Compare sole proprietorship and limited liability company: https://www.infakt.pl/porownanie-jdg-... Natural and legal personality The first and fundamental difference is the legal personality of a limited liability company. Legal personality means that a limited liability company is a separate company. It is not us, it has its own money, it pays taxes itself. Even if we have 100% of the shares in the company, we still cannot use our company's assets without registering it in the accounting. Costs of establishment Establishing a sole proprietorship is free. The cost of establishing a limited liability company ranges from PLN 350 (online) to PLN 600 (traditionally). The initial share capital, which in a company cannot be lower than PLN 5,000, can also be considered the cost of establishment. Money in the company The assets of a sole proprietorship are our assets, there is no separation here. We can withdraw the company's money from an ATM or transfer funds between our accounts at any time. A limited liability company has its own assets and also needs a separate business account for the limited liability company. The company's money is not our money and we can withdraw it from the company without a specific reason, conclusion of an agreement or issuing an invoice. Liability and risk For many entrepreneurs, this is the greatest advantage of establishing a limited liability company. Limited liability means that in most cases we receive protection against excessive liabilities that our company will generate. In extreme, difficult situations, we will not be forced to pay company receivables from our private money. Accounting Sole proprietorships use simplified accounting. This means that most operations performed in the company are limited and we can successfully undertake our own accounting. Limited liability companies are based on commercial books (full accounting). Maintaining full accounting is more expensive and more complicated, most often it is maintained by an accountant. Social Insurance Institution contributions A limited liability company does not pay Social Insurance Institution contributions for itself. Also, partners of a limited liability company do not pay Social Insurance Institution contributions, provided that one of them has at least 10% of the shares. The exception in this situation is being the sole partner and 100% owner of the company. In such a situation, in the eyes of ZUS, we will be a person running a sole proprietorship and from the very beginning we will be obliged to pay full ZUS contributions. Income tax Just as a limited liability company has its own money and assets, a limited liability company pays its own income tax. This tax is CIT and for new companies it is 9%. Remember, however, that after paying this tax, the company's money still remains its money. Partners A sole proprietorship does not give us the possibility of adding partners to it. We can do this in the form of a civil partnership, however, if we plan from the beginning to start a business with partners or create the possibility for an investor to join, it is worth considering establishing a limited liability company Check online accounting with a real inFaktu accountant: https://www.infakt.pl