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A perfect way to start a business activity

Not all businesses are the same and not all projects have the same economic requirements. When starting up a business, the entrepreneur has a number of alternatives to hand from the point of view of the legal form of the company and may choose not to follow the company route and work in a self-employed capacity.

The keys to choosing the best option for the business project are the following:

  • number of partners in the business
  • the type of activity undertaken
  • the formalities necessary for its incorporation
  • the level of liability the partners are prepared to accept
  • the amount of capital available
  • the economic size of the project (turnover, costs, expected investments)
  • taxation associated with each type of legal entity (through Income Tax or Corporation Tax)

Self-Employed: is the perfect business model at the beginning of an enterprise if the capital is not available to maintain a company – and the possibility to set up a company at a later date always remains.

The main advantage is the absence of formalities and the speed with which the paperwork can be completed. You do not need an entry in the Mercantile Register. The main disadvantage is that you have unlimited liability i.e. the acceptance that present and future business debts will have to come directly out of your own pocket. It is critical to take into account whether the person concerned is in a fixed relationship and in such cases the best advice is to draw up a legal document separating the couple’s assets. The profits from the business go directly to the worker and they will be declared in the tax return.

Limited Liability Entrepreneur: with the aim of limiting this liability in certain cases, one of the main innovations of the Law of Support for Entrepreneurs and Their Internationalization creates this new concept which allows the businessperson as an individual to avoid, under certain circumstances, that liabilities deriving from business or professional debts affect their main residence.

Sociedad Civil (General Partnership) or Comunidad de Bienes (Common Property): if there are two self-employed associates who wish to carry out their business together, the possibility exists to establish either of these two legal forms, as long as there are at least two partners and without requiring a minimum level of financial investment. In both cases each of the partners will have unlimited liability in the face of business debts.