Everything You Need to Know About Forming a Limited Liability Company – Pros and Cons

A limited liability company is one of the most popular business structures in Poland, though many entrepreneurs still find it confusing or underappreciate its benefits. In 2025, its key feature remains the limited liability of its shareholders—meaning that if the company fails, their personal assets are protected. In practice, this offers greater security than a sole proprietorship. On the other hand, establishing and operating an LLC involves certain formalities—mandatory full accounting, the registration process, and often the need to hire a lawyer or an accounting firm.

In this article, we take a closer look at what setting up a limited liability company (LLC) really entails, who can establish one, what its main advantages are, and what limitations you need to consider before deciding to register one. If you’re wondering whether an LLC is the right move for your business in 2025, you’ll find concrete answers here.

What is a limited liability company?

A limited liability company (LLC) is, as the name suggests, a joint business venture between two or more entities. However, to make things a bit more complicated, it is also possible to establish a single-member limited liability company. There is no doubt, however, that the most important feature of a limited liability company is precisely the limited liability of its shareholders. They are liable only up to the amount of the share capital.

Key features of a limited liability company

Undoubtedly, the most important feature of a limited liability company is that the shareholders’ liability is limited to the amount of capital they have contributed. The minimum capital required to establish the company is just five thousand zlotys. Moreover, this capital is not tied up. Once the formalities have been completed, we can freely use it for the company’s operations.

Setting up a limited liability company – disadvantages

Setting up a limited liability company and then running it involves certain drawbacks.

The time-consuming process of incorporating a company before a notary or online

The process of forming a limited liability company is highly formalized, which is certainly not an advantage of this business structure. It is best to have a notary prepare the documents required to form the company. Of course, you can draw on the wealth of information available online. You will also find a sample articles of association there, but it is advisable to seek legal assistance when registering the company. Naturally, this significantly increases the cost of forming the company.

Forming a company and registering it with the National Court Register (KRS) is also time-consuming. It can take up to several weeks. This depends, among other things, on the complexity of the articles of incorporation.

Setting up a company through the s24 platform takes much less time. However, forming a company this way is only possible for entities with a simple structure. It is not possible to set up a company through s24 if, for example, one of the shareholders wishes to contribute real estate or machinery to the company. The s24 platform accepts only cash contributions.

Unfortunately, a limited liability company is subject to double taxation. To withdraw the money you’ve earned, you must first pay a 19% corporate income tax. Another 19% must be paid on the distribution of profits. You won’t encounter such drawbacks with a sole proprietorship, but keep in mind that in that case, if the business fails, you are liable with all your personal assets.

Post-incorporation formalities for a limited liability company – full accounting services

When deciding to establish a limited liability company, you must be prepared to maintain full accounting records. This requires expertise and ongoing professional development. As a result, it is best to entrust this aspect of the business to an experienced accountant or an accounting firm.

Why should you consider starting one? The advantages of a limited liability company

The advantages of a limited liability company include, for example, the relatively low cost of incorporation. If drafting the articles of association is straightforward and therefore does not require a notarized agreement, the costs of establishing the company will amount to 350 zlotys. Of this amount, 250 zlotys covers the KRS registration fee, and 100 zlotys covers the cost of publishing the notice in the Court and Economic Monitor.

Of course, setting up a limited liability company also means that, should the business fail, the partners are liable only up to the amount of the initial capital.

Registering a limited liability company also allows you to avoid paying Social Insurance Institution (ZUS) contributions. However, this is only possible if the company is run by two or more shareholders, as they are not treated as employees. Registering a single-member limited liability company means that the owner is also an employee of the company and must pay ZUS contributions.

Who can form a limited liability company?

A limited liability company (Sp. z o.o.) may be established by any natural or legal person, regardless of their nationality or the location of the company’s registered office.

A partner in a limited liability company – who can be one?

Any individual may be a partner in a limited liability company, provided they are not subject to any personal restrictions resulting, for example, from a court judgment.

Partners may also include companies with different legal forms. It is possible to have a mix of entities with different legal statuses. The partners in a single company may include both a natural person and, for example, a joint-stock company.

The only legal restriction is that a single-member limited liability company cannot be a shareholder in a limited liability company.

Types of business activities in a limited liability company

There are virtually no restrictions on the business activities a limited liability company may engage in. Of course, these activities must comply with Polish law. However, for many types of business activities, additional permits or licenses are required.

The main ways to form a limited liability company

You can set up a limited liability company on your own, but since the process is quite complicated, it’s easy to make mistakes. This can prolong the process of starting a business and may also prove costly. Completing the process online is simpler than setting up a limited liability company the traditional way, but you may still encounter some hurdles.

It seems that the surest way is to hire a specialized firm that handles this professionally to register the company. That way, we’ll avoid mistakes and the process will be faster.

The location where the company is registered may prove important for its future operations. According to professionals, registering a company in Warsaw offers the greatest peace of mind. The local tax offices are so overwhelmed with work that they focus on major irregularities rather than minor oversights.

When choosing a place of registration, it’s worth considering a virtual office in downtown Warsaw. This solution combines a prestigious address with flexibility—the company gains a professional image, mail handling services, and access to conference rooms without the high costs of renting a traditional office.

The costs of operating a limited liability company

When setting up a limited liability company (Sp. z o.o.), the costs depend on the method of incorporation. The cheapest option is to set up the company yourself online. You must pay the registration fee to the National Court Register (KRS)—250 PLN—and 100 PLN for the publication of the company’s registration in the Court and Economic Monitor. And then there’s the civil law transaction tax, which amounts to several dozen zlotys.

With the traditional method of incorporation, there is a notary fee, which depends on the amount of the authorized capital. The minimum authorized capital required to incorporate a company is five thousand zlotys. However, this amount can be as high as desired. The higher the share capital, the greater the company’s credibility in the market. This also means greater risk in the event of failure, as a limited liability company is liable for its debts only up to the amount of its share capital.

Assistance with forming a limited liability company

Setting up a company online is relatively simple. The s24 platform essentially guides you through every step of the process. However, setting up a company via the s24 platform is only possible if the limited liability company (Sp. z o.o.) is to take the simplest form possible. However, if the limited liability company is to include, for example, a contribution in kind in its initial capital, the process of establishing the company becomes quite complicated. In such a case, it is better to entrust the preparation and execution of the articles of association to specialists.

Of course, assistance with setting up a company isn’t free. If you want to set up a company by having a specialized firm handle the paperwork, such as Biznes Spot , you’ll need to factor in their fee, but this is the fastest and most professional way to get the job done. We recommend setting up a company with us.

It seems that the limited liability company (Sp. z o.o.) is significantly underappreciated in Poland as a business structure. Sole proprietorships dominate our market. This structure is, of course, simpler. However, it is important to remember that a company’s liabilities are limited to the amount of its registered capital. In the case of a sole proprietorship, there is a risk of losing all of one’s personal assets.