Transforming a One-Person Activity into a Company
After the 24-month period of paying preferential contributions to the Social Insurance Institution, many entrepreneurs decide to transform a one-person activity into a limited liability company. What are the main reasons for such a decision? What can you gain by transforming your business into a company? Advise.
Entrepreneur registering business activity, can currently use the 6-month discount to start, and after its completion – from the 24-month period of preferential ZUS contributions. However, time runs inexorably. Before you look, the period of relief goes away and the amount of benefits required to pay for benefits increases. To protect the content of the portfolio and gain additional benefits, many owners transform their companies into limited liability companies.
Transforming a one-person activity into a limited liability company – why is it worth it?
- One of the most important arguments for transforming one-person business into a company is the lack of the necessity to pay monthly premiums to ZUS. The partners of a limited liability company are exempt from this obligation (the sole exception is a sole proprietor of a limited liability company). By creating a limited liability company, you will save over PLN 1,200 (the amount of a large ZUS that includes a sickness contribution amounts to PLN 1,288.70 per month), that is almost PLN 15,000 a year!
- Another advantage of converting a business into a company is the ability to limit the liability of partners. What does this mean in practice? As the owner of a sole proprietorship, you are responsible for the debts of your company with your own assets. In order to obtain funds for the repayment of the company’s debt, the bailiff can take over your apartment, car, even everyday objects. In the case of a company, the liability of partners is limited to the amount of the contribution made. If the company falls into debt – the bailiff will not have the right to take your property.
- An important plus of the transformation is the right to continue the rights and obligations of an entrepreneur who is a natural person until now. The newly established company is therefore a continuator of a sole proprietorship, which significantly simplifies daily operations.
- As the owner of a limited liability company (more on how to register a limited liability company) you will have the opportunity to raise additional funds for business development. Such a scenario will be possible thanks to the adoption of new shareholders and the increase of the company’s capital.
- Your company will be better perceived by potential clients and financial institutions. Running a capital company is associated with much greater prestige than running a sole proprietorship.