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Trade on the Internet – what form of business to choose?

Current times show that online stores are becoming more and more popular. Not only as an opportunity to expand your business but also as a destination business. However, what form of business is appropriate for an online store?

Online store as a sole proprietorship

There is no right answer to the above question because everything depends on the kind of business that we start (even if it will be conducted via the Internet). Therefore, it is worth considering the choice of the appropriate form of business already at the stage of preparation. Sole proprietorship – the advantage of this solution is the ease of establishment and few formalities related to its conduct (registration in CEIDG). However, this form of business can only be set up by a natural person. The disadvantage of this solution is the responsibility of the whole property for the obligations resulting from the business activity (also personal property) – in the case of low-risk business, it may be a good solution. The sole proprietorship is subject to PIT according to the tax scale, flat tax or a lump sum. The entrepreneur can also be a VAT payer, and the bookkeeping can be done in the form of a revenue and expense ledger (which means lower bookkeeping fees, and even the possibility to do it yourself). This form of business is for entrepreneurs who want to run a low-risk business and at the same time do not want to incur too many costs and paperwork.

Civil partnership – is it a good solution for an online store?

The second solution may be a civil partnership, which is also characterized by low set-up costs and the possibility of simplified accounting. However, civil partnership is dedicated to entrepreneurs who want to conduct business together (as partners). The distribution of profits in a partnership is equal (regardless of the contribution made), and the partners are subject to PIT, not the company. However, as in the case of a sole proprietorship, partners are still liable for all their assets in case of debts of the company (the company also owns the assets of the company – joint-ownership). That is why this form of business should be recommended for low-risk businesses.

Another solution: General partnership

This is a partnership that is formed through entry in the National Court Register (NCR) – which at the same time accounts for the increased cost of establishing such a company. The name of the company should include the names of the partners. The company may be represented by each partner unless the articles of association provide otherwise. Additionally, it should be noted that with this form of business activity one has to take into account a high level of liability – despite the fact that the company has its own assets, the partners may also be liable for the company’s obligations. A general partnership is subject to VAT. In previous years the general partnership was not a CIT taxpayer. However, at present regulations provide for the possibility of taxing general partnerships with CIT (Article 1 par. 3-6 of the CIT act – filing information on CIT and PIT taxpayers on CIT and PIT tax forms CIT-15J before the beginning of the financial year provides for the possibility of avoiding that tax). In addition, partners of the company are also subject to income tax. Finally, it is worth noting that the obligation to keep full books of account in the case of a general partnership is imposed when the threshold of 2,000,000 € of net income from sales in a given year is exceeded or when the partner of the partnership is a legal person, e.g. a limited liability company.

Partnership for selected professions only

A partnership is a specific kind of partnership because only natural persons who practice a liberal profession (such as a lawyer, pharmacist, architect or doctor) can be partners of the partnership. Therefore, due to the special nature of this partnership, an online store in this form of business is not possible.

Limited partnership in 2021

An interesting solution may also be a limited partnership, about which there has been quite a lot of talk recently. The reason for this interest is the taxation of limited partnerships with CIT (as is the case with limited liability companies). Unfortunately, despite many appeals from entrepreneurs, limited partnerships were added to the catalog of corporate income taxpayers. The introduced change caused that the income of the partnership is subject to CIT at the level of the partnership and then at the level of the partners.

However, the CIT taxation alone should not discourage to establish this form of business activity, because a limited partnership also has many advantages. It is a good solution for partners, one of whom wants to be involved in the company’s matters, while the other only makes a financial contribution – the limited partner is limited in liability for the company’s obligations, while the general partner is liable with all his assets. In the case of establishing a limited partnership the procedure is very similar as in the case of a limited liability company, as the registration is also in the NCR and the partnership agreement should be concluded in a form of the notarial deed.

Capital companies – their advantages and disadvantages

Limited liability company (LLC) is one of the most popular forms of business activity on the Polish market (apart from sole proprietorship). In this case, we have to deal with more formalities, because in order to set up a LLC  one has to conclude a memorandum of association (in a form of a notarial deed), make a contribution to cover the whole share capital, appoint the management board and make an entry to the NCR. The initial capital of the company should be 5,000 PLN, and the nominal value of the shares should not be lower than 50 PLN. In case of more risky activities a LLC is a good solution, as the company is liable for its obligations with all its assets, while its partners are liable only up to the amount of the contribution made and are not liable with their own assets. A LLC is subject to corporate income tax, i.e. CIT tax on income earned in a given tax year. Additionally, the partners of the company pay tax on dividends and other income from shares in the profits of legal persons (19% rate). The company is also a VAT payer and must keep full accounting records. Despite the fact that there are more formalities in a LLC, limited liability makes it very popular among entrepreneurs who decide to start a business.

Joint Stock Company

It is a capital company that has its own legal personality. The partners of the company can be both natural persons and legal entities. It cannot be formed by a single-member limited liability company. A joint-stock company is also registered in the NCR. The partners of the company receive shares for their contribution. Share capital of the company is 100,000 PLN. Due to the rather high level of complexity of this form of business activity it is rather dedicated to large enterprises.

There is also a limited joint-stock partnership which combines features of a limited partnership and a joint-stock company, however, due to quite high initial capital (PLN 50,000), it indicates quite high costs of running.


When starting out on the Internet or expanding your current business with an online store, the form of business does not limit your choice, as almost any of the possible forms is acceptable. Therefore, it is worthwhile to take into account other criteria when making the right decision, such as liability for liabilities, financial capabilities, number of formalities, form of taxation or number of partners. If you register your business in the form of an online store, it is important to indicate the PKD code for the store, e.g. 47.91.Z Retail sale via mail order houses or the Internet.

Dropshipping – the most popular form of e-commerce for starters and legal aspects

At the same time, it is worth noting that in the e-commerce industry a very popular form of business is dropshipping. This is a logistics model that allows you to sell goods over the Internet, where the burden of shipping goods is transferred to the supplier of goods. The goods goes directly from the supplier to the customer. In the case of dropshipping we can distinguish two types of activities: selling on our own account (where the goods we own are sold) and selling as an intermediary between the supplier and the customer (we do not purchase goods but pass the payment when the customer pays for the goods). It seems that each of the presented options gives the opportunity to do business on the Internet, but the tax aspects may be different depending on your choice.

If you still have any doubts about choosing the right form of business activity, we encourage you to contact our experts in order to help you choose and support you in completing the formalities related to the activities on the Internet.