For those looking to work in Barcelona, setting up your own business can be a good option and opportunity. There are several ways to run a business in Spain, to start we recommend two options: as a sole proprietor or setting up a Limited Liability Company.
- Sole proprietor or “autónomo”:
This is the easiest business entity and for example is commonly used by people working freelance. It is the equivalent to a sole trader. The business owner is responsible for all debts incurred by the business. There is no minimum financial investment to start this type of business. A disadvantage to freelancers is the fixed monthly fee that must be paid even if no money was earned that month to the Social Security. Autónomos are required to declare IVA (VAT) every quarter and must also file the annual Income Tax return by 30th June each year.
To set up as an Autónomo, it will be needed: Apply for a NIE (Número de Identificación Extranjero); Register to pay Impuesto de Actividades Económicas (Tax on Economic Activity) at your local tax office and present a formal declaration of the start of your professional activities at the tax office; and Register with the social security system (Seguridad Social).
Depending on your type of business or service, you may need to also apply for special licences and permits.
- Limited Liability Company (Sociedad de Responsabilidad Limitada S.R.L. or S.L. )
An S.L. is an autonomous legal entity and shareholders are not responsible for debts incurred by the company. S.L.s are liable for Company Tax (Impuesto sobre Sociedades). In addition, an S.L.’s shares cannot be traded on the stock exchange.
Briefly the steps will be the following: First step will be to Obtain Certificate from Mercantile Register, which confirms that the proposed name for your company has not already been registered.
Once the certificate has been obtained, it is necessary to open a bank account in the name of your company and deposit into the account a minimum of €3,000.00 and request a Deposit Certificate
Next step will be to Sign Deed Of Incorporation. All partners in the company are required to sign personally the Deed of Incorporation before a notary. Every partner will need to have a NIE number. The manager of the company (“administrador”) will be appointed by the share holders in this deed too.
You are required to pay transfer tax and will be a total of 1% of the capital invested by you and your partners in the company.
And finally, register the company at the Mercantile Registry and obtain the company identification tax code, to complete all the process.
The company must be registered for Company Tax at the tax office by submitting a formal declaration of the start of the company’s activities and if necessary (depending on the type of business), obtain a municipal licence to open business premises from the city council.