In the last six months, nearly 100,000 single-member companies have been closed and over 179,000 have been suspended. Experts foretell that next year the number of applications for the liquidation of JDG may increase, as a consequence of planned changes in the wellness contribution.
Deterioration of business conditions
According to the data of the Ministry of improvement and Technology, in the first half of 2024 99,6 1000 applications concerning the completion of one-man business were received in the CEIDG register, which represents only 3.4% little than in the same period of the erstwhile year. According to Łukasz Goszczyński, legal advisor and restructuring advisor, this slight decline does not change the economy and the marketplace itself.
Łukasz Kozłowski, chief economist of the Federation of Polish Entrepreneurs (FPP), comments:
"The beginning of 2023 was peculiarly hard for entrepreneurs. At the time, we had a period of culmination of cost pressure, linked in peculiar to advanced energy prices, while at the same time the interior request was weak. The Polish economy was in recession, in the first 4th of 2023 GDP decreased by 0.4%. In the second 4th of 2023 it decreased by 0.6 percent. Since then, economical prosperity has improved significantly. As a result, JDG’s ability to stay on the marketplace can besides be better."
Dawid Sułkowski of the Polish economical Institute (PIE) adds that the conditions for conducting business activity stay stable, although they have somewhat deteriorated compared to last year. Although the fall in inflation is beneficial to consumers, it frequently means lower gross increases for companies. Sułkowski points out that the data on the deregistration of companies do not full reflect the current situation, as entrepreneurs are more likely to decide to suspend their activity, alternatively of closing it, to wait out a heavier period.
Why do entrepreneurs like to suspend JDG?
The closures of one-person business activities are the consequence of complex reasons that cannot be brought to 1 simple factor. Łukasz Kozłowski notes:
"The most liquidated activity can be seen in the construction, trade and transport sectors. This is linked both to a number of barriers encountered in these sectors of the economy and to the fact that they have a crucial number of companies."
In the first half of 2024, 179.1 1000 applications for JDG suspension were received in the CEIDG register, an increase of 3.3% compared to the erstwhile year. Łukasz Goszczyński stresses that this increase is not worrying, as the suspension of operations is simply a natural exchange of companies on the market.
"The JDG suspension institution in the current legal state is simply a very flexible tool that can be utilized frequently and on an ongoing basis. Entrepreneurs decide to do this so that they do not bear the burden, among another things, of compulsory contributions at a time when, for example, the activity is not carried out due to seasonal downtime. The resumption of JDG is as simple as its suspension.”
Dawid Sułkowski of pastry notes that any entrepreneurs alternatively of resuming JDG, decide to registry a fresh company. It is besides common that the suspended business is never suspended, which in practice has an equivalent effect on the company's deregistration, but is not visible in statistic on the termination of business.
Changes in the wellness contribution may be decisive
Adrian Parol, legal advisor and restructuring advisor, explains that an entrepreneur can search to recover his claims and collect them even with suspended activities, thus avoiding social safety costs.
‘This attitude may be due to the request for real restructuring, not legal restructuring. Entrepreneurs are waiting for the situation to proceed and, in the event of improvement, decide to resume operations."
Łukasz Kozłowski estimates that the number of applications to close JDG will depend on future regulations on public burdens, especially as JDG is frequently a form of self-employment. Changes in the rules for establishing wellness contributions may be peculiarly important. If they are beneficial for tiny companies, the number of JDGs registered can grow faster and the scale of their liquidation decreases.
"This kind of entrepreneur is truly looking forward to fresh solutions, and frequently determines that if the problem disappears, they will resume. It is actual that the current government is announcing changes in this issue, but this is inactive not happening, and many entrepreneurs cannot afford specified a long wait."
Current financial burden on entrepreneurs
Entrepreneurs on a scale and linear PIT pay a wellness premium on income from activity – the first is 9% and the second is 4.9%. The premium must be calculated monthly and made an yearly settlement that frequently brings subsidies or refunds. In the case of lump sums, the wellness contribution depends on revenues little social safety contributions, which makes many of them pay a lot to the Social safety Office after the end of the year.
Applications for liquidation and suspension of JDG reflect the complex reality of the Polish business market. The future regulations will be decisive, especially regarding wellness contributions, which can importantly influence the dynamics of the JDG marketplace in Poland.
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Mass closures of single-member companies in Poland
