Characteristics
There are many forms of business activity, one of which is single-person limited liability company. A characteristic of a single-person limited liability company is that all shares belong to one shareholder, who makes all decisions in the company. A very important feature of a single-person limited liability company is that it has the status of a separate legal entity, which means that the owner’s liability is, as a rule, limited to the amount of contributed share capital.
How to set up a single-person limited liability company?
We can set up a single-person limited liability company by:
- filing an application in the S24 system,
- concluding a Articles of Association in the form of a notarial deed and submitting an application through the Court Registry Portal (PRS).
The sole shareholder must contribute at least five thousand zlotys to cover the entire share capital. The contribution may be in cash or non-cash.
What are the advantages of single-person limited liability company?
- Greater flexibility in management and decision-making
This form of business excludes the risk of conflicts between partners, which in practice are a common problem in multi-member limited liability companies.
- Limited liability of the owner
A shareholder in a single-member limited liability company is liable only up to the amount of the share capital; in comparison, in a sole proprietorship, the entrepreneur as an individual is liable with all his assets for the company’s obligations.
- All profits accrue to the sole shareholder
Due to the fact that, in a single-person limited liability company, there is only one shareholder, all profits accrue to him.
What are the disadvantages of single-person limited liability company?
- Costs of Social Security
A single-person limited liability company cannot take advantage of Social Security preferences. There must be a minimum of 2 shareholders in the company for it to be exempt from the responsibility of paying Social Security contributions.
- Dual taxation of profit
The company’s income is subject to both corporate and then personal taxation.
- Costs of incorporation and eventual liquidation are higher than for a sole proprietorship
- Lack of the ability to make verbal declarations of intent
Unlike a multi-member limited liability company, declarations of intent made to the company by its sole shareholder must be in writing on pain of nullity.
In addition, one-person limited liability companies are required to keep minutes of their resolutions.
In summary, a one-person limited liability company is a favorable choice for entrepreneurs who need a flexible legal form for their business. However, before deciding on a form of business, it is necessary to carefully analyze the rules of this type of company to begin with.
SKLAW supports in the process of choosing the right type of business. We provide an individual approach to the needs of the entrepreneur and comprehensive service.