How to entrepreneur startup in Spain | Own business
Entrepreneur startup in Spain does not always have to be a difficult process. However, depending on the type of company you set up, you may find the journey a bit bureaucratic and long-winded.
How to entrepreneur startup in Spain
EU citizens set up as sole traders or partnerships can jump through the required loops relatively quickly. Setting up a limited company with a range of different entrepreneur startups in Spain structures can be both time-consuming and expensive.
Legal Structures for entrepreneur startup in Spain
The main types of business arrangements are as follows.
Spain is generally known as autonomous and must register its entrepreneur startup in Spain with the Spanish tax office and the Spanish social security department.
Most autonomists must file an annual income tax return (IRPF) alongside quarterly VAT (IVA) returns. Other statements are often applied quarterly and annually, depending on the circumstances.
Sole Traders and Partnerships in Spain
The cheapest way to start an entrepreneur startup in Spain is to set up an unincorporated company. As an entrepreneur startup in Spain owner, you will be responsible for your own tax return. There is no legal separation between your business assets and your personal assets. Therefore, if your business goes into debt, you are personally liable.
Sole traders and partnerships are more suitable for small businesses that do not have a large annual turnover or employ a large number of staff. You can also choose to set up a freelancer (Profesionales autonomous) if you are only starting a business in Spain.
If several people are set up as partnerships and want to limit the amount of personal liability and give the business a more formal structure, they can be set up as a limited partnership (sociedad comanditaria) rather than a general company.
Limited Companies Spain
There are several types of limited company structures in Spain. The most common format, however, is SOCIEDAD LIMITADA or SL. The organization is important in protecting the owner from personal liability in the event of bankruptcy, but this type of structure includes a number of additional tax, accounting and business obligations.
A SL must file an annual corporate tax return and statutory accounts. The owner will need to file VAT returns (IVA) and usually a few more periodic notifications may apply.
Starting a Business as an Immigrant in Spain
If you want to set up a limited liability company in Spain, there is a defined path to follow. We’ll cover it in more detail shortly, but here’s how the process works:
- Make sure a foreigner has your tax identification number (NIE)
- Register company name with Commercial Registry (Registro Mercantil Central or RMC)
- Get a company tax identification number (CIF)
- Open a business bank account
- Sign the deed of incorporation
- Register company
- Sign up for social security
- How to get a work visa in Spain
- Non-EU citizens moving to Spain to start a business will need a valid work permit for this. To obtain a work permit, you must apply at the Spanish embassy in your country. First of all, you will need to prove that you have sufficient capital to invest in your business and support yourself while living in Spain. You may also be asked to submit a business plan and proof of your skills and experience. Work permits must be renewed every year, but after five years you can apply for resident status in Spain. This eliminates the need to obtain a work permit in the future.
Licenses and Permissions
NIE is required for financial transactions such as establishing a company in Spain. If you are a Spanish citizen, you will have a NIF instead of an NIE number. Applications for an NIE can be made at a processing office of foreign citizens (Oficina de Extranjeros) at a national Spanish police station (comisaría).
Registering Your Business in Spain
The first step in establishing a limited company is to obtain a certificate confirming that the company name you want to use has not yet been obtained. This is called an anonymous certificate of coincidence and can be obtained from the Commercial Registry (RMC). You can do this yourself via the RMC website. This step will take about three days for you to receive a reply from RMC by courier.
Creating a Business Bank Account in Spain
After obtaining a tax code and an anonymous certificate of a coincidence for a limited business, you must open a business account in a Spanish bank and make a deposit of €3,000. This is the minimum capital allowed when setting up a limited liability company.
Proof of payment can be obtained in the form of a bank document, which must be given to a notary or lawyer showing the incorporation process of the company. If you do not have a Spanish bank account, learn how to open one in Spain.
You now need to apply for the incorporation certificate to set up your company. This is the official document describing the key details of the company (name, address, board members, board members, shareholders, etc.).
You can appoint a local notary to sign the incorporation document. You can find the closest one in your area at www.notariado.org. This step takes about one to three days, depending on the notary.
You Must Provide the Following Original Documents and Photocopies to the Notary:
- Tax form 036
- Your Certificate from the Trade Registry
- your NIE
- Confirmation of having cash in your bank account
- Registering the deed of incorporation
- With the original certificate of incorporation from the notary, you must go to the Local Government Tax Office to register it. The deed will be stamped to confirm this fact. Do not forget to bring your promissory note and NIE original documents and photocopy with you. New joint-stock companies should use the 036 forms used to request a tax identification number; describe business activities and disclose other business details. Do not forget to take the original and photocopy of the promissory note and NIE with you.
Tax and Social Security Considerations
To get it, you need to fill out tax form 036; This can be done online or by hard copy delivered to your local tax office.
Starting a Business
Foreign Companies Opening a Branch or Subsidiary in Spain
If you run your own company at home but want to set up a branch or subsidiary, it may be easier to do so than starting from scratch with a new company.
When processing your application, you must provide a number of documents, including:
- A copy of the parent company’s incorporation certificate and certificate of good standing
- Notarized power of attorney
- Spanish tax identification number (NIE) A staff member at the Spanish branch and residing in Spain, additional branches and subsidiaries that will agree to be liable for company debts and tax payments, although not required to open accounts at the business register, are required to submit income tax payments and quarterly VAT returns on their NIE numbers. Some banks and business advisory companies will bargain higher packages to help you set up the features of opening a new branch in Spain.
Establishing a Nonprofit Company in Spain
Nonprofit companies in Spain will be divided into two categories: foundations and associations. Traditional charities that accept donations from the public will generally fall under the category of foundations. On the other hand, associations are often more informally run by groups of people with common interests.
Setting up an association is free, but you will need at least €30,000 in capital to do so. With a foundation, anyone can donate to the cause (they don’t need to be a member) and committee members can be paid for their work as they would in a normal business. Foundations with a turnover of more than €2.4 million or with more than 50 employees are required to undergo an annual external audit.
Managing Your Business in Spain
Businesses must keep records of their accounts and order books that can be requested for review by government agencies such as the tax office.
Companies must also keep a minute book detailing the measures agreed at Annual General Meetings (AGMs). Companies must be certified and stamped by the local office of the Commercial Registry before they can start using their mandatory book of accounts.
VAT for Limited Liability Companies in Spain
While some businesses are exempt from VAT, the vast majority have to pay it. VAT is usually charged at 21%, although companies in some industries can pay as low as 4% or 10%.
Social Security for Companies in Spain
Sole traders and partnerships in Spain are required to make an additional contribution to social security for a monthly fee of around 265 €, plus an additional contribution if they employ staff.
They will also be obliged to deduct the required social security contributions from their employees’ salaries each month.
Business Insurance in Spain
The level of business insurance you must issue varies significantly depending on the size of your company, whether you employ staff, and the nature and value of the assets the company owns.
As the owner of a limited company, you will need to take out personnel insurance to protect your employees in case of an accident or illness. As with all insurance programs, coverage and cost levels vary, so it’s best to seek advice from an expert broker.
Public liability insurance is essential if you run a business. This will cover you against claims by third parties for injuries, accidents, or damage to property on your watch, or due to your company’s negligence.
Finally, you will also need building and contents insurance. This will protect you against any damage to your offices or loss of stock; as well as insurance covering the theft of company-owned stock.
Employing Staff When Starting an entrepreneur startup in Spain
Employment in Spain is highly regulated, so you need to make sure you follow the rules before expanding your team. Employees in Spain usually work 40 hours a week and are paid 14 payments per year (one payment each month and an extra payment in July and December). Employees are also entitled to 30 calendar days off per year. The minimum wage in Spain is currently €900 per month, based on 14 payments a year.
Who Can Do entrepreneur startup in Spain?
To start a business, you must first have the right to live and work in Spain. If you are an EU citizen, the principle of free movement automatically gives you this right. However, you still need to obtain your Número de Identificación de Extranjero (NIE).
If you are an EU citizen, the principle of free movement automatically gives you this right. However, you still need to obtain your Número de Identificación de Extranjero (NIE).
An NIE is your unique Spanish tax identification number. You’ll need it for anything that requires formal action, including paying your taxes and renting or buying property, connecting to utilities, and opening a bank account.
You can apply for your NIE in person after entering Spain or, better yet, get it ahead of time through the Spanish embassy or consulate in your home country.
If you are not an EU citizen, you must have a valid visa and a valid work permit.
Spanish Work Permit Application
- If you need a work permit and are planning to start your own business, there are some rules you must follow.
- You must apply for a permit at the Spanish embassy or consulate in your home country. In addition to the application, you must also provide the following documents:
- A Business Plan (If Applicable)
- Prove that you have enough money to invest in your business and support yourself
- Evidence of your skills or experience
- Copies of employment contracts or commissions
- Any valid license or registration
Information on job creation potential in Spain.
You must renew your work permit and prove that you meet all these conditions every year. However, you can apply for Spanish resident status after five years.
Regulated Professions and entrepreneur startup in Spain
Some professions and types of jobs—lawyers, architects, healthcare professionals, and financial services, to name a few—are heavily regulated. Before you start trading, you need to make sure that you follow the applicable rules.
Often, the process involves formal accreditation or recognition of your qualifications (called homologación). Depending on your profession or the type of business you want to run, you may need to apply for a license.
Rules can vary from region to region, so it’s a good idea to review both the national rules and the rules of the region where you plan to base your business ahead of time.
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How Can I Do entrepreneur startup in Spain?
Once your personal legal status is appropriate, it’s time to decide on the legal form of your business. In Spain you have three key possibilities:
Let’s take a look at what each contains.
It is the easiest task to install.
To start operating as a sole trader in Spain, you need to do three things:
- Recording with the Spanish tax office (Agencia Tributaria);
- register for social security (Seguridad social)
- Acquire a license (if your profession is strategic)
- tax registration
- You can register for tax by visiting the nearest tax office with your valid, unexpired passport and NIE. Is Empresa individual or autonomous? This distinction is important because of the Spanish retention system (retenciones). As a self-employed professional, your clients keep a percentage of your invoice (currently set at 18%) and pay the tax authorities on your behalf as an advance on your tax payments. These amounts are then credited when you file your annual tax return.
The System Is Not Applicable If You Are A Single Trader.
Sign up for social security.
Surrounded by 30 days of registering with the tax establishments, you must record for social security under the special command for autonomous workers (RETA).
To Sign Up You Need The Following:
- your passport
- your NIE number
- A copy of your Modelo 036 or 037 form
- Your IRPF form
- You will also be asked to fill out a form.
- As a self-employed person, you must participate in a health insurance fund through the social security authorities. Your health plan will also cover all dependent family members living at your address.
Whether you are a sole trader or a self-employed professional, you must file personal income tax returns and quarterly returns each year.
You should also keep copies of invoices and receipts for any expenses you plan to deduct from your annual return.
It is best to consult a lawyer or accountant, as failure to comply with these conditions will often result in fines and other penalties (including criminal liability).
2.Partnership (Sociedad Civil)
If you plan to do an entrepreneur startup in Spain with one or more people but still want your structure to be flexible, you can run your business as a partnership.
Like independent traders, partnerships require no minimum investment. However, the process is somewhat more time-consuming and expensive.
There are two types of partnerships in Spain: general partnership (general society) and limited partnership.
Each has its own specific requirements and different rights and responsibilities. Either way, to set one up, you need to do the following:
create a partnership agreement and sign it before a notary public (a lawyer can prepare it for you)
Registration with Tax Offices
Sign up for social security
Apply for any license (including the opening license for your entrepreneur startup in Spain)
The partnership agreement is not strictly necessary. However, it is good to have as it organizes the relationship between you and your entrepreneur startup in Spain, partners, and outlines your responsibilities. This is especially helpful if things go wrong or you have a conflict.
Of the three legal forms available, a limited liability company is the most complex, formal, and expensive to form and operate. It also has a number of distinct advantages over other forms, including limited liability and more favorable taxation (if you earn more than a certain amount). Some types of entrepreneur startups in Spain must be run as a limited liability company by law.
Limited Company Types
There are six types of limited liability companies you can choose from in Spain.
Limited company formation: A step-by-step guide
Whichever company you choose, you need to follow the steps below.
Step 1- Hire a Lawyer or Accountant
A corporate lawyer or accountant can help you decide whether forming a company is right for you, advise you on the exact requirements, and assist you through the process.
Step 2- Certificate of Uniqueness
Once you are sure that starting a company is right for you, you need to check whether the name you have chosen is available. You must also obtain a certificate from the Mercantile Registry to confirm this. It takes an average of three days to get a response.
Step 3 – Obtain a Tax Identity Code (CIF)
A corporation is a legal person in its own right, so you will need a unique tax identification code.
You can apply for a CIF by downloading the form from Agencia Tributaria’s website. You will need to return the form in person at your local tax office along with your original and a copy of your NIE.
Step 4-Opening a Bank Account
Next, you need to open an entrepreneur startup in Spain bank account on behalf of your new company and deposit the minimum investment amount. This depends on the type of company you choose.
Step 5- Public Joint Stock Company
The incorporation document is the document that establishes your company. It includes information such as the name of your company, its official address, the nature of your entrepreneur startup in Spain, the names and addresses of all shareholders, and the names and addresses of its officers (managers, company secretary, and key officers). They will also learn about how the company is managed.
The deed must be published by a notary public and is open to the public.
Step 6- Register Your Company
To register your new company, you must do three things.
Take the original document to your local tax office to have it stamped.
Take your sealed deed to the Commercial Registry to file in your company’s official registry. This process should take about 15 days.
Then, after receiving confirmation of registration, you need to make another trip to your local tax office to obtain your final CIF number. Once again, you will need to take the original and copies of the promissory note and NIE with you.
Step 7- Register with Social Security Authorities.
As a director, you must register with the social security authorities on behalf of the company.
Step 8- Other Formalities
Finally, you need to take care of some other minor formalities. These:
Create appropriate ledgers, including VAT books Obtain all necessary licenses to run your business, including an opening license for your entrepreneur startup in Spain.
Limited companies pay corporate tax. You have to pay Spanish corporate tax on all worldwide income of the company.
The tax is due to your company’s net profit after all allowable deductions have been made.
Depreciation (decrease in the value of business assets over time)
The general tax rate is 25%.
Unless you run a VAT-exempt entrepreneur startup in Spain (for example, teaching), you must register for VAT in Spain. This is whether you are a sole trader, a partnership or a company and the less money you make, the more you earn.
In Spain, VAT is charged at the rate of 21%. However, some types of goods and services may attract 10% or even 4% less.
Along with the annual return, you must submit periodic VAT returns. You must also comply with certain accounting and invoicing requirements.
Social Security Grants
If you are a sole trader or a member of a partnership, you must make your own social security contributions. These payments will entitle you to free health services. You will also receive a pension if you have paid social security for at least 15 years.
The minimum amount is about 265 € per month. However, you can choose to pay more in exchange for a higher pension and extra benefits, including extra insurance.
If you earn less than €9,000 per year, you are exempt from paying social security. However, you won’t get any benefits if you don’t pay social security, so it’s a good idea to make the payments anyway.
A director must register with RETA and contribute on behalf of the company.
Tax and Social Security as an Employer
If you are an employer, you must make social security contributions on behalf of your employees.
You will also need to deduct taxes and social security contributions from your employees’ salaries.
Why Should You Open Your Company in Spain and Not Elsewhere?
- In recent years, Spain has become a real commercial center.
- In this sense, the main benefits of establishing your company on Spanish territory are:
- This attracts foreign talent and investment, as so many successful startups are born in Spain.
- The country offers such a large and diverse market that different business ideas can stick.
- Growing a company is an adventure. Spain, thanks to its people, food, culture and weather make it the perfect place to enjoy this journey.
Who Can Do entrepreneur startup in Spain?
However, depending on your country of origin, the process can get more complicated.
Whether you are a foreigner or not, the actual legal constitutional steps of the entrepreneur startup in Spain are as follows. What is different is the need to be a legal resident in the country, which creates an extra step that you must take.
How to Start an entrepreneur startup in Spain?
How to get your work visa: work permit to start a company.
There are two different types of work assistants that can allow you to go through the process: an entrepreneur visa and a work permit as a self-employed person. These are the two permits that will grant the specific type of residence that allows you to set up a company.
If you want an entrepreneur startup in Spain you want to develop that is innovative and technology is at the center of your activities, you should apply for an entrepreneur visa.
The application process is much faster and you can get your response after 20-30 days.
However, it is very important that you understand the requirements before you begin. Prove that you have sufficient skills and financing methods to keep the company growing, as you will need to present a truly detailed business plan.
That’s why we recommend that you visit our article on the legal process for obtaining a visa as an entrepreneur.
Self Employed Worker Visa
For example, let’s say you want to open any classic brick and mortar store; like a cafeteria or local supermarket.
In such cases, as the project is not innovative enough (it is something that already exists), the residence permit is the self-employed worker visa (regular work permit) that will allow you to arrange everything.
However, while the project does not necessarily have to be technological for a self-employed worker visa application to be accepted, not every company will qualify. How do I know what kind of business I should start?
Finding the Right Business Idea
This is a very important aspect that you should take up before you begin. As we have seen before, the relevant residency card changes depending on the type of company you want to start. That’s why it’s so important to find the right business idea.
Also, you can’t start a company if you don’t have a good business idea. It just won’t be successful.
And today, opportunities abound due to the rise of the internet and the interconnected world it has created. In this sense, there are some investment opportunities in Spain that you should really consider.
If you don’t know where to start, here is a list of 25 business ideas for getting started as an immigrant in Spain.
What Kind of Company Should You Choose? How to Do an entrepreneur startup in Spain?
Before we begin the process of forming a company, we must decide which type. But we are not talking about the entrepreneur startup in Spain or a model or a specific project.
In Spain, there are different company structures defined by the Commercial Code. Each has its own characteristics and it is very important to understand their different purposes.
We will concisely talk about the key ones:
The different entrepreneur startups in Spain are as under:
Probably the best option for small companies, because the legal process for its creation is really simple. One of its main advantages is that it does not require any initial investment.
However, being a sole trader (“Empresa individual”) has one major drawback: There is no separation between the company’s assets and your personal assets. Therefore, you are fully responsible for any possible debts the company has.
Who is this building for? For painters, web designers… For individuals whose work does not require a company for their activity, as freelancers do.
Single Merchant Taxes
This means that you will be responsible for your tax returns annually.
Since your activities are regulated under the income tax regime, it is possible to pay unnecessary taxes by using this legal structure. And if your incomes are higher than 50,000 € – 60,000 € per year.
Therefore, if you expect to earn above, our advice is to go for a limited liability company.
Sole Trader vs “Autonomo” (self-employed)
There is a general misunderstanding that we must address here.
We often mistakenly assume that the words “autónomo” and self-employment are the same. And this is wrong. Because yes, you can have a work permit as a self-employed worker. However, this does not mean that the company you founded is an autonomous one.
An autonomous is two things: a freelancer and a manager of a company. On the other hand, a freelancer or self-employed does not necessarily run the company.
Why are we talking about this? Because the constitutional process is exactly the same. Depending on the chassis, you will need to fill in model 036 or 037. This form asks whether he is a sole trader (“Empresa individual”) or self-employed (autónomo). You must choose the first.
To further clarify, you can access our article on how to become an autónomo in Spain.
Limited Company (SL)
This is undoubtedly the most popular firm structure in Spain. Why is that? Due to its flexibility and ease in the registration process, it requires only €3,000 as a minimum capital investment for the constitution process.
Self-employed if you expect to earn more than 60.000 €
So what if you have your own business in another country and want to enlarge in Spain?
In these cases, opening a branch in Spain is the right way. It will offer the opportunity to expand into a new market while leveraging the power of your brand and systems.
If you want to set up a branch of your company, you will need to submit a notarized power of attorney and a copy of the company’s public joint-stock company document. You’ll also need to provide a good certificate if required by your country’s employment law.
In this particular case, if you are the one opening and operating the branch on Spanish territory, you must be a resident of the country.
How to set up a company as an immigrant in Spain
In order to start your entrepreneur startup in Spain, you need to go step by step to the next:
Get Your NIE Number
- Identifying company names and checking validity: uniqueness certificate
- Get your CIF or tax ID number
- Establishment of shareholders and creation of shareholders agreement
- Going to the notary and signing the public joint-stock company
- Registration of the company with the tax authorities
- Registration of the company in social security
- 8 steps to starting your entrepreneur startup in Spain as a foreigner
- Let’s analyze each of the 8 steps to starting your company as an immigrant in Spain.
Update Your Website
If you have a Web site, make sure it’s suitable for Spanish and European countries, as well as English and other languages if necessary. Website owners have negative stories because they have incomplete information or incorrectly associated photos.
By following these steps, you can easily register or transfer your international domains from www.atakdomain.com to the domain and hosting of the company that you have established in Spain. Our company will continue to offer you aggressive solutions.