15.02.2010   The Panalyst Perspective

Making a start

The speed, cost and ease with which you can open a company in any country, has a major impact on entrepreneurship. Other factors such as simpler legal and tax regulations are important once you start operating, but if opening a company is too complex and expensive in the first place, you will never even get ‘out of the gates’.

Poland’s ranking in the World Bank report ‘Doing business 2010’ is 72 out of 183 countries behind most Central European countries. In the ‘Starting a Business’ section of their report, the top 3 nations are New Zealand, Canada and Australia, with the US and Ireland also in the top 10. The table below compares Poland with the best and worst nations. While a number of reforms have been made in Poland they still lag well behind their peers.

	New Zealand	US	UK	Germany	Poland	Iraq
Starting a bussines (rank)	1	8	16	84	117	175
Number of procedures	1	6	6	9	6	11
Time (days)	1	6	13	18	32	77
Cost (% of income per capita)	0,4	0,7	0,7	4,7	18	75,9
Minimum capital (% of income per capita)	0	0	0	0	15	30,3

Source: Doing Business 2010 World Bank

In Poland those 6 step procedure is as follows:
1. Company agreement in the form of a notary deed
2. Registering the company in the courts (KRS)
3. Registering the company in the government statistical office (REGON)
4. Registering the company with the internal revenue service (NIP, VAT)
5. Registering the company in the health insurance system (ZUS)
6. Setting up a bank account

4 years ago, as a stranger in a strange land trying to navigate my way through this process, I hired an accountant to help me with the process. Piotr patiently herded me from office to office and to my surprise most government staff were friendly and helpful. Processes were long-winded and paper intensive, but there was always a logic behind each step. The one question we consistently had to deal with was ‘Why don’t you have a PESEL number?’ Apparently without this number, I simply didn’t exist. I mean clearly I did exist and was standing in front of them with a passport, driving license and deed to a Polish property, nevertheless without a PESEL all the hard work of my parents 31 years previously meant nothing. Usually though Piotr, through a mix of flattery, pleading and jokes about foreigners, would get us through this.

The whole process took around 6 weeks and cost about 3,000 PLN. Since then I have opened several more companies and now it usually takes about 1 month at a cost of 2,500 PLN. One major improvement is that now the KRS, NIP, VAT and REGON applications are all delivered to the same place (The court building) at the same time. However in my opinion an accountant is still necessary to complete a number of the steps.

The holy grail of company setup procedures is a single one-stop shop for document filing, no need for expensive accountants, little or no minimum capital requirements and a low cost 1 day process at the end of which you are up and running. While some progress has been made in Poland and some steps are even moving on-line, the major issue in preventing movement from a 1 month to a 1 week process seems to be that each government department still operates in a separate silo. Improvements have concentrated on improving the efficiency of each of those silos, rather than presenting to the end customer, the entrepreneur, a single streamlined process.