What is suspension of business activity?
Suspension of business activity is a formal legal status in which an entrepreneur temporarily stops conducting ongoing business operations without closing the business permanently. In Poland, this mechanism is regulated primarily by the Act of 6 March 2018 – Entrepreneurs’ Law, in particular Articles 22-25. It is available to entrepreneurs who meet statutory conditions, including, as a rule, the condition of not employing employees at the time of suspension, subject to statutory exceptions concerning employees on certain protected leaves.
Suspension does not remove the entrepreneur from the relevant register. A sole proprietor remains entered in CEIDG, while a company remains registered in the National Court Register (KRS). The purpose of suspension is to allow a temporary pause in active operations while preserving the legal existence of the business, contracts, assets, permits, accounting continuity and the possibility of resuming activity later.
In practical terms, suspension is not the same as liquidation, bankruptcy or restructuring. It is usually used when the business is inactive for economic, organisational, seasonal, personal or strategic reasons. During suspension, the entrepreneur may not conduct current business activity or generate revenue from such current activity, but may perform certain actions allowed by law, including actions necessary to preserve or secure the source of income.
What does suspension of business activity involve?
The scope and procedure depend on the legal form of the entrepreneur. A sole proprietor generally files the suspension through CEIDG. Commercial companies and other entities entered in KRS usually file the relevant application to the register. Under Articles 23 and 24 of the Entrepreneurs’ Law, a sole proprietor entered in CEIDG may suspend business for an indefinite or fixed period, but not for less than 30 days. An entrepreneur entered in KRS may suspend business for a period from 30 days to 24 months.
During suspension, the entrepreneur cannot carry out regular commercial operations, issue invoices for new current business activity, actively provide services or sell goods as part of ordinary operations. However, Article 25 of the Entrepreneurs’ Law permits specific protective and administrative actions. These may include accepting receivables and paying liabilities that arose before suspension, selling own fixed assets and equipment, participating in court, tax or administrative proceedings, fulfilling statutory obligations, earning financial income and undergoing inspections.
Suspension may also affect tax, accounting and social security obligations. In many cases, it limits the obligation to pay current social security contributions, but the exact effect depends on the entrepreneur’s status, insurance title and applicable rules under social security regulations. VAT, income tax, accounting records and reporting obligations should also be reviewed separately. For example, a suspended business may still need to file certain returns or settle transactions connected with the period before suspension.
For companies, suspension often requires an internal corporate decision, verification of representation rules, preparation of registry documents and assessment of ongoing contracts. The management board should also consider whether suspension is consistent with duties owed to the company, creditors and contracting parties. If the company is insolvent or at risk of insolvency, suspension is not a substitute for bankruptcy or restructuring analysis.
When is it worth seeking legal assistance with suspension of business activity?
Legal assistance is useful when the entrepreneur wants to confirm whether suspension is permitted, how long it may last, what documents are required and what legal consequences it will have. This is particularly important for companies with ongoing contracts, leases, financing agreements, employees on protected leave, licences, public grants, regulated activity or pending disputes.
Private individuals conducting sole proprietorships may need support if they are suspending business due to illness, maternity or parental responsibilities, relocation, seasonal activity, temporary loss of clients or a planned change in business model. Entrepreneurs should verify whether suspension affects ZUS, VAT, income tax advances, lease agreements, service contracts, leasing, bank financing or obligations towards business partners.
Companies may need a broader review. Suspension can interact with management board liability, contractual default clauses, public procurement commitments, tax reporting, accounting duties, beneficial owner filings, data retention, intellectual property licences and employment issues. A formal pause in operations should not create accidental breaches of contract or regulatory obligations.
A quick consultation with a lawyer before filing for suspension can help avoid procedural errors, ineffective filings, missed deadlines, contractual disputes, tax exposure or unnecessary financial losses. It can also help determine whether suspension is the right solution or whether another legal path, such as restructuring, liquidation, sale of the business, amendment of contracts or temporary operational limitation, would be safer.
Law firm support in matters relating to suspension of business activity
Support in this area may include both the formal registration process and a wider legal assessment of the consequences of suspending operations. The key objective is to ensure that the business is paused lawfully, without creating avoidable risks for the entrepreneur, management board or company.
Legal support in relation to suspension of business activity includes in particular:
- assessment of whether the entrepreneur meets statutory conditions for suspension,
- preparation of CEIDG or KRS filings and supporting corporate documents,
- review of contracts, leases, financing documents and regulatory obligations,
- analysis of permitted activities during the suspension period,
- coordination of suspension with tax, accounting and social security obligations,
- advice on management board duties and liability risks,
- support in communication with contractors, creditors and public authorities,
- planning the resumption of business activity or choosing an alternative legal solution.
Need legal assistance with suspension of business activity? Contact us.