Conversion of a company into a partnership

Sole proprietorship is the most popular form of business in Poland. It is easy to set up, registration costs nothing, and there is usually no need for full bookkeeping. However, when a company expands, it sometimes needs an injection of capital. This is when it is worth considering setting up a company and knowing what pitfalls await entrepreneurs. What are they? We suggest.

As many as 3 million sole proprietorships had been registered in Poland by the end of 2018, according to data from Tax Care's 'Entrepreneurship Index'. This trend is continuing, as from January to February this year, there was an average of more than 900 such companies per day in Poland.

Although running a sole proprietorship has plenty of advantages, it is also not without disadvantages. The biggest of these is that the owner is liable with all of his or her assets for the company's liabilities. This can be particularly risky when the business has spread its wings. In the event of financial difficulties, the owner may end up bankrupt. Once the company has been converted, it is the company that is liable for the debts and not the entrepreneur with his or her assets.

Founding of the company also makes it possible to raise additional capital to run the businesswhich encourages the growth of the company. Most entrepreneurs know the advantages of converting a sole proprietorship into a company. However, few know that there are mines along the way that can be defused in advance.

If converting a sole proprietorship into a company is intended to escape financial difficulties, it is worth knowing that this is not a good solution.

The material appeared on biznes.interia.pl:24 June 2019:" 12 traps that lurk for the entrepreneur