Unregistered business activity is an alternative for people who would like to test their business idea, but are not ready yet to incur costs or register their business. What services can be provided in unregistered business activity? We discuss everything you need to know about undeclared activity in the article below.
Table of Contents
- Unregistered business activity – what is it?
- Unregistered business activity – how to start?
- Unregistered business activity – what services can you provide?
- Record-keeping and informational obligations in unregistered business activity
- Unregistered business activity and revenue limit in 2024
- Unregistered business activity and taxes
- Unregistered business activity and invoices
- Unregistered business activity and VAT
- Unregistered business activity and Social Insurance Institution (Polish ZUS)
- Unregistered business activity and health insurance
- Unregistered activity and performing a service contract or a contract of mandate
- Unregistered business activity in Poland – summary
Unregistered business activity – what is it?
Unregistered business is a type of activity that does not require registration in the CEIDG. It is perfect for individuals who:
- want to start their own business on a small scale,
- want to avoid incurring significant costs and formalities at the beginning.
A natural person who wants to start non-registered activity must meet the following conditions:
- Does not conduct any other business activity,
- Has not been registered as an entrepreneur in the last 60 months,
- Did not exceed the revenue limit in the previous tax year.
Even if unregistered business activity has all the key characteristics of a regular business activity, it is not recognised as such. The only condition is that the revenues obtained do not exceed 75% of the minimum wage in any month. So, the goal of non-registered business activity is not to generate profits. Exceeding the specified income limit will require full business registration.
Unregistered business activity – how to start?
To begin operations as a non-registered business, you just need to start your activity. The person conducting unregistered business activity does not have to:
- register in CEIDG,
- maintain full accounting (simplified accounting is enough),
- have a fiscal cash register, unless required by law,
- issue invoices. Still, you must respect consumer rights. For example, with regard to issuing receipts upon the customer’s special request,
- pay monthly taxes – tax liabilities are settled once, at the end of the year.
Unregistered business activity – what services can you provide?
Unregistered business activity is often a way to test one’s business idea. The scope of services that you can provide is broad, it may include:
- Educational services, such as tutoring, conducting extra classes, courses, or training,
- Care services, such as childcare, elderly care, or care for people with disabilities,
- Transport services, such as transport of passengers or goods,
- Renovation services, such as painting, minor repairs,
- IT services, such as technical support, website creation,
- Marketing services, such as graphic design, social media promotion,
- Creative services, such as jewellery making, crafts, photography,
- Catering services, such as preparing and selling meals for delivery or takeaway.
It is crucial for non-registered activity to be genuinely conducted on a small scale.
Record-keeping and informational obligations in unregistered business activity
The record-keeping and information obligations under the non-registered activity include:
- keeping simplified sales records,
- settling revenues from non-registered activities in the annual PIT-36 tax return,
- respecting consumer rights. For example: the right to complaints, issuing invoices or receipts at the buyer’s request.
Unregistered business activity and revenue limit in 2024
The revenue limit for non-registered activity depends on the amount of minimum wage. It includes revenues due, even if they have not yet been actually paid. However, it does not include the value of returned goods. The revenue from unregistered business cannot exceed 75% of the minimum wage in any month. So, the limit in 2024 will be:
- 3181.50 PLN from 1st January to 30th June,
- 3225 PLN from 1st July to 31st December.
After exceeding the revenue limit, the person conducting non-registered business activity must register it.
Unregistered business activity and taxes
Due to the lack of obligation to register in CEIDG, the tax identifier for individuals conducting non-registered business activity will be the PESEL number, unless the natural person:
- Is a registered VAT taxpayer,
- Has a statutory obligation to use a Tax Identification Number (NIP).
You must report revenues from non-registered activity in the annual PIT-36 tax return. There is no obligation to settle contributions on a monthly basis. According to tax regulations, the following records are considered revenues from unregistered business activity:
- all cash receivables received or made available during the calendar year,
- the value of received in-kind benefits and other non-monetary forms of settlements.
Unregistered business activity and invoices
An individual conducting non-registered business activity does not have to issue invoices or receipts. The obligation occurs only upon the buyer’s request. The request for an invoice should be made by the customer within 3 months from the end of the month in which:
- the goods or services were delivered,
- the individual conducting unregistered business activity received full or partial payment.
It is enough to specify the name of the provider of the service or the seller of the goods on the receipt or invoice.
Unregistered business activity and VAT
An individual conducting non-registered business activity may benefit from VAT exemption. It is possible if their sales in the year preceding the tax year did not exceed the amount of 20 000 PLN. This limit also applies if they commenced such activity during the previous year. It is calculated proportionally to the period of performing these activities in the previous tax year.
The obligation to have a cash register and pay VAT becomes effective if:
- The sales exceed 20 000 PLN, or
- The goods sold or services provided are not exempt from fiscal cash register recording.
Unregistered business activity and Social Insurance Institution (Polish ZUS)
An individual conducting unregistered business activity is not obligated to pay social insurance contributions. However, such an obligation may arise in two cases:
- After applying for voluntary insurance coverage,
- When providing services under e.g. a contract of mandate or an agency contract. In this case, the commissioning party pays social insurance contributions.
Unregistered business activity and health insurance
An individual conducting unregistered business activity is exempt from paying health insurance contributions. However, if he exceeds the statutory limit and has to register activity, he will have to pay social insurance contributions. This also applies to health insurance contributions.
Unregistered activity and performing a service contract or a contract of mandate
If you perform contracts for the provision of services or mandate contracts as part of unregistered activity, the person conducting such activities is still a mandatee. This means that there is an obligation to pay social and health insurance contributions. The payer’s obligations lie with the principal. He should report the mandatee to ZUS within 7 days of concluding the contract.
There is no obligation to pay social and health insurance contributions only when you sell goods as part of non-registered activity. There are some exceptions to this rule. For example, in the case of students up to 26 years of age who work under a contract of mandate.
Unregistered business activity in Poland – summary
Unregistered business activity is a solution beneficial for individuals who generate small revenues. However, it is important to remember that it comes with certain limitations and risks.
If you find the above topic interesting and want to know more about it, do not hesitate to contact us. Our experts are ready to help you.