What does full accounting in Poland include, and does your business need it?

In Poland, there are two main accounting systems:

• Simplified accounting (Księgowość uproszczona)
• Full accounting (pełna księgowość)

The simplified accounting system is most commonly used by small and medium-sized businesses. It does not require maintaining full accounting books and allows for simple solutions for recording and submitting financial reports to tax authorities. It comes in three forms:

• Income and expense ledger (księga przychodów i rozchodów)
• Flat-rate tax (ryczałt ewidencjonowany)
• Tax card (karta podatkowa)

Full accounting in Poland is the most complex and detailed form of accounting, requiring compliance with numerous rules and regulations. It is intended for large companies and enterprises that meet specific criteria.

What does full accounting in Poland include:

1. Maintaining all accounting books, covering all business transactions of the company, from issuing invoices to paying salaries (with full details of transactions).
2. Preparing monthly financial reports – includes the balance sheet, profit and loss statement, cash flow statement, and other reports necessary for analyzing the company’s financial condition.
3. Preparing annual financial reports – in this case, it is more complex and detailed than monthly reports, including an auditor’s opinion (except for small businesses).
4. Compliance with all tax regulations – full accounting requires strict adherence to all tax rules and timely submission of all tax declarations.
5. Payment of all taxes and fees – accurate calculation and payment of all taxes and fees in accordance with the law.
6. Working with bank statements – mandatory reconciliation of bank statements with accounting records.
7. Management of fixed assets – mandatory recording of the acquisition, depreciation, and disposal of fixed assets in the books.
8. Inventory management – tracking the movement of goods in the warehouse (if applicable).
9. Internal control – internal processes ensuring the reliability and accuracy of accounting.

Maintaining full accounting in Poland

The process is quite complex and requires compliance with numerous rules and regulations. It includes the following steps:

1. Choosing the form of accounting:
   • Accounting books (Księgi rachunkowe) – this is the most common form of full accounting, requiring the maintenance of several books, including:
     a) Journal (Dziennik) – a chronological record of all business transactions.
     b) General ledger (Rzeczownik) – a system of accounts reflecting the balance of each account.
     c) Inventory list (Inwentaryzacja) – a document confirming the existence of assets and liabilities on a specific date.
   • Electronic Accounting Book (Elektroniczna Księga Rachunkowa) – more and more companies are switching to electronic accounting using specialized software. This option allows for the automation of many processes and simplifies reporting.
2. Documentation:
   Maintaining strict documentation is the foundation of full accounting. All business transactions must be supported by primary documents (VAT invoices, receipts, contracts, etc.).
   All documents must be properly filled out, contain all necessary data, and be stored for the period required by law (usually 5 years).
3. Accounts:
   A detailed system of accounts is maintained, in accordance with the Chart of Accounts (Plan Kont), which can be adapted to the specifics of the company’s activities.
   Proper recording of business transactions in the accounts is a key element for accurate financial reporting.
4. Preparing financial statements:
   At the end of the financial year, financial statements must be prepared, including:
   • Balance sheet (Bilans) – showing the company’s assets, liabilities, and equity.
   • Profit and loss statement (Rachunek zysków i strat) – showing revenues, expenses, and profit (or loss) for the reporting period.
   • Cash flow statement (Raport o przepływach pieniężnych) – reflecting the company’s cash flows.
   • Statement of changes in equity (Zmiany w kapitale własnym) – reflecting changes in equity during the year.
5. Taxation:
   Full accounting is closely related to taxation. Based on accounting data, various taxes such as income tax, VAT, and others are calculated.
   Timely and accurate payment of taxes is mandatory.
6. Audit:
   For some companies, an audit of the financial statements by an independent auditor is mandatory.

Maintaining full accounting in Poland is a complex task that requires knowledge of legislation, accounting, and taxation. It is best to entrust this work to qualified professionals to avoid errors and penalties. The choice between managing accounting in-house or outsourcing it to an external company depends on the size of the company, its financial capabilities, and the specifics of its operations.

How to determine if your company needs full accounting:

Polish law defines the criteria under which companies are required to maintain full accounting. You must use full accounting if your company meets at least one of the following conditions:

• Revenue size (including tax amount) from the sale of goods, products, and financial operations in the previous financial year – the threshold is 2 million EUR, and if the legal threshold is exceeded, full accounting is required (the threshold amount changes annually).
• Asset size. For limited liability companies (spółka z ograniczoną odpowiedzialnością – sp. z o.o.) and joint-stock companies (spółka akcyjna – S.A.), full accounting is mandatory regardless of asset size or revenue. For other legal forms (e.g., sole proprietorships – działalność gospodarcza), the obligation to maintain full accounting is determined by revenue size and may depend on the type of activity. If revenue exceeds a certain threshold, full accounting is mandatory (the threshold changes annually, so it is important to check the latest data on the website of the Polish Ministry of Finance).
• Number of employees. A higher number of employees usually means higher revenue. Companies with a larger number of employees typically generate higher turnover. If this turnover exceeds the legal limit for simplified accounting, the company is required to switch to full accounting.

To determine which type of accounting is most suitable for your company, we recommend seeking help and consulting with an accountant or tax advisor. They will help assess your situation and determine which type of accounting is most appropriate for your business, taking into account your turnover, number of employees, and the specifics of your operations.

It is important to remember that incorrect accounting practices can lead to penalties and other unpleasant consequences. Accounting must be conducted strictly in accordance with Polish law.

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