How to close down a one-person business

How to remove a business from CEIDG

If you want to close your one-person business, you need to apply to remove your business from the Central Registration And Information On Business (CEIDG). In the application, you indicate the date on which you actually stopped doing business. The legislation does not indicate the time limit for the application.

Remember, however, that based on this application, Social Insurance Institution (ZUS) will automatically remove you from the register as a payer of contributions. As long as you do not file it, ZUS will treat you as a payer of contributions.

In addition, regardless of the application to remove your business from CEIDG, you have 7 days from the date of actual termination of business activity to remove from the insurance the persons registered with ZUS: associates, family members and yourself (you can attach the appropriate forms to the application to remove the business from CEIDG).

If you do not do it, ZUS will continue to charge contributions for these persons.

In practice, it happens that an entrepreneur terminates business activity, removes the employees from ZUS registers, but forgets about themselves, and does not file the application to remove the business with CEIDG, or does so only after a long time.

In such a case, ZUS treats the entrepreneur as an insured person and calculates the entrepreneur’s contributions. ZUS calls on the entrepreneur to submit explanations only after receiving information about the removal of the business from CEIDG. After accepting them, ZUS can waive the collection of outstanding contributions. However, the decision in such a matter rests with the ZUS official in charge of the case.

Therefore, in order to avoid complications, once the business activity is terminated:

• as soon as possible, file an application to remove the company from CEIDG
• remove all insured persons from ZUS, including yourself, within 7 days.

Example

Anna terminated her business activity on 2 November, but failed to notify either CEIDG or ZUS. She did not submit the application for removal from CEIDG, which listed 2 November as the date of terminating her business activity, until 31 December. This is when she was removed from the registers as a payer of contributions, but ZUS charged Anna with contributions for the period when her business was no longer in operation – from the date of the actual termination until the date of submitting the application for removal from CEIDG. Anna will have to provide an explanation of the situation to ZUS.

Example

Jan terminated his business activity on 3 November. On 7 November, he filed an application with CEIDG to remove his business from the register. On this basis, he was automatically removed from ZUS as a payer of contributions. In addition, Jan attached ZUS forms for removing associates and himself to the application for removal from CEIDG. In this way, he fulfilled his information obligations towards CEIDG and ZUS in a single application.

You can file the application:

• online – through Biznes.gov.pl. You will need your Trusted Profile or your qualified signature to sign your application.

Check how to apply online to remove your business from CEIDG.

• in person at the city/municipal council:

  • print out the application form, fill it in and submit it at the city/municipal council
  • fill in and submit the application form at the city/municipal council.

After checking your identity (with your identity card, passport or mDowód – mObywatel document), the official will give you a confirmation that the office has received your application.

• by traditional post: send the application form to the city/municipal council. In this case, you need to first have your signature on the application form certified by a notary, and attach such notarial certification to the form you are sending.

The waiting time for your business to be removed from CEIDG depends on how you submitted the application. Your business will be removed at the latest on the next working day after:

• the day of sending an electronic application (online application)
• the day of submitting the application at the municipal/city council (if submitted in person)

• the day when the office receives your application (if submitted by traditional post)

  You can download a certificate confirming the removal of your business from CEIDG from the CEIDG website: find your business in the database of businesses, download and save or print out the certificate.

Despite the removal, the details of your business will not be deleted from the database. They will remain in the database, but with a note specifying the date when your business was removed from CEIDG.

The information on the removal of a business from CEIDG is automatically sent to the tax office, Statistics Poland (GUS), Social Insurance Institution (ZUS), and Agricultural Social Insurance Fund (KRUS).

You do not need to separately notify those institutions that you have closed down your business.

Please note! If you calculate your tax based on the simple flat-rate tax (the so-called karta podatkowa) and you are closing down your business, you must file the PIT-16Z form with the tax office. You must do this regardless of the fact that the tax office is notified of the closing down of your business by CEIDG. PIT-16Z is a declaration of the taxpayer on the end date of business activity taxed under the simple flat-rate tax system. It allows the tax office to correctly determine the flat-rate tax. With this notification you will pay the tax under the simple flat-rate tax system proportionately to the period of business activity conducted in the given month.

Please note! If your business activity required a licence or a permit, the notification on the removal of your business from the register will be also sent to the office keeping the register for this type of activity.

How to remove a civil law partnership from CEIDG

When a civil law partnership ends its business activity, each of its partners needs to decide whether they want to continue business activity on their own:

• If a civil law partnership ends its business activity but you wish to continue operating on your own – apply to update the entry in CEIDG and change the form of business activity.
• If a civil law partnership ends its business activity and you do not wish to operate on your own – apply to remove your business from CEIDG.

Apart from the obligation to apply for the removal from CEIDG or to update the entry in CEIDG, partners in a Cicil law partnership must liquidate the partnership’s identification numbers.

For this purpose, they must submit the NIP-2 form (PL) to the tax office and the RG-OP form (PL) to Statistics Poland (GUS).

Please note! In order for the civil law partnership to be closed down in a valid manner, it must be closed down by all partners. This means that the application to GUS must be signed by all partners, and all partners must notify the tax office as well. This can also be done on their behalf by a jointly appointed representative.

How to remove a business from ZUS

If you have submitted the application to CEIDG to remove a business, ZUS will remove you as a payer of contributions from its registers automatically – it will draw up the ZUS ZWPA form for you.

Remember, however, that as a payer of contributions you are obliged to remove from ZUS registers the persons you have registered with ZUS: associates, family members and yourself, using the following forms:

• ZUS ZWUA – removal from ZUS registers of the person running a one-person business and removal from ZUS registers of associates (osoby współpracujące)
• ZUS ZCNA – removal from ZUS registers of family members of the insured person – the person running a one-person business and an associate.

You can do it:

• with CEIDG, in the application to remove the business from the CEIDG register, attach the form ZUS ZWUA or ZUS ZCNA
• directly with ZUS – submit the form ZUS ZWUA or ZUS ZCNA electronically or on paper, within 7 days of the date of termination of the insurance obligation.

You pay social insurance contributions ZUS on the same dates on which you submit your settlement declaration and personal monthly reports, that is:

• by the 5th day of the following month – if you are a budgetary unit or a local government budgetary establishment
• by the 15th day of the following month – if you are a contribution payer with a legal personality
• by the 20th day of the following month – for other contribution payers.

Therefore, you will pay the last social insurance contribution already after your business is closed down (in the next month). Calculate its amount proportionately to the period when you conducted your business activity. For instance, if the application was submitted mid-month, you will only pay half of the contribution.

However, the health insurance contribution must be paid in full – this contribution is not calculated proportionately to the period of conducting business activity. Health insurance will be valid for 30 days following the end date of your business activity.

After this period you will be no longer entitled to refunded healthcare services.

Read how to pay ZUS contributions.

Obligations related to income tax

When closing down a business you must remember to complete several obligations related to income tax settlement.

Among the most important ones is making a list of your business assets and a physical inventory count as of the date of closing down your business.

Please note! A physical inventory count must be carried out only if you have kept a tax book of revenues and expenses (PL).

List of business assets

The list should include:

• name of the asset
• purchase date of the asset
• the amount of expenses incurred to purchase the asset and the amount of expenses incurred to purchase the asset recorded as a deductible cost,
• purchasing value.

Please note! In the list, you must also include any goods that you have in stock as of the date of making the list but which are not owned by you. In this case, you do not need to state their value; you need to only state who owns them.

Please remember that the assets included in the list are owned by you and they are not taken into account when determining income as of the date of closing down the business, that is they are not subject to tax as of this date. Only selling them within 6 years from the date of closing down the business may result in your earning taxable revenue.

You do not have to submit the list of business assets to the tax office, or notify the head of the tax office. You only need to keep the list for five years and make it available if requested by any authorities conducting a tax inspection.

Physical inventory count

If you keep a tax book of revenues and expenses, when closing down you must take a physical inventory count (liquidation inventory) as of the date of closing down your business.

The obligation to take a physical inventory count does not apply to taxpayers who keep accounting books, taxpayers paying lump-sum tax on registered revenues and those taxed under the simple flat-rate tax system.
In the physical inventory count you need to include any of the following (if they are still part of your business):

• commercial goods
• (raw) materials, both basic and additional
• semi-finished goods
• work in progress
• finished products, defective products and waste
• equipment – if you pay lump-sum income tax.

Please note! If you are a taxpayer paying lump-sum tax on registered revenues, you do not prepare a physical inventory, only a list of assets containing at least the following: serial number, designation (name) of the asset, date of acquisition of the asset, amount of expenses incurred for the acquisition of the asset.

Example

Let's say you have a business registered with CEIDG to sell office products. You pay your taxes under general rules (according to the tax scale). You have decided that you are closing down your business on 30 April 2020. As of 30 April, in your business there are:

• commercial goods: 20 notebooks (size A4), 30 pens, 15 pencils, 8 rulers (size 35 cm), and 7 sketchpads
• equipment: 5 warehouse shelves, a counter, 2 office desks, a cash register device
• fixed assets: 1 car, 2 laptops

Upon closing down your business, you must take a physical inventory count, including:

• only commercial goods – if you are taxed under the tax scale or flat-rate taxation scheme
• commercial goods and equipment – if you pay your tax as lump-sum tax on registered revenues

The inventory will not include: the passenger car and the laptops.

Your physical inventory count must include:

• name and surname of the business owner
• date of the physical inventory count
• detailed specification of the goods and other assets
• the value being the product of the amount of goods and the unit price, and the total value of the physical inventory count
• the value subtracted as a result of the regulation on payment backlogs, with the indication of the relevant item in the physical inventory count and the item in the books to which the subtracted value is related – only if you keep a tax book of revenues and expenses (PKPiR)
• signature of the business owner.

There is no template of the physical inventory count for income tax purposes. You must make it on your own; add its value to the book of revenues and expenses or in your revenue registry.

Remember that you are not obliged to submit the physical inventory count to the tax office.

Payment of tax for the last month of business activity

You must pay the tax for the last month of business activity:

• under the same rules as usual – if you have paid your taxes under the tax scale, the flat-rate taxation scheme or as lump-sum tax on registered revenues
• in the amount of 1/30 of the monthly amount due for each day until the date of closing down your business – if you have paid your taxes under the simple flat-rate tax system

Please remember that you need to submit your annual tax returns by the deadlines set for tax returns.

Income tax on the business assets

When closing down a business, the assets owned by the business become private property of the business owner.

If you do not sell such assets within six years (counted from the first day of the month following the month in which you closed down your business), you do not have to pay income tax on this account. If you sell such assets earlier, such sale will be subject to tax.

Obligations related to VAT

If you are closing down a business and you are a VAT payer, you must remember to pay VAT to the tax office.

In order to do that, you must complete certain formalities. One of them is the obligation to make a separate physical inventory count for VAT as of the date of closing down the business.

You must inform the tax office that you are going to stop conducting activities that are subject to VAT.

Physical inventory count

You must take the physical inventory count only if you are an active VAT payer.

The physical inventory count must include any goods that entitled you to VAT deduction upon their purchase, and that are still part of your business as of the date of closing down. Therefore, as a general rule these will be any goods whose purchase was documented with an invoice, regardless of whether you deducted VAT or not.

Please note that a physical inventory count for VAT should not include any goods for which the VAT deduction did not apply. However, if you simply chose not to deduct VAT in relation to a business asset, then such business asset must be also included in the physical inventory count.

Your physical inventory count must include:

• name and surname of the business owner
• date of the physical inventory count
• detailed specification of the goods and other assets (unit of measure, amount determined during the count, price in PLN (and gr) for a unit of measure, the value being the product of the amount and the unit price)
• total value of the physical inventory count
• signatures of the persons making the count and of the business owner
• name and amount of the goods and their purchase price or the purchase price of similar goods or the production cost (if no purchase price is available), the applicable VAT rate and the VAT amount.

Please note that valuation of business assets should take place no later than within 14 days from the final date of the physical inventory count (liquidation inventory). Goods included in the physical inventory count may be valued based on:

• the purchase price – the price that you have paid for the goods, minus any granted discounts and deductible VAT, and plus any applicable customs fees, excise tax and other customs charges (for imported goods)
• the purchase price of the same or similar assets – if you have received the goods as inheritance or donation
• the total cost – that is the purchase price increased with any additional costs related to the purchase of goods until their warehousing (such as the costs of transport, loading and unloading or freight insurance)
• market prices as of the date of the count – you can apply this valuation method only if the market prices are lower than the purchase price or the total cost of such goods. Please note that if you choose this valuation method, you need to include the unit purchase price (or the total cost) of the goods in the physical inventory count (for each item).

Example

A business was closed down in April 2020. In 2016, a computer was purchased with business funds (recorded as fixed assets) for PLN 7,000 net. At the moment of closing down, the value of the computer was PLN 5,000 net (i.e. down by PLN 2,000).

In the physical inventory count, you must disclose the computer with the value of PLN 5,000 net and VAT at 23% (PLN 1,150).

Please note! The physical inventory count may be prepared in any form. There is no one obligatory model although some tax offices publish their forms that you can use.

You do not need to notify the tax office of your intention to take a physical inventory count.

The information on the physical inventory count taken, its final value and the amount of tax due may be:

• submitted to the tax office, or
• attached to the tax return submitted for the last period of your business activity.

The assets recorded in the physical inventory count are taxable. The date on which the tax liability arises is the end date of business activity.

You must state the VAT amount resulting from your physical inventory count in your settlement statement (JPK_V7M for monthly returns, and JPK_V7K for quarterly returns).

If you have sold all of your assets and commercial goods before closing down your business, you should submit a note (together with the last VAT return) stating that the value of goods to be included in the physical inventory count is PLN 0.

Please note: When settling VAT, you must include in your VAT return the amount of output VAT and input VAT related to the sale and purchase transactions made in the last settlement period, and the output VAT amount resulting from the physical inventory count.

Check how to submit a VAT return (PL).

Removing a business from the VAT register

If you are a VAT payer, you must notify your tax office when closing down your business. You must do this within 7 days from the end date of business activity. File the VAT-Z form with the tax office competent for your business as of the last day of business activity.

This will result in the removal of your business from the register of VAT payers. If you were a VAT-EU payer, you will lose this status automatically as well.

You can submit your notification on closing down your business electronically, through the Tax Portal or with the e-Deklaracje app.

How long to keep your business documents

Documents filed with ZUS

Type of the document	To be kept for
Registration forms filed with ZUS, such as ZUS ZUA	5 years from the date of filing
Settlement documents (ZUS DRA), personal reports, correcting documents - filed with ZUS since the beginning of 2012	5 years from the date of filing
Settlement documents (ZUS DRA), personal reports, correcting documents - filed with ZUS since before the end of 2011	10 years from the date of their filing
ZUS IWA form	10 years from the date of filing
Documents confirming: - payment of your own social insurance contributions - the amount being the assessment basis for your own contributions	ZUS may inspect such documents for the period starting on 31 December 1998
Employee documents: payrolls, salary sheets and other documents which are the basis for calculating retirement or disability pension of employees, contractors and associates.	50 years for employees employed before 01.01.1999 - 10 years for employees employed after 01.01.2019 - 10 or 50 years for employees employed between 01.01.1999 and 31.12.2018

See also: When you can keep documents for 10 years instead of 50

Type of the document	To be kept for
Tax book of revenues and expenses (PKPiR) and registry kept to calculate lump-sum tax on registered revenues	5 years, counted from the beginning of the year following the tax year to which the documents are related
Accounting records and any related documents	5 years, counted from the beginning of the year following the tax year to which the documents are related
Registers kept for tax purposes, such as VAT registers, register of fixed assets, mileage register	5 years, counted from the beginning of the year following the tax year to which the documents are related
Inventory documents, such as the physical inventory count	5 years, counted from the end of the calendar year in which the deadline for tax payment has passed
Tax returns, including VAT returns and annual tax returns, such as PIT-36, PIT-36L	5 years, counted from the end of the calendar year in which the deadline for tax payment has passed
Accounting records, such as sale and purchase invoices, internal records, correcting invoices, adjustment notes	5 years, counted from the end of the calendar year in which the deadline for tax payment has passed
Approved annual financial statements	At least 5 years, counted from the beginning of the year following the tax year in which they were approved

Example 1

Adam runs a one-person business activity (as a sole trader). In April 2020, he filed a PIT-36 form for the year 2019 and paid the resulting tax. The period for which he must keep the documents related to his tax settlement is counted from the end of 2020 and ends at the end of 2025.

Example 2

The tax year of ABC company is the same as the calendar year. The company’s financial statements for the year 2019 were approved in June 2020. The period for which the financial statements must be kept is counted from the beginning of the year following the tax year in which they were approved. The financial statements must be kept at least until the end of 2025.

Please note! The Polish Accounting Act specifies a shorter period of keeping accounting records than the one under the tax regulations. According to the Accounting Act, accounting books for 2019 must be kept for 5 years, counted from the beginning of the year following the tax year to which such books are related, that is until the end of 2024. In order to observe the periods under the tax regulations, you must keep such documents until the end of 2025.

The period for which documents and records must be kept may be extended if the statute of limitations is suspended or stopped, for example when proceedings for a tax offence or crime are initiated.

Additional obligations upon closing down a business

When closing down a one-person business, remember also to:

• remove your cash register from the register (PL)
• terminate contracts with employees (PL)
• keep the documents of the business after closing it down (PL).