A retired company is a chance to earn a retirement pension, but also for development. This is a good option due to the financial security and passive income of a pensioner, but also due to tax possibilities. See echase.org for an observation
Some open the company at a young age, others after burning in a corporation. There is also a group of people who open their first activity in retirement. Louis de Funes earned fame as an actor aged 50+. Nothing stands in the way of opening and moving the company while being retired!
From this article you will learn:
- why is it worth to open a company in retirement,
- how a retired company has to Social Security,
- how to start a company in retirement,
- where to get additional funds to open the business.
Other articles that may interest you:
- Best company accounts – ranking for business owners
- 18 books that you must read before opening the company
- Co-financing for companies – 39 tested programs
Why is it worth to open a company in retirement?
If you wear the intention of opening a company in retirement, it is probably not a new idea. It happens that people have wanted to open their own life all their life, but something has always stopped them from making the final decision. It could be a lack of sufficient resources, no time or just fear of the unknown. Why is it worth to open a company while being retired?
1. Financial security. Retirement, or permanent, monthly passive income, gives a sense of financial security. Even if the business will not generate income, you will still be financially secured. It is important to approach the opening of the business sensibly and with the head. Do not get involved in debts that can make you calm.
2. Free time. Retirement is also a lot of free time. Many people who finish their professional career feel fulfilled and lack new goals. This often causes addiction. Involvement in building a business can cause that strength and energy will return. The most demoralized man is a man without a goal. Running a company will be a new experience, and at the same time an opportunity to set new goals for yourself.
3. Financial possibilities. Young people have a problem with their own contribution. Pensioners are in a slightly better position because they usually have savings. I usually write because if someone relied only on ZUS and spent the rest of their earnings on consumption, now there is not much investment opportunities. Nevertheless, some retirees certainly have more financial capacity than young people. Using this money as a lever to expand your business can be a salvation before taking out loans.
The company is retired and ZUS
The greatest fear among pensioners is the issue of Social Security, and the question is exactly: if you open a business, ZUS will not take away your pension . This is an important topic, so let’s look at it carefully. It is a scandal to take people money that they have saved all their lives. A man should put money on his own in any place (deposits, real estate, precious metals, socks …) and then he could make a living without fear that someone will take away his life’s savings. In summary, the sooner we liquidate ZUS, the better for our children and grandchildren. Going to the heart, ZUS’s dependents depend on whether you have reached retirement age and on what title you receive money.
1. I have reached the retirement age or I am taking a pension from “uniforms”
In this situation, you have nothing to fear. If you run a company in retirement, you do not lose the right to benefits if you have exceeded the retirement age (60 years for women and 65 years for men) or you get a benefit from the so-called “uniforms”.
2. I am in early retirement (I have not reached retirement age)
The exception are people in early retirement. If the additional income of the person in early retirement exceeds 70% of the average monthly remuneration from the previous quarter announced by the Central Statistical Office, the state will reduce the retirement benefit (the average salary in the second quarter of 2018 amounted to PLN 4521.08). If, in turn, it exceeds 130% of the average monthly salary – the pension will be fully collected. 70% of the average monthly remuneration is as of today (November 2018) 3164.76 PLN, while 130% is 5877,40 PLN. What is important:
You should notify the Social Security Office that you have begun a gainful activity and declare the amount of income from which the contributions will be paid. It should be remembered that the pensioner has the right to declare – just like any other entrepreneur – the minimum possible basis for calculating social security contributions, and this is the income that ZUS will take into account.
The good news is that you do not have to pay social insurance contributions as a pensioner. If you want, you can apply for a voluntary pension and disability insurance. However, you can not apply for sickness insurance. By not joining social insurance for running a business, save a few hundred zlotys a month. However, health insurance will be necessary for you. An entrepreneur with the right to a retirement is subject to compulsory health insurance. In sum:
- pension insurance – VOLUNTARY,
- accident insurance – OBLIGATORY IF YOU ACCEPT PENSION INSURANCE INSURANCE,
- health insurance – OBLIGATORY,
- sick leave – NOT SUBJECT.
How much will you pay the health contribution?
You deduct 86% of health insurance premiums from income tax. In practice, it looks like you pay a health contribution of PLN 319.94 (as of 2018) and deduct PLN 275.15 from the amount of income tax that you paid, which is 86% from PLN 319.94 . So if you have to pay 300 zlotys in income tax, you will only pay him less than 25 zlotys.
Exemption from paying health insurance
There is one more wicket. Some retirees running their own business can take advantage of the health insurance premium. Health insurance does not pay for a pensioner, whose pension does not exceed the monthly minimum wage (in 2018 it is PLN 2,100), if additionally:
- revenues from operations will not exceed 50% of the amount of the lowest old-age pension (currently PLN 514.90, ie 50% of PLN 1,029.80) or
- pays income tax in the form of a tax card.
However, these are marginal situations. If you want to become completely independent of ZUS, consider setting up a limited liability company. You can read more about how to set up a company and when it pays off, read this article .
How to start a company in retirement?
Establishing a company (sole proprietorship) by a pensioner is carried out according to the standard procedure. An application for entry into the Central Register and Information on Economic Activity (CEIDG) should be submitted. You will do it in your Commune Office. At the same time, it is a notification to ZUS / KRUS, GUS and the head of the tax office. You can read about how to complete the CEiDG and other registration documents in a separate article . Additional documents needed to complete are:
- ZUS ZFA printing – registration of the contribution payer,
- ZUS ZUA printing – when you choose a voluntary pension and disability insurance,
- ZUS ZZA printing, when you only decide on compulsory health insurance.
Settlement of income from operations in the annual PIT return
The amount on which print you settle your operating income depends on the chosen form of taxation. You have general rules for the election (18% or 32% tax depending on the amount of income received), a registered tax or a flat tax (19%). If you choose the general rules, you settle your business income in the PIT-36 annual tax return, including income from retirement benefits. Only if you choose a linear form of taxation, you will settle these revenues separately using PIT-36L. By choosing a registered lump sum, you will settle for PIT-28.
These are tax and accounting issues that your accountant will explain to you exactly. Before starting a business, it is worth signing a contract with an accounting office. I recommend that I find accountants locally or use accounting and online consultancy. TAX Care specialists are not only able to handle the accounting firm, but also advise on the choice of the best form of taxation: link .
Where to get additional funds to open the company?
The best way to calm and maintain financial liquidity is to open the company from your own resources. By supporting your life and professional experience, which you probably have large, you can choose an activity where the threshold of entry is low. This means that you do not have to spend a lot of money to start. In case you need a larger amount, you can consider several options:
1. EU subsidy – as it turns out, EU funds from Regional Operational Programs (RPO) are also foreseen for pensioners. Not all, so check the terms first. In 2018, subsidies of this type were granted by The Upper Silesian Fund in Katowice and the Bytomska Agencja Rozwoju Inwestycji. Current competitions can be found on the European Funds Portal: funduszeuropejskie.gov.pl, in Provincial Labor Offices and in the Marshal’s Office.
2. Loan – the second form of raising capital and the first one that incurs costs. You need to repay 1 credit, 2 – pay more than it takes. No less is this option for people who do not have cash and will not get subsidies. Loans have different interest rates and repayment terms. You can read more about loans in this article .
3. Crowdfunding – an interesting way to get money for opening a business is a social gathering. If you have a business idea, you can ask the community (your future clients) to support your project in exchange for certain profits. For example, by collecting funds to open a gym, you can offer a monthly subscription for paying the money. Services on which you can collect money include polakpotrafi.pl and zrzutka.pl. It’s worth taking a look and observing successful examples of rebounds.
3. Other possibilities – besides subsidies and credits, the most popular forms of obtaining money, there are also other. These include contests for the “business idea”, business angels, venture capital funds.
Practical advice for pensioners opening a company
Do you already know if it is worth establishing a company as a pensioner, how to set up an activity, where to get additional funds and whether ZUS will not collect your pension. Other practical issues remain. It is worth knowing that from 2018 you can conduct so-called undeclared activities . Up to 1125 PLN of revenue per month, you can run a business without registration. This applies to activities for which you do not need to obtain licenses and permits (eg baking cakes is discontinued, because you need consent from Sanepidu). Undeclared activity is a great opportunity to test the business. You can learn about other forms of business testing by reading the article How to test the business idea .
People opening a business are trying to write a business plan. A business plan is useful not only when applying for a loan or subsidy, but also when checking whether the idea actually has a chance for success. Be sure to read an article on how to write a business plan , where you will learn about different options and additional advice when opening a business.
Remember that opening a business is worth having a bank account. It is worth opening a separate account to conduct business matters, the company account in Nest Bank is 100% free. I wish you luck in running a business and I encourage you to follow my blog!