How to re-register your business to change its legal status from sole proprietorship to a company?

Zebra Rachunkowa 21.04.2023

When you start your business, you have two options to choose from: a sole proprietorship or a company. However, this is not an irrevocable decision. In the future, you might re-register your business to change its legal status.
How to do it? You will find out in this article.

Re-registration enables you to change the legal status of your business without the need to liquidate that business.

Whom will you need to make that process go smoothly? You will need some experts, namely an accountant, a legal counsel, an independent auditor and a notary public.

The first thing to do is to develop a plan; it must include preliminary articles of association, which are developed by a lawyer, and a financial statement (consisting of the balance sheet, a profit and loss account and notes) and asset valuation, which are made by an accountant. At this stage, you need to provide your accountant with some additional documents and information, as the revenue and expense ledger will not suffice.

The balance sheet is a statement of all assets, receivables from and payables to contractors, whereas the revenue and expense ledger also includes such information as the value of receivables from and payables to contractors, current loan and lease debt. The profit and loss account is an extended version of the revenue and expense ledger. Notes include descriptive information on the legal status, the type of business activity and methods of valuation and presentation of the business assets. The easiest way to prepare financial records is to provide the balance at the end of the month. The re-registration plan and the appendices need to be notarised.

What happens next?
A legal counsel will apply to the National Court Registry to start the process of re-registration. An independent auditor will be selected, who will audit the financial statement, as ordered by the court, to check if it complies with the actual state of affairs. The independent auditor will send their report to the court. The process is not finished yet, though!

Next, you need to see a notary public to approve the re-registration plan and execute notarized articles of association. A legal counsel will need to prepare the applications again and send them to the National Court Register. The court will make a record in the National Court Register; this will be the day your new company begins to operate. For executing the Articles of Association, you will need to pay a tax on civil law transactions totalling 0.5% of the share capital. As your sole proprietorship will cease to exist, you will need to delete it from the Central Business Registration and Information Service (CEiDG). All the payables and receivables are transferred to the limited liability company, and the information on re-registration will be recorded in the National Court Register. You will be assigned a new Tax Identification Number (NIP) and Business Statistical Number (REGON).