Non-registered business activity vs. dropshipping. Things you need to know.

 8 min read

What is non-registered activity? Since April 30, 2018, it’s permitted to conduct non-registered business activity in the Central Register and Information on Business Activity (CEIDG).

The Entrepreneur’s Law regulates it in the following way:

Article 5 (1) An activity is not a business activity if it is performed by a natural person who has not conducted business activity in the last 60 months and whose income due from this activity does not exceed 50% of the amount of the minimum wage, referred to in the Act of 10 October 2002 on the minimum wage for work (Journal of Laws of 2017, item 847 and of 2018, item 650).

So how to understand the abovementioned rule?

In 2019, the minimum wage in Poland amounted to PLN 2250 gross. Thus, in this case, the monthly income shouldn’t exceed PLN 1125 gross. Due revenue – what is it?  It determines the amount that a person should receive, even if it did not happen, excluding returned products, discounts and allowances. 

If a person hasn’t been self-employed in the last 60 months, it means that he or she can start non-registered activity if he or she hasn’t been self-employed for the past 5 years. However, transitional provisions are more lenient in this respect as according to them it’s possible to start such an activity if the business activity was conducted before 30 April 2017 and was removed from CEIDG.

Non-registered activity can be conducted by only one person. Additionally, it doesn’t include civil partnerships and situations where permits or licenses are required. Thus, it can’t be an activity dealing with industries related to air transport, protection of property or persons, explosives, weapons and ammunition.

Advantages of non-registered activity:

• It’s not required to register it in the Central Register and Information on Business Activity.
• NIP (tax number) and REGON (national business registry number) aren’t required. However, if transactions are recorded with a fiscal cash register, these numbers should be given. If the annual amount exceeds PLN 20,000 (PLN 1666.67 per month), a fiscal cash register is mandatory. Additionally, you should become acquainted with the regulations contained in Article 4 of the Regulation of the Minister of Finance on exemptions from the obligation to keep cash register records.
• Social and health insurance contributions aren’t obligatory. The situation changes if we are subject to the general insurance rules associated with employment contracts or civil law contracts.
• We don’t pay VAT. However, there are a few exceptions, e.g. in the legal, jewellery and consulting businesses.
• It’s possible to make breaks in running the business, however, it’s crucial to maintain the required monthly income due.

What are the responsibilities of a person running non-registered activity?

• Such a person should keep a simplified form of sales records. Before starting to sell on one day, the previous day needs to be included in the records.

These records are mandatory as they inform whether VAT exemption is possible. Don’t neglect this aspect as you may always be audited.

When dealing with non-consumer sales, accounting evidence is recorded by entrepreneurs or institutions. If a receipt from a non-consumer business towards an entrepreneur shows that the limit has been reached, this fact may be detected during an audit. Although many may think that it’s a potentially hideable situation, it’s far from the truth. As things progress, such data will probably be sent automatically to the tax office in the future.

• Income received from non-registered activity is taxable. You should settle based on PIT-36 – section “other sources”. It’s not required to make an advance income tax payment. Moreover, all costs incurred can be deducted from income obtained from this activity.
• The regulations concerning consumer protection, e.g. complaints and returns, must be observed.
• A customer buying goods in your store has the right to expect a receipt – such a request can be submitted up to 3 months after the end of the month when the customer received the goods.

Dropshipping vs. non-registered activity

If you decide to start a cooperation with a dropshipping wholesaler, you should take into account that it’s very likely that your monthly income will exceed PLN 1125 gross. According to the law, if this amount is exceeded, you should immediately register your activity in the Central Register and Information on Business Activity. The application must be submitted within 7 days from the date the limit is exceeded.

Is it worth running a non-registered activity?

First, you should answer the question what a dropshipping store means to you. Is it supposed to be a source of extra income? Or do you plan to expand the business so that it brings you significant profits?

Megamo suggests what to pay attention to.

1. Create a simple financial analysis and determine your possible income. If your monthly income exceeds PLN 1125 gross, think about starting a business. In this case, you’ll be able to take advantage of the start allowance which means that for the first 6 months the health contribution won’t be higher than PLN 342.32 per month. During this time, you can advertise your business, gain expertise as a sales person and check what profits are generated by your company. However, keep in mind that closing any business means that you won’t be able to start non-registered activity right away.
2. It’s also beneficial to start with non-registered activity and then register it in CEIDG as soon as the monthly income is exceeded.

Contact us if you have any questions related to non-registered business activity. We will be happy to resolve your doubts.