Generating cost of revenue in 2026

Generating cost of revenue in 2026 requires a strategic approach and knowledge of current tax regulations. Entrepreneurs conducting business activities can significantly reduce the amount of income tax by consciously planning business expenses and maximizing costs that qualify for deduction.

Tax optimization through cost generation is a legal method of reducing the tax base, which when properly applied can translate into thousands of zlotys in savings annually.

What this guide includes

This guide focuses on practical methods of generating costs within conducted business activities, proper expense documentation, and strategic planning of business purchases. It does NOT include gray areas or illegal tax practices.

Who is this guide for

This guide is intended for entrepreneurs conducting sole proprietorship, small businesses, and enterprises under general rules seeking legal tax optimization. It will be particularly useful for those conducting sole proprietorship who want to better understand the costs associated with its operation, such as social security contributions, taxes, startup costs, expense tracking, and formal obligations. Regardless of whether you pay tax on a progressive or flat tax basis, you will find specific solutions here.

Why this matters

Proper generation of cost of revenue and income management directly affects the company's financial results, tax settlements, income tax amount, health insurance contributions, and social security contributions in case of exceeding specified revenue thresholds. High costs can reduce the company's income, but at the same time indicate business development and can positively affect the company's financial credibility assessment and tax settlements. In 2025, changes in tax regulations introduce new opportunities and limitations that entrepreneurs must take into account in their strategy.

What you will learn:

• Basic principles of qualifying expenses as cost of revenue in 2026

• Categories of business costs with the greatest optimization potential

• Step-by-step procedure for planning and documenting expenses

• Using integration events and incentive trips to generate costs

• Solutions to the most common cost settlement problems

Basics of generating cost of revenue in 2026

Cost of revenue is the expenses incurred to achieve income or maintain or secure the source of recorded income.

In practice, this means that any expense directly or indirectly serving the conducted business activity can be classified as cost of revenue, provided it meets certain legal criteria. VAT taxpayers have the ability to deduct VAT from business expenses, which leads to a reduction in the tax to be paid.

For an entrepreneur, generating costs is a key element of tax optimization - the higher the costs, the lower the tax base and the smaller the income tax. Costs in a company should be planned so they bring real tax benefits.

Rules for qualifying expenses as costs

The basic principle is the connection of the expense with the conducted business activity and its economic rationality – expenses must be necessary for conducting business. This connects with the basis of costs, because without a clear connection with activities, no expense can be recognized as cost of revenue, regardless of its amount or form of documentation. The method of classifying costs also depends on the type of entrepreneur's activity.

Obligation to document expenses

Each cost of revenue must be properly documented through invoices, receipts, or other accounting documents in accordance with tax regulations. These documents should include the net amount, which is particularly important when settling VAT and properly deducting tax. Building on the principles of qualification, documentation is the foundation of cost defensibility against tax authority inspection - without proper documents, even justified expenses can be questioned.

Transition: Knowing the basic principles, we can move on to specific expense categories offering the greatest opportunities for generating costs in 2026.

Categories of costs to generate in 2026

Strategic planning of business expenses requires identifying areas with the greatest tax potential while maintaining economic rationality and compliance with conducted business activities. In practice, most companies need basic electronic equipment and office costs that support daily business operations.

Expenses for equipment and office equipment

The purchase of computer equipment, printers, office furniture, or software is one of the most effective forms of generating costs. All technical terms related to IT equipment (hardware, software, licenses) qualify as consumable materials or fixed assets depending on their value and period of use. Office rental costs and VAT on business purchases can also be deducted as cost of revenue.

Operating and administrative costs

Monthly costs of conducting business activities include not only utilities, internet, telephone, insurance and accounting services, but also fees, social security contributions, and health insurance contributions – all these expenses form the basis of daily business operations. Unlike one-time investments, operating costs generate a steady stream of deductions throughout the entire tax year.

Expenses for development and marketing

Investments in training, courses, website positioning, promotional materials, and marketing costs directly support business development and revenue increase. These expense categories often offer the highest return coefficient in the form of increased income while reducing the tax base. It's worth generating costs in these categories because they allow deducting expenses from the tax base.

Key Points:

• All expenses must be rationally justified by the type of activity

• Expense documentation should be complete and comply with VAT regulations

• Cost planning should take into account the chosen form of taxation

Transition: Theoretical knowledge of cost categories needs to be supplemented with a practical procedure for their implementation.

Step by step: How to generate costs in practice

Effective cost generation in a sole proprietorship or larger structure requires a systematic approach based on prior analysis of business needs and financial capabilities. Proper cost settlement requires knowledge of current regulations.

If you want to check which expenses can be deducted as costs, it's worth consulting with a tax advisor.

Procedure for generating business costs

When to use this: This procedure works well for entrepreneurs planning tax optimization at year-end and businesses starting operations.

1. Analysis of business needs: Determine the company's actual needs in terms of equipment, services, and materials for the upcoming settlement period

2. Identification of qualifying costs: Analyze which planned expenses can be classified as cost of revenue in accordance with tax regulations. Remember that the ability to deduct expenses from cost of revenue depends on the chosen form of taxation.

3. Development of schedule: Plan the timing of expense implementation taking into account cash flow and annual settlement requirements

4. Execution of purchases: Execute planned expenses while maintaining proper documentation rules and compliance with employment obligations

5. Cost recording: Enter all invoices into accounting records with appropriate classification by type of cost

6. Control and verification: Conduct final verification of the correctness of cost settlement before submitting a tax return

Comparison: Generating costs vs. Natural business activity costs

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Generating costs requires greater documentation precision, but offers the possibility of significant tax reduction in a specific settlement period, while natural business activity costs provide stability and predictability.

Transition: Particularly effective forms of cost generation are expenses for integration and motivation purposes for the team.

Team-building events and incentive trips as business expenses

Organization of integration events and motivational trips is one of the most effective methods of combining business objectives with tax optimization, provided they are properly planned and documented showing their connection to conducted business activities. For example, the costs of such an event can be settled proportionally to the number of participants or type of event, which allows better matching expenses to the specifics of the company and its needs.

Integration events for the team

Companies increasingly use integration events as a way to create justified costs of revenue while building organizational culture. The costs of hall rental, catering, conducting team workshops, and training materials can be fully deducted as business expenses if the main purpose of the event is to develop employee competencies or strengthen team cooperation.

In 2026, the limits and rules for settling business event costs remain stable - the key is documenting the business objectives of the event and maintaining proportionality of expenses to the scale of activities. Most companies organize 2-4 integration events annually, generating costs from several to tens of thousands of zlotys monthly in periods of intensive activity.

Documentation required for events includes invoices from service providers, participant lists with personal data, detailed event program showing business elements, and a summary report of achieved objectives. Such documentation allows defending expenses against potential tax authority inspection and proving their connection to business activity.

Motivational and training trips

Using incentive trips as a way to generate costs requires even greater precision in planning and documentation than standard integration events. Costs of transport, accommodation, food, and program can reach significant amounts, but their qualification as cost of revenue depends on the proportion between business and recreational elements.

The difference between training trips and tourist trips in tax context is fundamental - the trip must have a predominant business character with clearly defined training, workshop, or strategic objectives. In practice, this means that minimum 70% of the time should be devoted to activities directly related to competency development or business planning.

Planning business trips with cost optimization in mind should include choosing a location with justified business value, inviting external experts conducting training, and developing measurable results from conducted activities. Technology companies often organize integration-training trips for project teams, generating costs from 15 to 50 thousand zlotys per event.

Practical guidelines for organizing events

Combining business objectives with cost generation when organizing events requires a strategic approach already at the planning stage. Each event should have clearly formulated business objectives - from implementing new procedures, through team integration, to transferring industry knowledge. These objectives must be documented before the event and verified after its completion.

Documenting business objectives of events and trips should include detailed briefings for participants, agendas divided into business and integration elements, workshop protocols, and evaluation surveys measuring achievement of assumed results. Such documentation is the basis for defending expenses against tax authorities.

It is crucial to avoid classifying events as personal benefits for employees - all program elements must serve company objectives, and any recreational elements should be secondary and constitute no more than 30% of the entire program. An employee may have benefited from the event, but the main beneficiary must be the organization's business objectives.

Transition: Even the best planned cost generation may encounter practical challenges requiring specific solutions.

Most common challenges and solutions

Practice of generating costs in companies of all sizes is associated with typical problems that with proper approach can be effectively resolved and avoid tax complications.

Challenge 1: Insufficient documentation

Solution: Implementation of an electronic record-keeping system with automatic archiving of all invoices and documents related to business costs.

Most documentation problems result from lack of systematicity - an electronic storage system with proper categorization helps avoid document loss and facilitates their finding during inspections.

Challenge 2: Exceeding the limits of expense rationality

Solution: Conducting an analysis of cost proportionality to revenue and benchmarking with other companies in the industry.

Tax authorities pay particular attention to expenses that seem disproportionate to the scale of activities - regular analysis of cost structure helps maintain expenses within reasonable limits.

Challenge 3: Tax authority inspection and questioning of costs

Solution: Proactive documentation of business objectives for all major expenses and regular consultations with a tax advisor.

The best defense against questioning costs is their solid business justification documented even before incurring the expense.

Transition: Understanding challenges and solutions allows moving to concrete implementation actions.

Summary and next steps

Effective generation of cost of revenue in 2026 requires combining strategic planning with meticulous documentation and constant monitoring of compliance with tax regulations. The key to success is maintaining a balance between tax optimization and economic rationality of expenses.

To get started:

1. Conduct an audit of current expenses and identify optimization opportunities within your conducted business activities

2. Develop an expense plan for 2026 taking into account tax objectives and financial capabilities of your company

3. Implement a documentation and recording system compliant with tax regulations and prepared for potential inspection

Related topics: It's also worth familiarizing yourself with VAT optimization rules, choosing the optimal form of taxation for your activities, and modern solutions in digital accounting that significantly facilitate business cost management and tax compliance.