Choosing your company structure

It is for anyone considering, planning or carrying out a move to Spain who needs to pick a legal vehicle for their activity. The choice affects your tax, Social Security, personal liability and paperwork for years, so it is worth settling early. You will see the real running costs and the points where one option starts to beat the other.

Start with "Choosing between self-employed (autónomo) and limited company (sociedad limitada)". It weighs liability, tax, Social Security and admin so you can choose the vehicle for your activity. The other pages then follow from your choice: company types, the profit level where a company starts to pay off, yearly running costs, owning a company alone, moving an existing autónomo business into a company, and buying an existing business.

Registering as an autónomo, quotas, tax and VAT, the steps to form a company, and residence routes for entrepreneurs are covered elsewhere.

Key rules

• Minimum capital: A limited company (SL) can be formed with share capital of €1, but until capital reaches €3,000 part of the profit must go to reserves and pay and dividends are restricted.
• Single-member status: A change to or from single-member status must be recorded in a public deed and registered within six months, or the sole member is personally liable for debts in the meantime.
• Annual accounts: A limited company must approve its annual accounts within six months of year end and file them at the commercial registry within one month of approval.
• Liability: An autónomo answers for business debts with all personal assets, while an SL shareholder risks only the capital contributed, except for personal guarantees and administrator liability.
• Fixed costs: An SL costs money every year for advisers, registry filings and administrator Social Security, even in a slow year.
• Default choice: Use an SL unless your project clearly needs another form.

Choosing your company structure: the whole process, step by step

From choosing a structure to running your company

• Choose between self-employed (autónomo) and a limited company (sociedad limitada, SL), and pick the company type: Before you start. Read the first two articles on choosing between autónomo and SL, and on company types.

• Work out where a company starts to beat self-employment, and budget the yearly running costs: Before you incorporate. See the articles on the break-even profit and on running costs.

• Incorporate the SL: sign the deed, get the tax number (NIF), register at the commercial registry and pay in the capital: Capital can be as low as €1, paid into a bank account and certified before the notary.

• If you are the only shareholder, state it in the deed and register it as a single-member company: At incorporation. If a company becomes or stops being single-member later, within six months of the change.

• If you are moving an autónomo business, register the SL's activity and cancel your autónomo registrations: Cancel the tax registration within one month of stopping, and ask for the Social Security cancellation within 3 days of stopping.

• File the last autónomo VAT and income tax returns and issue the last invoices, then invoice in the SL's name: For the period up to cancellation, then from the SL's start date.

• If you are buying an existing business instead, request tax and Social Security debt certificates before the sale: Before signing. The tax agency has three months to issue its certificate and Social Security has 30 days.

• Legalise the company's accounting books electronically at the commercial registry: Within four months of the year end.

• Approve the annual accounts at the general meeting: Within six months of year end, so by 30 June for a calendar year.

• File the approved accounts at the commercial registry online: Within one month of approval.

• File the corporate tax return (modelo 200): In the 25 days after six months from year end, which means July for a calendar year.

• Pay corporate tax instalments (modelo 202) and file the quarterly VAT and withholding returns: Instalments in April, October and December; VAT and withholdings every quarter.

Documents you may need

Identity and residence

• Tax ID — Moving your self-employed (autónomo) business into a company

Income and work

• Digital certificate of the company or administrator — What a small limited company (sociedad limitada) costs to run each year
• Corporate tax return — What a small limited company (sociedad limitada) costs to run each year
• Written contract for every agreement between you and your company — Owning a company alone: the single-member company (sociedad unipersonal)
• Register book of contracts between you and the company — Owning a company alone: the single-member company (sociedad unipersonal)
• Deed of incorporation of the company — Moving your self-employed (autónomo) business into a company

Other documents

• Annual accounts
• Certificate of approval of the accounts — What a small limited company (sociedad limitada) costs to run each year
• Journal and inventory and accounts book — What a small limited company (sociedad limitada) costs to run each year
• Public deed — Owning a company alone: the single-member company (sociedad unipersonal)
• Minute book of your decisions as sole member — Owning a company alone: the single-member company (sociedad unipersonal)
• Registration form — Moving your self-employed (autónomo) business into a company

Each article lists the other documents it asks for, where you need them.

Choosing your company structure: questions that cross several articles

Does forming a limited company protect my personal assets?

Yes, as a shareholder you risk only the capital you put in, unless you sign personal guarantees or are held liable as an administrator. Banks and landlords often ask for those guarantees. As an autónomo you answer with all your assets.

How much capital do I need to start a limited company?

You need only €1 of share capital to form an SL, paid in money or assets, not work. Until capital reaches €3,000, part of the profit must go to reserves and pay and dividends are restricted. Read "Which company type to form, a limited company (sociedad limitada) or another" next.

What corporate tax rate will my new company pay?

The general rate is 25%, but new companies pay 15% on their first profitable year and the next one if they carry on an activity. Small companies get lower scales that fall each year to 2029. Read "At what profit does a limited company start to beat self-employment?" next.

Do I still pay Social Security if I run my own company?

Yes, if you work in the company and hold at least 25% of the capital or control it, you register as a self-employed contributor and pay Social Security on your income. This is a separate and larger cost than the company's fees. Read "What a small limited company (sociedad limitada) costs to run each year" and "Moving your self-employed (autónomo) business into a company" next.

What does a small limited company cost each year apart from my own Social Security?

Usually in the low thousands of euros a year, mostly the adviser's fees for bookkeeping and tax returns. The rest is registry fees, certificate renewal and bank fees. Get quotes from advisers, then read "What a small limited company (sociedad limitada) costs to run each year".