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Fewer Sole Proprietorships Established in 2023

BUSINESSFewer Sole Proprietorships Established in 2023

In 2023, the number of applications to establish a sole proprietorship fell by nearly 3% compared to 2022. Analyzing data from each month of the previous year, it’s clear that the most businesses were opened in January, and the fewest – in December. Considering the division by province, Mazovia is at the top of the list, and Opolskie is at the end. However, the vast majority of applications were without a specific area of operation. On the other hand, the number of requests to resume a sole proprietorship increased year-on-year by over 16%. Commenting on these data, subject matter experts suggest that if the new government does not make any major move towards this type of entrepreneur, there should be no hope for any improvement in the situation.

Data provided by the Ministry of Development and Technology indicates that in 2023, the Central Register and Information on Economic Activity (CEIDG) received 302 thousand applications for the establishment of a sole proprietorship. This is 2.7% less than in 2022 when 310.3 thousand applications were filed. According to Adrian Parol, legal counsel and restructuring advisor, the year-on-year decrease in this number is neither alarming nor strange. This is due to substantially increasing costs of maintaining a business. High inflation, increasing minimum wage, and higher social insurance premiums are resulting in less interest in establishing these types of businesses.

“Entrepreneurs in Poland too often can’t withstand the pressure associated with the challenges of doing business. And we’re usually not talking about market competition, but about public burdens. The gap between the number of established companies and those disappearing from the market is widening. It’s no wonder, with inflation high and premiums for entrepreneurs regularly increasing. Additionally, the quality of lawmaking is also problematic,” comments Jacek Podgórski, director of the Labor Forum at the Union of Entrepreneurs and Employers.

Analyzing data from each month of 2023, it can be seen that the most applications to establish a sole proprietorship were in January – 28.5 thousand (the previous year – 26.6 thousand), in March – 28 thousand (27 thousand), and also in September – 27 thousand (29 thousand). The fewest, however, were recorded in December – 20.2 thousand (in 2022 – 22.8 thousand), in November – 23 thousand (23.8 thousand), and also in July – 23.3 thousand (25.6 thousand).

“On average – the closer to the end of 2023, the more businessmen began to look soberly at planned changes. This applies not only to the sole proprietorship sector. The end of the year means a much closer perspective of changes that are to come into effect in the following year. In this context, it’s worth mentioning the increase in the minimum wage. Conversely, the relatively lower number of founded sole proprietorships in July could result from the peak of the holiday season,” analyzes Jacek Podgórski.

Ministry data also shows how many applications for the establishment of a sole proprietorship were recorded in each province. At the top of the list is Mazovia – 30.3 thousand (the previous year – 31.8 thousand). Further down we see Małopolska – 17.2 thousand (in 2022 – 19.1 thousand), Greater Poland – 16.7 thousand (18 thousand), Silesia – 16.5 thousand (18.5 thousand), and also Lower Silesia – 14.3 thousand (16.9 thousand). The fewest applications were related to the Opolskie province – 3.4 thousand (the previous year – 3.7 thousand), Świętokrzyskie – 4.6 thousand (5.6 thousand), and also Lubuskie – 4.8 thousand (5.1 thousand). However, the vast majority of applications were without a specific area of operation – 129.1 thousand (in 2022 – 119.2 thousand).

“These data are directly related to the population and conditions of running a business in different parts of Poland. The greater number of applications without specifying the province may indicate that more and more new companies are focusing their activity at the national or international level. This is also related to the natural trend of an increasing number of companies providing network, mobile, or remote services,” says Dr. Przemysław Zbierowski from the University of Economics in Katowice.

According to ministry data, in 2023, the CEIDG received 177.5 thousand applications to resume sole proprietorship activity. This is 16.1% more than in 2022 when there were 152.9 thousand such cases. As Łukasz Goszczyński, a legal counsel and restructuring advisor from the GKPG law office, states, the aforementioned increase is good news. However, it should be remembered that in 2022 around 350 thousand businesses were suspended. Despite the recorded increase, only half of the entrepreneurs decided to resume. And as the expert insists, comparing these statistics indicates that the conditions for doing business did not improve.

“The increase in the number of resumed economic activities is – in my opinion – due to two factors. Firstly, 2023 was a year of psychological stabilization for entrepreneurs after the pandemic, which was associated with adapting to uncertainty. Secondly, last year we saw some stabilization of legal and tax regulations related to running a business,” says Dr. Przemysław Zbierowski.

Meanwhile, Jacek Podgórski points out that 2022 was extremely unfavorable for doing business. At that time, we were dealing with pandemic inflation, increasing costs of business operation, and a surge in energy carrier prices, which was caused by the outbreak of the war in Ukraine. In addition, unfavorable and complicated changes were introduced by the Polish Deal regulations. According to the expert, these factors resulted in a massive increase in suspended businesses in 2022 and a decrease in the number of resumed businesses. The director from the ZPP emphasizes that entrepreneurs’ goal was to outlast unfavorable conditions for running a business.

“It is unknown how the number of applications for opening and resuming sole proprietorship will evolve in the coming months. This will be influenced by the economic situation, which depends, among other things, on the actions of the government. It is undeniable that the activation of funds from the Operational Program Infrastructure and Environment will allow for the re-acceleration of the economy,” Adrian Parol points out.

According to an expert from the GKPG law office, the state should develop a broader economic model that would allow enterprising and energetic citizens to think more seriously about starting their own businesses. This has to be a decisive step towards changes. There also has to be a long-term program supporting young and creative people who would like to run businesses. The current conditions do not really favor this and, to put it bluntly – they can be discouraging.

“It seems that the current trends will be continued. This year the number of applications for the registration of sole proprietorship might be the same as last year. However, those concerning resumption could be slightly fewer since many businesses have already returned to the market in 2023. Also, a lot depends on new regulations, primarily on taxes and compulsory contributions imposed on entrepreneurs,” summarizes the expert from the University of Economics in Katowice.

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