Setting up and running a Limited Liability Company (LLC), or Spółka z ograniczoną odpowiedzialnością (Sp. z o.o.), in Poland comes with various financial and legal responsibilities. One of the most important aspects for any LLC is understanding and adhering to Polish accounting standards to ensure compliance and transparent financial reporting. For more information please visit Accounting for LLCs in Poland

This article provides a comprehensive overview of Polish accounting standards relevant to LLCs, key compliance obligations, and reporting requirements that businesses must follow.

1. Overview of Polish Accounting Standards

In Poland, accounting practices are governed primarily by the Accounting Act of 29 September 1994 (Ustawa o rachunkowości), which sets out the general rules for bookkeeping, financial reporting, and audit procedures.

  • The Accounting Act applies to all entities, including LLCs, with specific provisions tailored based on company size and activities.
  • The Act is aligned with International Financial Reporting Standards (IFRS) to a degree, especially for publicly listed companies, but private LLCs generally follow Polish Generally Accepted Accounting Principles (GAAP).
  • The Polish Accounting Standards Committee (Komitet Standardów Rachunkowości) issues detailed guidance on applying these standards.

2. Who Must Keep Accounting Records?

  • LLCs in Poland are required to maintain full accounting records, including double-entry bookkeeping.
  • Sole proprietors and small partnerships may have simplified reporting, but LLCs, due to their legal structure and shareholder obligations, must adhere to full accounting standards.
  • This includes maintaining documentation for all financial transactions, assets, liabilities, and equity.

3. Key Accounting Compliance Obligations for LLCs

a. Bookkeeping and Records

  • LLCs must keep accounting books in Polish currency (Polish złoty, PLN).
  • All financial transactions must be recorded chronologically and systematically.
  • Records should be kept for a minimum of 5 years after the end of the fiscal year.

b. Chart of Accounts

  • LLCs should use a standardized chart of accounts, which categorizes assets, liabilities, revenues, and expenses.
  • The chart must comply with the Polish Accounting Act and relevant guidelines.

c. Valuation and Asset Recognition

  • Assets and liabilities should be valued according to cost, fair value, or market value as applicable.
  • Depreciation and amortization methods must follow the rules set by tax regulations and accounting standards.

d. Tax Accounting

  • Accounting records must facilitate proper tax calculation for corporate income tax (CIT), VAT, and other applicable taxes.
  • Tax accounting principles influence how certain transactions are recorded and reported.

4. Financial Reporting Requirements

LLCs are obliged to prepare and submit annual financial statements, which generally include:

  • Balance Sheet (Bilans) – summarizing the company’s financial position.
  • Profit and Loss Account (Rachunek zysków i strat) – showing revenue and expenses.
  • Cash Flow Statement (in some cases).
  • Notes to the Financial Statements – providing additional details on accounting policies and figures.

Deadlines and Submission

  • The financial year in Poland typically aligns with the calendar year (1 January to 31 December), but LLCs can choose a different fiscal year.
  • Annual financial statements must be prepared within 3 months after the end of the fiscal year.
  • LLCs must submit their financial statements to the National Court Register (KRS) within 15 days after their approval by the shareholders’ meeting but no later than 6 months after the fiscal year ends.

5. Audit Obligations

  • LLCs are subject to statutory audit requirements if they exceed certain thresholds related to total assets, revenues, or the number of employees.
  • If required, financial statements must be audited by a certified auditor before submission.

6. Electronic Accounting and Reporting

  • Increasingly, Polish accounting regulations support electronic bookkeeping and reporting.
  • Many LLCs use professional accounting software aligned with Polish standards.
  • Reports submitted to tax authorities and the KRS can often be filed electronically.

7. Penalties for Non-Compliance

Failure to comply with accounting and reporting standards can result in:

  • Administrative fines
  • Penalties from tax authorities
  • Legal action from shareholders or creditors
  • Increased scrutiny in audits

Maintaining accurate, transparent, and timely accounting records is thus essential.

Conclusion

For LLCs operating in Poland, understanding and adhering to Polish accounting standards is crucial for legal compliance, effective management, and building trust with investors and partners. The Accounting Act, combined with detailed Polish GAAP rules, ensures that LLCs maintain transparent financial records and fulfill reporting requirements.