Single member LLC in Poland causes many problems

Błażej Sarzalski        07 September 2015        Please comment!

I will not mince my words. Single member LLC in many cases is not a good idea. Especially for small enterprise. Why so?

If you are an individual and at the same time the sole shareholder of Polish limited liability company, social insurance law will treat you as an entrepreneur. It means you have to pay duties to Polish social security office. If you do not need Polish pension* in future or access to public health system** in Poland then it is not a good idea at all.

This is just the tip of the iceberg, as a single member LLC in Poland often causes other unexpected problems and costs.

During organisational stage (from the moment of signing of company agreement to actual registration in Polish court registry)  the sole shareholder is not legally entitled to represent the company and its powers in this regard are limited only to application for registration. If he wishes to conduct businness in organisational stage (sign contracts, negotiate deals) one must appoint a board of directors or a proxy.

After the registration you have to obbey some important rules regarding contracts between you and your company.
In case you have management board all transactions between you and your company should be made in writing. It gets wrose if you are sole shareholder and simultanously the only member of the board of the company. In such case any legal action between the member and his company as represented by him require a notarial deed. Notary has an obligation to notify the registry court about that deed by sending an excerpt of it. Such  company is therefore subject to more extensive checks. Besides … a notarial act means notarial fees.

How to avoid troubles?

Take someone as a minority shareholder. You may use your own company registered in another jurisdiction or friend, relative or some other person you trust.

*Polish pensions are quite low comparing to other EU member states

**If you live in Poland it is good idea to have access to public healthcare as we have very good healthcare specialists but you do not need to pay for it in Poland if you are EU citizen and have health insurance in your country

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