Non-registered activity (no need to register with CEIDG)
Are you a student and a tutor on a regular basis? Do you provide small services that provide you with a small but stable income every month? If you run a small business (e.g. small trade or services), you can take advantage of the so-called non-registered rules from April 30, 2018 and avoid the obligation to register your business.
When I can use a non-registered activity
You do not need to register a company if:
- you are a natural person and the revenues from your activity will not exceed 50% of the minimum wage in any month - in 2018 it is PN 1050
- you have not run a business before or ran it, but before April 30, 2017 your company was removed from the register of entrepreneurs and since then you have not registered it again
What are the benefits of non-registered activities?
Thanks to the new regulations, you can earn income from activity that was previously considered to be economic activity and entailed many obligations (contributions and other obligations to the Social Insurance Institution (ZUS), tax settlement method)
If you use the regulations on non-registered activity:
- you do not need to register your activity in the Register of Entrepreneurs (CEIDG), Tax Office and Central Statistical Office (you will not need identification numbers NIP and REGON)
- you do not have to pay contributions for insurance in ZUS and you do not have to submit ZUS declarations
- you do not have to pay monthly (or quarterly) tax advances
- you do not need to keep complicated accounting (only simplified sales records)
What are your obligations in the case of non-registered activity?
Obligations towards consumers
If you run an unregistered business, you are an " entrepreneur " under civil law. This means that, for example, in relations with consumers, you are treated as an entrepreneur and have obligations to do so (e.g. in relation to a complaint or a repair). This also applies to the consumer's right of withdrawal within 14 days from the distance contract). See more on consumer rights.
Accounts for non-registered activities
A person conducting non-registered activity is in principle exempt from the obligation to issue an invoice. He/she must do so only if the request for its issue was made within three months of the end of the month in which the goods or services were supplied or all or part of the payment was received. In this case, it may be an invoice which only contains:
- the date of issue
- sequence number
- names and surnames and name of the taxable person and of the person acquiring the goods or services and their addresses
- the name (type) of the good or service
- measure and quantity (number) of goods supplied or scope of services rendered
- the unit price of the good or service
- the total amount of the entitlements
For a non-registered sale, you only need to enter your name and surname on the documents.
How to calculate revenue in the case of non-registered activity
Whether or not you can run a non-registered business is determined by the amount of monthly revenue (it may not exceed 50% of the minimum wage in any month). Your revenue from non-registered activity will be the receivables that you receive for the sale of your goods/services. Remember that you also include in your revenues amounts that are due to you even if you have not yet received them (e.g. if you have sold goods and issued a sales note but have not yet physically received payment). You do not include in your revenue the value of goods that have been returned to you or discounts and rebates granted (i.e. discounts for making payments before the due date).
You will need sales records to help you determine your revenue.
Records of non-registered sales
If you run a non-registered business, you should keep simplified records of your sales (article109(1) of the VAT Act). You record the sales for the day in question. Remember that you should make entries for a given day no later than before the sale on the next day (i.e. after the sale of goods the next day, you should not enter the sale on the previous day). This obligation results from the VAT regulations.
What should the register of sales contain?
The rules do not regulate what exactly the simplified sales register should contain. It usually contains information such as
- serial number
- the date of the sale
- the value of sales
- the value of sales incrementally
You can also add other information to the register, such as the sales receipt number or information about the type of transaction.
Accurate records will help you quickly determine whether you have exceeded the income threshold for non-registered activities.
The register may be kept on paper.
You have an obligation once you have taken up a non-registered business:
- to keep simplified sales records
- respect consumers' rights
- issue invoices or bills at the purchaser's request
What are the limitations of non-registered activity?
The provisions on non-registered activity do not apply to partners in a civil law partnership.
You may also not conduct regulated activities, i.e. activities that require special permits, concessions, etc.
How to account for revenues and costs from non-registered activity
Revenues from non-registered activities are revenues from the so-called other sources. You do not have to pay any tax advances on your income. You are obliged to settle your income in the PIT-36 annual tax return.
You can also deduct in your annual tax return expenses that you have incurred strictly in connection with your business (e.g. purchase of raw materials for the production of products).
These costs should be documented, so you should keep records of all purchases related to your business.
Non-registered activity and VAT
If you conduct a non-registered business, you are exempt from VAT. You only keep simplified records as described above.
Remember, however, that the performance of certain activities obliges you to register as a VAT payer regardless of the amount of your income. This includes jewellery, legal and advisory services. If you intend to do business in any of the above areas, you need to register as an active VAT payer.
What happens if I exceed the limit for non-registered activities?
If you exceed the monthly income limit (50% of the minimum wage), your business will be considered an economic activity. Once you have exceeded the limit, you have 7 days to register your business with CEIDG. As a novice entrepreneur you will be exempt from social security contributions. Compulsory social security contributions must be taken out within six months of starting up. Then for 2 years you will be able to use the so-called small ZUS.