Converting JDG to Sp. z o.o. — Complete Guide 2026

Why convert JDG to Sp. z o.o.

• Limited liability — you are liable only up to the share capital (PLN 5,000); your personal assets are protected
• No entrepreneur's ZUS — in a Sp. z o.o., a management board member does not pay entrepreneur's ZUS (~PLN 1,600/month in savings)
• Ability to bring in partners/investors — you can sell shares in a Sp. z o.o., but not in a JDG
• Lower CIT (corporate income tax) at 9% for small taxpayers — compared to 19% flat-rate PIT (personal income tax)
• Greater credibility with larger clients — a Sp. z o.o. inspires more trust in B2B relationships

Conversion procedure — step by step

1. Conversion plan — preparation of a document containing a valuation of JDG assets and a draft articles of association for the Sp. z o.o.
2. Auditor's report — valuation of JDG assets by a certified auditor (cost: PLN 2,000–5,000)
3. Notarial deed — establishing the Sp. z o.o. before a notary (cost: PLN 800–1,500)
4. Entry in KRS (National Court Register) — fee PLN 600, processing time 2–4 weeks
5. Removal of JDG from CEIDG (Central Register of Business Activity) — free of charge, done online
6. Notification of change to the tax office, ZUS, and GUS (Central Statistical Office) — submitted simultaneously

Total cost: PLN 4,000–8,000; timeline: 4–8 weeks.

Tax consequences

Positive:

• CIT at 9% for small taxpayers (revenue below EUR 2 million) instead of 19% flat-rate PIT
• No entrepreneur's ZUS
• Profit reinvestment — company expenses are deducted before CIT; you can reinvest profits without paying PIT until dividends are distributed

Negative:

• Double taxation of dividends — first CIT at 9%, then PIT at 19% upon distribution
• More expensive accounting — full accounting instead of KPiR (Tax Revenue and Expense Ledger), which is 3–5× more costly
• More formalities — resolutions, financial statements, mandatory audit if certain thresholds are exceeded

Impact on ZUS

The most common question: do you pay ZUS in a Sp. z o.o.?

• Sole director/shareholder — pays ZUS as an entrepreneur (since the 2022 amendment)
• Shareholder in a multi-person company — no ZUS on company income, but ZUS applies to any employment or civil-law contract with the company
• Working for the company under an employment contract — full employee ZUS contributions (~PLN 1,800)

Conclusion: ZUS savings work primarily with 2+ shareholders. A single-shareholder Sp. z o.o. does not exempt you from entrepreneur's ZUS.

When conversion makes sense

Conversion is worthwhile when:

• Your annual profit exceeds PLN 100,000 (CIT at 9% is more favorable than PIT at 19%)
• You plan to bring in partners or investors
• You want to protect your personal assets from business risk
• You work in B2B with large clients (Sp. z o.o. → higher rates and credibility)
• You can have at least 2 shareholders (to save on ZUS)

It is not worth it when: your revenue is low (~PLN 50,000/year), you work mainly B2C, or you run a one-person business with no plans for growth.

Frequently asked questions