In short

• Costs of obtaining revenue (koszty uzyskania przychodu) in a sole proprietorship (JDG) are expenses incurred in connection with the business and documented with an accounting document.
• Mixed expenses, such as a car or a phone, are deducted only in the part attributable to the business.
• Private and representation expenses that do not meet the conditions are not costs, and under a flat-rate tax, costs are not deducted individually.

What costs of obtaining revenue are

Costs of obtaining revenue are expenses that an entrepreneur may deduct from revenue before calculating the tax base. For an expense to be recognized, it must be incurred in connection with running the business and serve to generate revenue or maintain the source of revenue (Co można wrzucić w koszty działalności jako JDG? – money.pl). Not every purchase invoice automatically reduces tax, and entrepreneurs often make the mistake of counting private expenses as costs.

What expenses typically fall within costs

Typical costs of a JDG include, among others, rent for premises used for the business, utilities for those premises, materials and goods needed for sales, accounting services, bank fees for a business account, software, and insurance premiums and fees related to running the business. Some expenses, such as computer equipment or machinery, are settled through depreciation rather than all at once (Co można wliczyć w koszty jednoosobowej działalności gospodarczej? – podatki.egospodarka.pl).

For mixed expenses, such as a phone, internet, or car, the principle of proportionality applies. Only the part attributable to business purposes can be deducted, and the entrepreneur should have a way to document it, for example a vehicle mileage log.

What is not included in costs

Personal expenses, fines and penalties, and expenses not documented with an invoice or another accounting document cannot be counted as costs. Representation expenses and expenses for the owner's private needs, such as grocery shopping or holiday trips, remain outside costs, even if someone tries to attribute them to the business. The tax authority challenges such deductions during audits, and the difference in tax is accompanied by interest.

How the choice of tax form changes the settlement

Under the linear tax and the tax scale, the entrepreneur deducts actual costs and keeps a revenue and expense ledger (księga przychodów i rozchodów) or full accounting. Under the flat-rate tax on recorded revenue (ryczałt od przychodów ewidencjonowanych), costs are not deducted individually, because tax is calculated on revenue at a rate depending on the type of activity. Therefore the question about costs matters mainly for those settling under the general rules.

Documentation without which a cost will not pass

Every cost requires evidence: an invoice, a receipt, or another document confirming the expense and its connection with the business. It is worth noting the purpose of the expense on the document, especially for mixed purchases. Documents must be kept for the required period, and costs should be recorded in the period in which they were incurred. This helps avoid disputes during an audit.

Most common mistakes

Most often, entrepreneurs count private purchases as costs, skip proportions for mixed expenses, and do not keep a vehicle mileage log. Another frequent problem is the lack of an invoice for an expense, because a receipt without the buyer's details often is not sufficient. When in doubt, it is worth consulting a tax advisor or accountant before the deduction goes into the return.

Frequently asked questions

Can I count the purchase of a car for the company as a cost?

A passenger car can be settled only to a limited extent. For expenses related to the vehicle and its use in the business, a mileage log is required, and the deduction concerns the part attributable to the business.

Are food expenses a cost?

Generally not. Food expenses, especially private ones, are not a cost of obtaining revenue, and deducting representation requires meeting strict conditions.

Can I deduct costs under the flat-rate tax?

Under the flat-rate tax on recorded revenue, individual costs are not subtracted, because tax is paid on revenue at the flat-rate rate.

Is a receipt enough as proof?

If a receipt does not contain the buyer's details and is not an invoice, it often is not sufficient for a deduction. It is better to ask for an invoice made out to the company.