What are the most common mistakes when choosing a business form?
The most common mistake is choosing a business form solely based on the “smallest number of documents”. Meanwhile, the legal form determines your liability, taxes, costs, and development possibilities.
Confusing sole proprietorship with a “small company”
Many entrepreneurs treat sole proprietorship (JDG) like a “small company”. However, in a JDG, you are liable with all your private assets for the company’s obligations, including future ones. A limited liability company (Sp. z o.o.) generally provides limited liability but requires different formalities.
If you plan to hire employees, cooperate with large clients, or seek an investor, a Sp. z o.o. is often safer. JDG is good for a simple model, low risk, and when quick decisions by one person are key.
Lack of consistency between the business plan and the legal form
The second mistake is choosing a form without analyzing revenues, costs, and industry risks. An IT freelancer has different needs than a construction company or an e-commerce operator.
At Progress Holding, we always start with a short conversation about your business model. Only then do we recommend a JDG, a Sp. z o.o., or a combination, e.g., JDG for simple services and a company for larger contracts.
Table: business form and typical risks of wrong choice
| Form | Typical mistake | Consequence |
|---|---|---|
| JDG (Sole Proprietorship) | Entering a risky industry with full asset liability | Risk of execution from the entrepreneur’s private assets |
| Sp. z o.o. (LLC) | Registration “in a rush” without a good company agreement structure | Shareholder conflicts, decision deadlock, necessity of changes in KRS |
| Partnership | Underestimating the liability of partners with all assets | Joint and several liability for partners’ debts |
What mistakes appear when registering a company in CEIDG and KRS?
When registering a company, entrepreneurs often incorrectly fill in form fields, choose random PKD codes, or skip mandatory notifications after registration. This leads to official summons or blocking of important services, e.g., a bank account.
Ill-considered choice of PKD codes
The CEIDG-1 application or notification to the KRS requires indicating the main and additional PKD (Polish Classification of Activities) codes. A frequent mistake is entering random codes just to “have something”.
If your main code does not correspond to actual activity, you may have problems at the bank, ZUS, or when applying for grants. At Progress Holding, we always analyze the revenue model with the client and select PKD codes for the real business, not the other way around.
Errors in the CEIDG-1 application or application to KRS
On the Biznes.gov.pl portal, you can set up a JDG online and register the company in one place. However, errors in the address, business start date, or contact details force corrections.
In the case of a Sp. z o.o., you submit the entire application to the KRS electronically via the Court Registers Portal or the S24 system. Formal errors cause the return of the application and delay the start of the company, sometimes by several weeks.
Lack of notification to CRBR after company registration
Shareholders of capital companies often forget to report beneficial owners to the CRBR (Central Register of Beneficial Owners). Meanwhile, you have 14 days to do so from the entry of the company into the KRS or a change of data.
Lack of notification or incorrect data can result in a high financial penalty provided for in the AML Act. At Progress Holding, we standardly prepare the CRBR notification together with the company registration so that you do not risk sanctions just because of a technical mistake.
What are the typical mistakes when choosing a form of taxation?
Many entrepreneurs choose a form of taxation guided solely by the tax rate. Meanwhile, they differ in the scope of costs, accounting obligations, and possibilities of change during the year.
Choosing a form only by the tax rate
On the tax scale, rates of 12% and 32% apply, with the flat tax it is a constant 19%, and the lump sum (ryczałt) is settled on revenue according to rates depending on the industry.
If you have high costs, a lump sum may turn out to be unfavorable despite the low nominal rate. In turn, with a flat tax, you lose some reliefs and cannot provide services to your current employer in the same scope.
Late or incorrect change of taxation form
Another mistake is missing the deadline for reporting the choice of flat tax or lump sum. As a rule, you have time until the 20th day of the month following the first revenue in the year or until the end of the year if the revenue appears in December.
If you submit a statement to CEIDG after the deadline, you remain on the current form of taxation. At Progress Holding, we watch over deadlines and submit online notifications on your behalf to avoid such a simple yet costly mistake.
Tax form inconsistent with the company development plan
Choosing a tax form only “for the first year” without a plan for subsequent years can also be problematic. If you know that revenues will grow quickly, it is worth designing a transition to another form of taxation right away.
Together we analyze forecasted revenues, costs, investments, and reliefs. Thanks to this, you will avoid a situation where the profitability of the company disappears after exceeding the tax threshold or lump sum limit.
What mistakes concern ZUS and insurance in a new company?
Mistakes when registering with ZUS result in arrears and interest, and sometimes loss of the right to reliefs. The problem is particularly acute for new companies using preferences in the first years of operation.
Lack of notification to ZUS on time
An entrepreneur must register as a contribution payer within 7 days of starting the business. In JDG, you do this on the appropriate ZUS ZUA or ZZA form, depending on the scope of insurance.
Late notification may mean the necessity to pay contributions with interest, and even problems with health insurance. At Progress Holding, we configure ZUS notifications together with CEIDG or company registration, so you do not have to watch over dates yourself.
Failure to use reliefs and preferential contributions
New entrepreneurs often use reliefs such as “relief for the start” and preferential contributions, but sometimes they do it incorrectly. Preferential contributions are calculated from a base not lower than 30% of the minimum wage.
If you incorrectly determine the business start date, you may shorten the time of using preferences. Before making a decision, it is worth designing a company start schedule, especially when you combine business with an employment contract.
Ill-considered form of employing collaborators
A common mistake is employing “on a mandate contract” just to avoid full employment. In practice, ZUS verifies whether the contract should not be an employment contract and may order the payment of contributions.
Together we analyze whether it is better to operate on B2B, a mandate contract, or an employment contract. For foreigners, we additionally check compliance with immigration regulations and the type of work permit.
What mistakes do foreigners most often make when setting up a company in Poland?
Foreigners usually understand business but get lost in the formalities of the Polish system. Problems often concern identification documents, company representation, and communication with offices.
Lack of prepared identification numbers and documents
For JDG and companies, PESEL, passport, address in Poland, and contact details are key. This information is required in CEIDG, KRS applications, and when setting up a trusted profile.
If you do not have a PESEL, we must additionally plan to obtain a tax identifier and data for VAT registration. At Progress Holding, we prepare a list of documents in Polish and English, so you know exactly what to take to the notary and the office.
Mismatch of company structure to bank requirements
Foreigners often plan shareholders and the board solely for internal convenience. Banks, however, analyze the residence of board members, the method of representation, and beneficial owners.
It happens that a company after registration has a problem opening a bank account. Therefore, we design the company agreement and the composition of the board to meet the requirements of KRS, banks, and CRBR.
Lack of a tax plan for a cross-border structure
If you live abroad and the company is in Poland, you must take into account double taxation avoidance agreements. It is a mistake to assume that “I will pay tax only where I live”.
Together we analyze tax residence, the place of company management, and dividend flows. Thanks to this, you avoid a situation in which two countries want to tax the same income.
Our data: Most common mistakes when setting up a company
At Progress Holding, we analyzed over 500 company registration processes in the years 2018–2025. These include both JDG and Sp. z o.o. established by Poles and foreigners.
Three mistakes that repeat most often
- Registering a company without a prior decision on the target taxation form and tax strategy.
- Lack of a schedule for notifications after registration: ZUS, VAT, CRBR, beneficiary notifications, updates in CEIDG.
- Signing a random Sp. z o.o. agreement without adapting it to the number of shareholders and investment plans.
Most problems come to light not at the moment of setting up the company, but at the first control or business conflict. Then it turns out that a few sentences in the company agreement or a few fields in the CEIDG application decide the outcome of the dispute.
How do we work with Progress Holding clients?
We start with a short business interview, without documents and paragraphs. We ask where you live, where the income will come from, what contractors you plan, and whether you want to build an investment company or a “lifestyle business”.
Based on this, we propose a model: legal form, taxes, settlement method, ownership structure. Then we prepare a set of documents, conduct registration, and take over current accounting so that you do not get stuck in formalities after the start.
Frequently asked questions
Here I answer the questions I hear most often from people setting up a company in Poland in 2026. You can treat this section as a short FAQ before talking to an advisor or visiting an office.
Can I set up a company “on a trial basis” and then change everything without consequences?
You can change many elements: PKD codes, form of taxation, even legal form. However, each change has tax and formal consequences, so it is better to plan the structure at least two or three years ahead.
Is it worth always starting with a JDG and only then moving to a Sp. z o.o.?
Not always. With high risk, large contracts, or several partners, a Sp. z o.o. is often a better start. JDG works well for simple, individual services with little liability.
Can I set up a Sp. z o.o. completely online as a foreigner?
Yes, but you need appropriate electronic signatures and well-prepared documents. It is often simpler to use the help of a local advisor who will prepare drafts and coordinate the notary and translator.
What is more important: accounting or a good company agreement?
You need both. Without correct accounting, you risk tax sanctions, and without a good company agreement, you risk shareholder conflicts, decision blockades, and lawsuits.
Can I decide on the form of taxation myself, without consulting an accountant?
You can, but often you only know the tax rate and do not see the whole picture. In practice, one conversation with an advisor saves years of paying too much tax or keeping improper records.
Can Progress Holding handle company registration for me from A to Z?
Yes, at Progress Holding we register JDG and Sp. z o.o. on your behalf, also for foreigners. We prepare CEIDG or KRS applications, notifications to CRBR, ZUS, and the tax office, and launch permanent accounting services.
Mistakes made when setting up a company often reverberate only after years when a control or business conflict appears. It is worth spending a few hours on good decisions regarding the legal form, taxes, and notifications, instead of fighting with offices and partners later. Do you need professional support? Contact us at Progress Holding at +48 603 232 418 or by email office@progressholding.pl.
