How to Set Up a Limited Liability Company (LLC) in Poland?

Many current and future entrepreneurs wonder how to set up a limited liability company (LLC) in Poland and how long the process takes. The importance of this issue is evident from the fact that there are almost half a million registered LLCs in the country (compared to fewer than one hundred thousand of all other types of companies combined), making this form of business the most popular, alongside sole proprietorships (there are more than two million of these). The law firm’s clients most often interested in starting a business in the form of an LLC are sole proprietors whose businesses are growing dynamically, as well as individuals who want to start a business together and limit personal liability for the new entity’s obligations, a goal ideally suited for an LLC. Below, in almost telegraphic brevity, I present the latest information on how to open an LLC, the costs of establishing an LLC, how long it takes, and share some valuable general observations.

How to Set Up an LLC? Traditional Method and S24 – Pros and Cons.

There are two methods for setting up an LLC: the traditional and the electronic method, and the key task is to determine which of these methods will be optimal in a given client’s individual situation. I will outline the criteria for evaluating this issue shortly. In the meantime, the electronic method, i.e., setting up an LLC using the S24 portal, is a method – and one of its main advantages – that, with proper preparation, allows for the fastest, most efficient, and cheapest creation of a company. What should one keep in mind when considering how to set up an LLC online, specifically through the S24 portal? First of all, using this method, it is not possible to form the LLC agreement in the form of a notarial deed (which is mandatory in the traditional method), so we avoid notarial fees, the need to schedule a visit to a notary, and appearing at their office, etc. On the other hand, with this method, we will only be able to create the simplest, least nuanced company agreement possible. For example, we will not be able to establish, via this method, issues such as inheritance of shares, the right of first refusal for shares, non-cash contributions (i.e., we will not be able to contribute assets such as tangible assets or, for example, a business or its organized part), and dozens of other issues that should often be included in the agreement to properly secure our interests – these matters can only be shaped using the traditional method. The price we pay for the saved time and money (an important piece of information regarding the cost of setting up an LLC is that, using the electronic method, the court fee will be lower, amounting to PLN 250 instead of PLN 500, which must be paid with the traditional method) is the simplicity of the entity being created, but sometimes – I do not dispute this – this trade-off is worth it. For simple businesses, with no complicated decision-making mechanisms, especially in the case of planned two-person companies where the partners have excellent relations and agreements (which, however, is worth remembering, could change at any time), the electronic method seems like a reasonable option to consider.

How Long Does it Take to Set Up an LLC? How to Register an LLC?

How long does it take to set up an LLC using the electronic method? A well-prepared online LLC formation process can take just a few hours (or a few days if we also consider the registration of the company at the registration court, which is also done solely electronically via the S24 portal). On the other hand, setting up a company using the traditional method (primarily due to the conceptual work on solutions that should be included in the LLC agreement, possible negotiations between partners, the need to prepare the agreement, schedule a visit with a notary, the type of contributions to the company, etc.) can take from a few days to several months, depending on various factors. Where should an LLC formed in this way be registered? The registration of an LLC established through the traditional method now also takes place exclusively online (via the Court Register Portal), but it does not change the fact that registering the new entity in this case can take from a few weeks to several months, depending on the workload of the respective registration court.

Converting a Sole Proprietor (Sole Proprietorship) into a Limited Liability Company

As an attorney in Krakow with experience in serving entrepreneurs, I know that the greatest dilemmas regarding further actions concern those entrepreneurs who already run a business (most often in the form of a sole proprietorship or civil partnership) but, for various reasons (dynamic business growth, the need to attract investors, the desire to protect personal assets from potential business creditors, etc.), decide to change the form of their business into a limited liability company. In such a case, we have three methods to consider, presented below.

1. Creating a new entity from scratch – this is the simplest and cheapest method, especially in terms of the cost of legal services for such a venture. It involves setting up a new LLC and essentially continuing the same business, but through a formally different entity. While this sounds very appealing, it can only be implemented – for civil law, business, and tax reasons – in the case of very simple businesses, where there are no public tenders, numerous contracts with other entities, employee hiring, etc.
2. Conversion based on the Commercial Companies Code – the code regulates a detailed and complex procedure that allows for the conversion of a sole proprietorship into – at least initially – a sole-member LLC. This is a lengthy, multi-stage, and costly procedure but should be considered for the most complex and sophisticated sole-member businesses, especially those with a long tax history, such as VAT, numerous employees, and contracts; in short, large and complex businesses may require a long and complicated conversion procedure.
3. Contributing the business to the newly established limited liability company and continuing it within the company – this should be considered for small and medium businesses where, for certain reasons (e.g., tax reasons, or due to contracts resulting from winning a tender), continuity of the existing business must be maintained. This is a much faster and less complicated method than method 2, though it will still require adequate preparation, and depending on the scale of the business, it may take from a few weeks to several months to complete the process.

As mentioned, the above article only provides a very brief outline of the individual issues. Due to its intended length, I have omitted several more detailed issues, and matters such as how to set up an LLC online, how long it takes to establish an LLC, and where to register it have been discussed in an oversimplified manner. If you are interested in more detailed explanations about how to set up an LLC step by step, to discuss your individual business situation and choose the appropriate solutions, you should schedule a personal consultation at the office, during which I will provide you – considering the individual elements of your business – information about the proposed course of action, the expected time for its completion, and – as expected – the overall fee for the office’s services in carrying out the agreed-upon actions. It is worth noting that our specialty is not only business law in Krakow, among our services we also offer:

• criminal law in Krakow,
• divorce cases in Krakow.
• company services in Krakow,
• setting up companies in Krakow,
• bankruptcy of entrepreneurs in Krakow,
• liquidation of companies in Krakow,
• company division in Krakow,
• company agreements in Krakow,
• debt collection in Krakow.

Also read:

• Business Succession – What is it? Succession of the Entrepreneur in a Sole Proprietorship and Family Business
• LLC Established Online – S24