In business, working with individuals under contracts of mandate (umowa zlecenia) has become common practice, especially in seasonal and project-based industries. Business owners often receive a large number of bills (rachunki) from different contractors within a short time, which can create a temptation to simplify the records by entering pay costs collectively. But is this approach in line with the rules on keeping the KPiR (tax revenue and expense ledger, in full PKPiR)? We enter contractors' bills in the KPiR for clients who use our accounting services.
Recording contract of mandate costs correctly in the KPiR requires following detailed rules set out in tax law. Keeping incorrect records can have negative consequences during a tax audit, including the tax-deductible costs being challenged. That is why every business owner who uses contractors should know the rules for recording these costs well.
Basic rules for keeping the KPiR
The tax revenue and expense ledger is the basic record for business owners taxed under the tax scale (12% and 32%) or the flat 19% tax (podatek liniowy). From 1 January 2026, the way the ledger is kept is set out in the Regulation of the Minister of Finance and Economy of 6 September 2025 on keeping the tax revenue and expense ledger (Journal of Laws, Dz.U. 2025 item 1299), which specifies both the formal requirements and the practical rules for recording business transactions.
The regulation does not provide for a choice of recording method. Sales revenue documented by invoices or fiscal reports, as well as other revenue, is entered no later than the 20th day of the month following the month in which it was earned (§ 11(2) and § 14). Expenses are entered according to the rules for deducting costs set out in the PIT Act (§ 10 and § 15)
The taxpayer must keep the ledger reliably and correctly, and all entries must be made in Polish and in Polish currency (§ 4 and § 6(1) of the regulation). A fundamental rule is that entries are made only on the basis of accounting documents that meet the requirements of the regulation.
The detailed conditions for keeping the KPiR cover not only the technical side of the records but also the scope of obligations related to documenting business transactions. Every entry in the ledger must be supported by an appropriate source document, which is the basis for verifying that tax settlements are correct.
Accounting documents in the KPiR
Keeping the tax revenue and expense ledger correctly is based on the appropriate accounting documents, the list of which is precisely set out in secondary legislation. Knowing this list is essential for documenting all business transactions correctly, including costs related to contracts of mandate.
The basic accounting documents on which KPiR entries are made are, above all, invoices, VAT RR invoices, bills and customs documents (§ 6(3) of the regulation). These documents are the foundation of the records and must meet certain formal requirements to serve as the basis for recognising tax-deductible costs.
Pay under contracts of mandate is entered in column 14 of the KPiR (pay in cash and in kind) on the basis of a payroll list or other documents on which the contractor confirms receipt of the pay with their signature (e.g. a bill), and, for bank transfers, on the basis of proof that the pay was transferred to the account (explanatory note 12 to the ledger template). Until 2025 this was column 12
Additional accounting documents are accounting notes, proofs of postal and bank charges and other proofs of payment (§ 7 of the regulation). Accounting notes are used to correct entries concerning business transactions. The regulation in force from 2026 no longer lists daily summaries of documents (under the previous regulation they concerned sales invoices only) or transfer documents.
Internal documents are a special category: they may be prepared in certain situations, but their use is strictly limited by the rules. Proofs of postal and bank charges document costs related to running the business and are an important part of cost records.
Rules for recording contract of mandate costs
Costs related to contracts of mandate are a significant item in the expenses of many business owners, especially those in service industries. Recording these costs correctly in the tax revenue and expense ledger requires following detailed rules set out in tax law.
The basis for entering contract of mandate costs in the KPiR is the bills issued by individual contractors or a payroll list on which contractors sign for their pay, and, for bank transfers, proof that the pay was transferred. These documents must meet certain formal requirements and contain all the information needed to identify the business transaction and its value correctly. Pay under a contract of mandate becomes a cost only once it has been paid out or made available (Article 23(1)(55) of the PIT Act) - the rule of "the month for which it is due" in Article 22(6ba) applies to employees' pay. Similar questions about accounting evidence arise with purchases, for example whether a WZ note can replace an invoice.
A bill issued by a contractor can be entered in the KPiR as a separate entry or - together with other pay - as one entry on the basis of a payroll list. Making collective entries on the basis of internal documents for contract of mandate costs is not compliant with the rules in force
In practice, business owners often receive a large number of bills from different contractors in certain periods, especially in season. This may apply, for example, to event companies, marketing agencies or construction businesses that use subcontractors.
Recording each bill separately can be time-consuming, but the rules allow an entry based on a bill or other proof of payment, or based on a payroll list covering many payments. Attempts to simplify the records by entering costs collectively on an internal document may have negative consequences during a tax audit.
Limits on internal documents
Internal documents are a special category of accounting documents, and their use is strictly limited by the regulation of the Minister of Finance and Economy. Although they may be used to document certain types of business transactions, their scope does not cover costs related to contracts of mandate.
Under the rules in force, internal documents may be prepared only for strictly defined categories of expenses. This list is closed and cannot be interpreted broadly, which means it cannot be applied to other types of costs.
Internal documents may concern only the categories of expenses listed in the rules, such as purchases of agricultural products from producers, court and notary fees, business travel allowances or utility charges (§ 8(2) of the regulation). Pay under contracts of mandate is not on this list
Expenses that may be documented with internal documents include, among others:
- Purchases of plant and animal products directly from domestic producers
- Purchases of medicinal herb raw materials and wild herbs from the public
- The value of products from the taxpayer's own crops or livestock
- Court and notary fees
- Allowances and other amounts due for business travel
- Expenses for rent, electricity, telephone and other utilities in the part attributable to the business
Each of these categories has its own detailed requirements and limits that must be followed when preparing internal documents. Using this type of document for other categories of costs is not compliant with the rules.
Consequences of recording costs incorrectly
Keeping incorrect records of contract of mandate costs in the KPiR can have serious consequences for a business owner. A tax audit may challenge costs recorded in breach of the rules, which may lead to having to pay additional tax with interest.
Making collective entries for contract of mandate costs on the basis of internal documents not only breaches the regulation but can also make it much harder to verify expenses during an audit. If individual costs cannot be clearly linked to specific business transactions, this may be grounds for challenging them.
Having costs challenged during a tax audit may mean paying additional tax with late-payment interest. Penalties for keeping the records incorrectly may also be imposed (Articles 60 and 61 of the Fiscal Penal Code)
Keeping proper records of contract of mandate costs requires systematically entering every bill - separately or as part of a payroll list - in the KPiR. Although this may take more time than a collective entry on an internal document, it reduces the risk of the costs being challenged and makes tax settlements easier. As revenue grows, you also need to keep an eye on the threshold for switching to full accounting.
It is also worth remembering that proper records make internal control and cost management in the business easier. Recording individual bills in detail allows a better analysis of the cost structure and helps identify areas that need improvement.
Practical aspects of record-keeping
In practice, business owners often struggle to record a large number of contractors' bills efficiently. This applies especially to seasonal or project-based industries, where the number of contractors grows significantly in certain periods.
Examples of such industries include event services, where business owners use many freelancers during the wedding or conference season. The situation is similar in construction, where different stages of projects require various specialists working under contracts of mandate.
Business owners in seasonal industries often receive dozens of bills from contractors within a short time. Each of these bills must appear in the KPiR - as a separate entry or as part of a payroll list - regardless of how many there are in a given period
To make record-keeping more efficient, business owners can introduce systematic organisational procedures. These include:
- Introducing a numbering system for bills for easier identification
- Keeping a register of contractors with their basic details
- Setting dates for settling accounts with contractors
- Organising documents chronologically or by subject
- Making KPiR entries regularly, within the deadlines set by the rules
A systematic approach to recording contract of mandate costs not only ensures compliance with the rules but also makes day-to-day financial management of the business easier. It allows better control of the level and structure of costs.
Practical examples from different industries
To illustrate the rules for recording contract of mandate costs in the KPiR, it is worth looking at specific examples from different industries. Each has its own specific features, but the record-keeping rules stay the same.
In photography, especially in the wedding season, photographers often use additional specialists. These may be retouchers, drone operators, additional photographers or assistants. Each of them works under a separate contract of mandate and issues a separate bill when the job is finished.
In July, a wedding photographer covered 8 weddings, using 2-3 additional specialists at each. In total, he received 18 bills from different contractors. Although all of them concerned the same business, he could not replace them with one internal document - each bill had to go into the KPiR as a separate entry or as part of a payroll list signed by the contractors.
The situation is similar in the events industry. Event organisers use many specialists: decorators, technical staff, artists and caterers working under contracts of mandate. Each larger event can generate a dozen or more bills from different contractors.
The IT industry also often uses freelancers. Programmers, graphic designers, testers and copywriters often work under contracts of mandate, issuing bills after individual stages of a project are completed.
Regardless of the industry and the number of bills received, every document from a contractor must be entered in the KPiR - as a separate entry or as part of a payroll list. They cannot be entered collectively on the basis of an internal document
Alternative organisational solutions
Although the rules do not allow contract of mandate costs to be entered collectively in the KPiR on the basis of an internal document, business owners can introduce various organisational solutions to make managing these costs easier. The key is to find a balance between efficient processes and compliance with the rules in force.
One solution may be a system of periodic settlements with contractors. Instead of settling each job separately, you can set fixed settlement dates, for example every two weeks or at the end of the month. This allows better planning of cash flows and organisation of office work.
Another approach is to standardise the processes for working with contractors. Introducing uniform templates for contracts, bills and settlement procedures can significantly streamline record-keeping. Contractors receive clear guidelines on how to issue bills, which makes processing them easier later on.
| Solution | Advantages | Disadvantages | Compliance with the rules |
|---|---|---|---|
| Periodic settlements | Better financial planning | Delay in recording | Yes, if deadlines are met |
| Standardised documents | Uniform processes | Training required | Yes, fully compliant |
| Numbering of bills | Easier identification | Additional duties | Yes, without restrictions |
| Electronic records | Faster processes | Implementation costs | Yes, in line with the rules |
It is also worth considering IT tools for document management and automation of accounting processes. Modern accounting systems offer functions that make it easier to enter and categorise a large number of documents, which can significantly speed up record-keeping.
Tax audit and verification of costs
During a tax audit, the authorities pay particular attention to whether tax-deductible costs, including costs related to contracts of mandate, have been recorded correctly. Incorrect records may be grounds for challenging all or part of the costs, which means having to pay additional tax.
Auditors check not only whether incurring the costs was justified on the merits but also the formal and legal side of how they were recorded. Cases where costs were recorded in a way that departs from standard accounting procedures are analysed especially closely.
During a tax audit, the authorities check whether cost records comply with the rules in force. Entering contract of mandate costs collectively on the basis of internal documents may be grounds for challenging those costs
Keeping proper records of contract of mandate costs requires not only meeting the formal requirements but also keeping the entries logically consistent. Every cost must be identifiable and linkable to a specific business transaction and the relevant source document.
If the audit authority challenges the costs, the taxpayer has the right to submit explanations and present additional evidence. However, the best protection is to keep the records in line with the rules from the very beginning.
Remember that the consequences of recording costs incorrectly can be financially significant. In addition to paying extra tax, late-payment interest is charged, and in some cases further penalties may be imposed.
