Simplified and Full Accounting: A Comparison. How to Choose the Right System for Your Business

Simplified and full accounting in Poland have significant differences that affect the entrepreneur’s responsibilities, the costs of maintaining records, and reporting to state authorities. The choice between them depends on the size and type of the company’s activities.

Simplified Accounting (Księgowość uproszczona – KUP):

1. Who it applies to: Micro-enterprises and small businesses that meet certain criteria (e.g., annual turnover does not exceed 2 million PLN, and the balance sheet value of assets does not exceed 1 million PLN). Specific criteria may change, so it is best to check the latest information on the website of the Polish Ministry of Finance.
2. Advantages of simplified accounting:
   • Fewer formalities – easier to maintain, requires less documentation and time.
   • Lower costs – reduced expenses for accounting services or accounting software.
   • Simplified reporting – fewer tax returns and reports. The main reports are JPK_VAT (for VAT), PIT (for sole proprietors), or CIT-8 (for limited liability companies – Sp. z o.o. or joint-stock companies – S.A., but only under certain conditions).
3. Disadvantages:
   • Business size limitations – not suitable for large companies.
   • Limited analysis capabilities – does not provide as detailed information about the company’s financial condition as full accounting.
   • Limited opportunities – some expenses may not be deductible under simplified accounting.

Full Accounting (Księgowość pełna):

1. Who it applies to: Companies that do not meet the criteria for simplified accounting – limited liability companies (spółka z ograniczoną odpowiedzialnością – sp. z o.o.) and joint-stock companies (spółka akcyjna – S.A.), as well as companies that want more detailed information about their financial condition.
2. Advantages:
   • Detailed information – provides a complete and thorough analysis of the company’s financial condition.
   • Greater analysis capabilities – allows for more informed management decisions.
   • Broader opportunities – more possibilities for reducing the taxable base.
3. Disadvantages:
   • More complex and time-consuming – requires more time and resources.
   • Higher costs – increased expenses for accounting services or accounting software.
   • More complex reporting – requires the preparation of more reports and declarations, including annual financial statements (sprawozdanie finansowe). This includes the balance sheet, profit and loss statement, cash flow statement, and notes to the financial statements.

Brief Comparison in a Table:

IMPORTANT! This information is of a general nature. Specific requirements and regulations may change, so it is recommended to consult with an accounting specialist in Poland or refer to current legal acts. Choosing the wrong accounting system can lead to penalties.

How to Choose the Right System for Your Business

The main criteria to consider when choosing an accounting system include:

• Annual revenue – if the revenue exceeds the limits set for the simplified system, the choice automatically falls on full accounting.
• Type of activity – some activities in Poland are prohibited under the simplified system (e.g., banking, insurance).
• Number of employees – the simplified system has limitations on the number of employees.
• Volume of expenses – if the business has significant expenses that can be deducted, full accounting may be more beneficial despite its complexity.
• Future plans – if the business plans rapid development and increased turnover, full accounting may be a more flexible option.
• Financial literacy and resources – if the entrepreneur lacks the time or resources to maintain complex accounting, simplified accounting will be preferable.

Before choosing a tax and accounting system, we recommend consulting with qualified accountants or tax advisors in Poland. They can help assess your specific situation and determine the most profitable and efficient option. Only after a detailed analysis of your business activities can you make an informed choice between full or simplified accounting. The wrong choice can lead to significant financial losses.

If you have any further questions, please write to us at office@progressholding.pl.