How to assign an individual business to a family member?

Date: 06.10.2015 / Marcin Szołajski

It is difficult to clearly estimate how many people are engaged in conducting individual businesses (self-employment). Certainly, this is a very large group, and according to various reports and data, in Poland there are two million self-employed entrepreneurs.

However, a few of them probably wonder if, when and how to assign their business to their children, wives or other family members, i.e. succession?

Methods of individual business succession

We should note that there are three main methods of assigning a business conducted in the form of self-employment.

The first method involves concluding an agreement with the successor (e.g. children) on the sale of the business. If one of the assets of such business is real estate, the agreement has to be concluded in notarial deed form. Otherwise, a standard agreement would be sufficient.

Another option is donation of the business. The donor and the donee make individual statements before a notary public, and thus execute a free-of-charge transfer of a benefit to the donee.

The last and the least known method of succession is inheritance: statutory or testamentary – provided that the testator has prepared his/her last will. What is important here is the fact that the succession is only effective upon the death of the testator, and thus, he/she may run the business throughout his/her life.

What is the most efficient method of succession?

Undoubtedly, each entrepreneur wants his/her business to operate, develop and generate profits for as long as possible. The above options allow for taking care of the future of the family and the business itself before the death of the entrepreneur. Of course, they do not guarantee the continuation of the business in the coming years, but significantly reduce the risk of its bankruptcy once its founder has ceased managing it.

My personal recommendation is succession by disposal or donation. Such methods guarantee the execution of the will of the entrepreneur, in terms of succession, without any disputes. On the other hand, in the case of inheritance, there may be disputes between individual successors.

Furthermore, in the case of failure to prepare or improper preparation of the succession process, after the death of the business owner, there may be significant obstacles to the further existence of the business.


Marcin Szołajski

Legal counsel, CEO

Marcin specialises in advising on acquisition and implementation of public contracts: analysis of tender documentation, assistance in the preparation of bids, participating in negotiating o the contract with the Contracting Authority, and participating in the contract implementation process. He guides clients through the appeal procedure before the National Board of Appeal and Regional Courts. Read more