity, they do not provide services to the former employer in the same way as on a full-time job - this applies to the employer with whom the entrepreneur was employed under a contract of employment in the same year in which he founded the company or in the previous year.
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What is a large ZUS and when do you need to register for it?
After the end of the period in which the start-up and small ZUS relief is entitled, the entrepreneur is obliged to register with the large ZUS. A large ZUS is required to be paid by all entrepreneurs who do not meet the conditions for the application of any of the above-mentioned preferences, or small ZUS for small businesses and people for whom the period of using the start-up relief, preferential ZUS or small ZUS for small businesses has expired.
Contributions for social insurance and the Labor Fund for entrepreneurs subject to large ZUS are:
- PLN 1,075.68 - including the voluntary sickness insurance contribution;
- PLN 998.37 - without the sickness contribution.
The transition to a large ZUS means the necessity to pay contributions to the Labor Fund. With the start-up relief and small ZUS, entrepreneurs are exempt from this obligation because the FP contribution is paid when the basis for the calculation of social insurance contributions, which is also the basis for the calculation of the contribution to the Labor Fund, is at least equal to the minimum wage applicable in a given year. The basis for the amount of preferential contributions at ZUS is 30% of the minimum remuneration for work, and with the start-up relief, the entrepreneur is exempt from the obligation to pay social contributions.
To sum up, entrepreneurs who start a business can pay reduced ZUS contributions for new companies for 24 months. However, in order to benefit from preferential ZUS contributions, certain conditions must be met.