What Are The Biggest Difficulties In Running A Business

25 Apr

Running a business in Poland is not the easiest one. This is confirmed by numerous surveys and surveys conducted among entrepreneurs, as well as analyzes comparing the conditions of conducting business in different countries. The most frequently mentioned problems of Polish companies are related to finances and the legal system.

Financial difficulties of Polish enterprises

Financial difficulties of Polish enterprises

In the sphere of finance, most enterprises as a barrier to running a business point to excessive burdens related to Social Security, difficulties in obtaining a loan and payment delays.

1) High contributions to ZUS

Excessive burdens due to ZUS contributions are the most frequently indicated barrier in running a business. At present, the sum of contributions that a trader must pay each month is PLN 1034, 08. A particularly raised issue is the fact that there is no dependence of the premium on the entrepreneur’s income. This means that no matter how much the entrepreneur earns in a given month, he must pay premiums in a fixed amount. In the case of small companies, this obligation is sometimes lethal and often ends with ceasing operations. The only convenience offered to Polish entrepreneurs in this area is the reduced value of premiums for new companies, which are valid for the first two years of operation.

2) Difficulties in obtaining a loan from a bank

Each company needs additional resources to develop or cover ongoing liabilities. Unfortunately, banks have tightened the terms of granting loans to companies, especially those that either operate too short on the market or are unable to provide strong financial documents that show creditworthiness or offer good collateral. Particularly small and start-up businesses are particularly disadvantaged. An additional obstacle to access to banking sources of financing are complicated procedures for applying for a loan.

3) Payment bottlenecks

The use of trade credit, i.e. the sale of goods and services with deferred payment, is a standard in today’s business. However, more and more companies exceed these deadlines, which results in payment delays. According to the BIG Report, more than 60% of small and medium-sized enterprises are struggling with this problem, and the phenomenon of late payment of liabilities is systematically deepening. Payment bottlenecks are very dangerous as they worsen financial liquidity of enterprises, which in extreme cases may result in bankruptcy.

Problems with the legal system and bureaucracy

Problems with the legal system and bureaucracy

1) Complicated tax system

According to the World Bank and PwC report “Paying Taxes 2015”, Poland ranks 87th in the ranking assessing the complexity of the tax system. Similarly, the system is evaluated by Polish entrepreneurs, for whom it is over-regulated, not transparent, often inconsistent and unstable. Constant changes in regulations and too late information of taxpayers about changes make it difficult to conduct business. Entrepreneurs are also afraid of the interpretation of the law by tax officials who too often are issued to the detriment of the taxpayer.

2) Bureaucracy

Although the government systematically introduces changes to reduce bureaucracy, the Polish entrepreneur still has to fill in piles of forms and documents, and too often contact many offices and institutions.

3) Insufficient justice

Courts in Poland operate very slowly, which is especially visible in disputable cases, which duration is counted in years. In addition to protracted proceedings, mistakes and mistakes made by prosecutors and judges, which have already led many a company to fail, are more and more frequent.

The above-mentioned difficulties that companies in Poland have to deal with largely depend on the applicable procedures and regulations and are systematically raised by both experts and politicians. The latter before each election promise to improve the situation and change unfavorable legal regulations, but in the end, not many of these promises succeed. It remains to be hoped that the resourcefulness and determination of Polish entrepreneurs will not discourage them from doing business, while subsequent ruling teams will pay more attention to their problems and needs.

 

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