Converting a sole proprietorship (JDG) into a capital entity — a limited liability company (sp. z o.o.) — is a formal transfer of the entire business — assets, contracts, permits and employees — to a new entity with legal personality. Unlike winding up and setting up a new company, conversion preserves the legal, tax and economic continuity of the business. For an entrepreneur running a growing JDG this is usually the moment when they want to limit personal liability, separate private assets from business assets and tidy up tax matters (Estonian CIT, a lower health contribution for the shareholder). The procedure is formalised, takes about 3–5 months and requires cooperation with a statutory auditor and a notary. Below we describe its course in accordance with the state of the law as of 2026.
Legal basis and the principle of continuity
The procedure is regulated in Title IV, Division III of the Commercial Companies Code (Article 551 et seq.), in particular the provisions on converting an entrepreneur into a capital company (Articles 584¹–584¹³). On the day of entry in the KRS (National Court Register) the converted company takes over the rights and obligations of the JDG — without the need to assign contracts. Permits, concessions and reliefs obtained by the entrepreneur remain in force, unless a statute or administrative decision clearly provides otherwise. The company's NIP number is new, but tax succession covers most settlements — income taxes from the moment of conversion are calculated for the company.
Stages of the procedure — step by step
- Conversion plan. The entrepreneur draws up the plan in the form of a notarial deed. It contains the balance-sheet value of the JDG's assets on a specific date (no earlier than one month before the plan is drawn up), together with the draft articles of association of the new company and the declaration of conversion.
- Annexes to the plan. The JDG's financial statements, the draft declaration, the valuation of asset components and an opinion on the balance-sheet value.
- Statutory auditor. The registry court appoints an auditor who examines the plan for correctness and reliability. The auditor's opinion should be issued within the deadline set by the court — usually up to two months from the receipt of the application.
- Declaration of conversion. The entrepreneur submits it in the form of a notarial deed — it contains the type of company, the amount of share capital, the names of management board members and other elements of the articles of association.
- Articles of association of the converted company. Also in the form of a notarial deed. The minimum share capital of a sp. z o.o. is PLN 5,000, but it is most often paid up with the components of the business (an in-kind contribution).
- KRS application. Filed through the Court Registers Portal together with the full set of annexes. The day of entry in the register is the day of conversion — from that date the JDG ceases to exist and the company operates fully.
- Follow-up steps. Striking the JDG off CEIDG, the NIP-8 notification to the tax office, updates with ZUS, the notification of beneficial owners to the CRBR, VAT-R, updates in industry registers (BDO, URE, UOKiK — if applicable).
Documents and required annexes
- the conversion plan (notarial deed) together with the draft articles of association and the declaration of conversion;
- a valuation of asset components as at the balance-sheet date of the conversion;
- the JDG's financial statements for the period up to that date (if the JDG kept accounting books — full statements; under the KPiR (tax book of revenue and expenditure) — a balance sheet prepared specifically for the conversion);
- the statutory auditor's opinion;
- the declaration of conversion and the articles of association in the form of notarial deeds;
- statements by management board members consenting to perform the function and giving service addresses;
- the list of shareholders and the amount of share capital;
- proof of payment of the court fee and the fee for announcement in the Court and Commercial Gazette (MSiG).
Costs — what you actually need to pay
Costs break down into several items. Specific rates are worth confirming with the notary before starting — they depend on the value of assets:
- Notarial fee for the plan, the declaration and the articles of association — set progressively on the value of assets, usually PLN 1,500–5,000 gross for medium-sized firms, several times more for larger ones.
- Statutory auditor's opinion — market cost PLN 3,000–8,000 net, depending on complexity.
- Court fee for the KRS entry — PLN 500 (standard proceedings); with no separate fee for the MSiG announcement (the PLN 100 fee was abolished on 29 November 2025).
- Notarial signature fees — several items at PLN 20–60.
- Legal and advisory services — cost depends on the scope; typically PLN 5,000–15,000 net for the full service.
- Updates in KSeF, VAT-R, CRBR, BDO — no fees, but your own work or an advisor's cost.
The total starting budget for a typical medium-sized firm is PLN 15,000–30,000. For a very small JDG with a simple balance sheet it can go down to about PLN 10,000; for firms with real estate, inventories and many contracts the amount grows.
How long it takes
A realistic schedule:
- preparation of the plan and accounting documentation — 2–4 weeks;
- application to the court for an auditor and the issue of the opinion — 6–10 weeks;
- declaration and articles of association at the notary — 1 day;
- KRS entry — 2–6 weeks (the PRS is faster than the paper mode);
- follow-up steps — 2–4 weeks.
In total about 3–5 months, counting from the first consultation. Haste does not pay off — the auditor flags imprecise valuations and poorly drafted balance sheets, which can lengthen the whole process by another 2 months.
Tax consequences
From a tax perspective the conversion is neutral. General succession covers:
- VAT — the company continues the VAT number, taxpayer status and the right to deduct; in practice it gets a new NIP, so a VAT-R filing and informing counterparties are required;
- CIT — from the day of conversion profits are taxed with CIT (9% for a small taxpayer up to EUR 2 million of revenue, 19% above), or with Estonian CIT, which defers taxation until the dividend is paid;
- the entrepreneur's PIT — the JDG records come to an end; income from work in the company, a contract or dividends is settled separately;
- fixed assets — the company continues depreciation from the balance-sheet value (no "double" write-off).
For people who have been paying the flat tax (podatek liniowy) or ryczałt (lump-sum tax on recorded revenue) it is worth recalculating the profitability — at low margins a sp. z o.o. may mean higher burdens (double taxation of profit and dividends), unless Estonian CIT is used.
The most common causes of problems and rejections
- An incorrect balance-sheet date in the conversion plan (older than one month from the preparation of the plan).
- A valuation inconsistent with the auditor's opinion — the auditor raises comments that require the plan to be changed.
- Missing the NIP-8, VAT-R or CRBR filings after the entry — this risks penalties and a block in KSeF.
- Incorrect classification of the in-kind contribution — missing documentation showing that the entire set of components constitutes an enterprise within the meaning of Article 55¹ of the Civil Code.
- Failure to strike the JDG off CEIDG on time — formally it expires on the day the company is entered, but a missing notification leaves a mess in the register.
Can it be done online
The plan, the declaration and the articles of association have to be signed at a notary — no exceptions. The application to the registry court is filed electronically through the Court Registers Portal, signed with a trusted profile or a qualified signature. The S24 mode, available for "new" sp. z o.o. companies, does not apply to conversion — the regulations require the form of a notarial deed.
How Good Balance helps
As part of handling changes in your company, the Good Balance team carries out the JDG-to-sp.-z-o.o. conversion end-to-end: from the profitability analysis and choice of timing, through drafting the plan with the statutory auditor, coordinating the notary and the KRS application, to the follow-up steps with ZUS, the tax office, CRBR and KSeF. If there are doubts about the legal form, we also advise on alternatives within registering a new company — sometimes setting up a fresh company and gradually winding down the JDG is faster and cheaper than the classic conversion.