Choosing between self-employed (autónomo) and limited company (sociedad limitada)

Terms used

• Autónomo — An autónomo is a self-employed person who runs a business in their own name and pays into the self-employed Social Security scheme.
• Sociedad limitada — A sociedad limitada (SL) is a private limited company whose shareholders risk only the capital they contributed.
• Ley de Segunda Oportunidad — The Ley de Segunda Oportunidad lets an honest individual debtor have unpayable debts cancelled after liquidation or a payment plan.
• Aval — An aval is a personal guarantee that makes you answer personally for a company's debt to a bank or landlord.
• IRPF — IRPF is Spain's personal income tax, which an autónomo pays on business profit.
• Registro Mercantil — The Registro Mercantil is the public registry where companies are registered and file their annual accounts.
• Comunidad de bienes — A comunidad de bienes is a joint-property arrangement in which partners share a business without forming a company.

Key rules

• 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.
• Corporate tax: The general corporate tax rate is 25%, and a new active company pays 15% in its first two profitable years.
• Personal guarantees: Banks and landlords often ask for a personal guarantee, which cancels much of an SL's protection for that debt.

The short answer

Choose autónomo if your profit is low or uncertain and you want simplicity. Choose an SL if your profit is higher, you want limited liability, and you want to leave money in the company. An SL comes with fixed costs you pay every year, even in a slow year.

Liability: the biggest difference

As an autónomo, your business and private assets are not separated. A business debt can be collected from everything you own now and later. Some income is protected from seizure, such as salary and pension up to the minimum wage and part of what is above it. Tools of the trade can sometimes be protected too. Your main home is not automatically safe. Limited protection for it exists for tax and Social Security debts, and only under conditions. If you are married, your marital property regime affects what a creditor can reach.

If your business fails, a debt-discharge procedure called the Ley de Segunda Oportunidad is open to individuals acting in good faith. Tax and Social Security debts can only be partly wiped out, up to a cap.

With an SL, the company pays its own debts. As a shareholder you risk only the capital you put in. There are exceptions you should know about:

• Banks and landlords often ask you to sign a personal guarantee (aval). You then answer for that debt personally.
• If you are the administrator, you can be liable for harm caused by acts against the law or the company's bylaws, or by a lack of due care.
• An administrator is also liable if they do not call dissolution or file for insolvency when required. One example is when net assets fall below half the share capital.
• Courts can look through the company in cases of fraud or abuse. Tax authorities can also extend some tax debts to administrators.

Tax

An autónomo pays personal income tax (IRPF) on profit, so the rate rises as profit rises. An SL pays corporate tax on its profit. The general rate is 25%. A new company that carries on an activity pays 15% in its first profitable year and the next one. Small companies are moving to lower scales from 2025, phasing down to 2029. These rates change each year.

An SL is worth considering when your profit is high enough that corporate tax is lower than your personal rate. It also helps if you want to keep profit in the company instead of taking it out. Taking money out as salary or dividends is taxed again in your hands. Ask an adviser to run the numbers on your own figures.

Paperwork and running costs

An autónomo files quarterly IRPF returns (modelo 130, or modelo 100 for the annual return) and VAT returns (modelo 303). Bookkeeping is simpler and there is no registry filing.

An SL adds:

• corporate tax returns (modelos 200 and 202)
• annual accounts prepared to the standard accounting plan
• approval of the accounts at a general meeting
• filing at the Registro Mercantil
• legalised books, minutes and a register of members
• registry matters such as beneficial ownership

The adviser is usually the largest cost. Expect fixed annual costs in the low thousands of euros: adviser fees, registry fees for filing accounts, digital certificate renewal and bank fees. Your own Social Security as administrator is a separate, larger item. Get quotes from several advisers, as fees vary by city and transaction volume.

How to decide

• Low profit, simple activity, little risk: stay or start as an autónomo.
• Real risk of debts, such as premises, staff or large contracts: an SL protects your private assets, unless you sign personal guarantees.
• Higher profit you want to reinvest: an SL can make sense, once its fixed costs are covered.
• Already an autónomo and growing: moving your business into an SL is possible. Speak to an adviser first.

The side-by-side comparison and the decision tool below cover the joint-property option (comunidad de bienes) and when to get an adviser.

Which structure fits your situation, and when to get an adviser

Which structure fits you: autónomo, joint property (comunidad de bienes) or limited company (SL)?

• Stay or start as an autónomo: You work alone, want the cheapest and fastest start, and accept answering for business debts with all your personal assets. Registering costs nothing. You register for Social Security (RETA) and the tax agency census, in that order of need, and can invoice straight away.

• Form a comunidad de bienes with partners: You share a small activity or property with one or more partners and want a light setup. You sign a partnership contract, request a tax number (NIF) with Modelo 036, and each partner usually registers as an autónomo. Partners are personally liable.

• Form a limited company (SL): You want to limit your risk to the capital you put in, have partners or investors, or expect to keep profit inside a company. Order: negative-name certificate, notary deed, tax number, Registro Mercantil, then the activity census. If you control and run it, you also register as an autónomo societario, with one set of contributions. Setup typically runs about 400-1,200 euros plus capital.

• Move an existing autónomo business into an SL: You already trade and want the company to take over. Incorporate first and contribute the business. Then register the SL's activity, cancel your autónomo activity within one month, request your RETA baja within 3 days of stopping, cancel your IAE (business activity tax) registration and file final VAT and IRPF returns. Contributing a whole business unit can defer capital gains; contributing single assets is taxed as a sale of each.

Decide on four facts: your work situation (alone, with partners, or already employed, which makes you pluriactivo), your route (new start, or moving an existing business), whether your profession is regulated (you may need a colegio profesional and a special company regime), and your savings (an SL can start with €1 of capital, but until it reaches €3,000 part of the profit must go to reserves and pay and dividends are restricted). Get a gestor, lawyer or tax adviser before choosing if you contribute property, vehicles or other non-cash assets, work in a regulated profession, are buying a business, have mixed income such as employment, foreign or rental income, are a non-resident or need a NIE or work authorisation, or have several partners or investors. No law requires an adviser for a standard SL, but a notary is mandatory for the deed.

Autónomo, limited company and joint property (comunidad de bienes) side by side

Which structure fits: the short answer

Going solo, an autónomo is the cheapest and simplest to set up, but you are personally liable for business debts. An SL costs more to start and run, but it separates the business's debts from your own. A comunidad de bienes is a cheap way for two or more people to share a business, but the partners are personally liable too.

Side by side

What the set-up costs include

Autónomo. There are no official fees. Your real costs come later, in monthly contributions and any gestoría fees.

Comunidad de bienes. The contract can be private, though a gestor or lawyer may charge a modest fee to draft it. A 1% transfer tax applies only if partners contribute assets other than money.

SL. Typical costs are:

• Name certificate: roughly €15-20.
• Notary deed: roughly €100-300.
• Company registry: roughly €40-150.
• Gestoría for the whole process: roughly €300-800.

Setting up online with standard statutes, through a notary, is cheaper and faster. Forming a company is exempt from the 1% stamp tax.

Fees vary by provider and region, so get two or three quotes before you commit.

How to choose

• Starting alone with low risk: start as an autónomo.
• Starting with a partner and keeping costs down: a comunidad de bienes works, but each partner carries personal liability, so be sure you trust each other.
• Expecting debts, contracts or customers that put your own assets at risk: the extra cost of an SL buys that separation.

Frequently asked questions

What corporate tax rate does a new SL pay?

A newly created SL that carries on an activity pays 15% corporate tax on its first profitable year and the following year. The general rate is 25%. Micro-companies with turnover under €1 million have a lower scale from 2025: 21% on the first €50,000 of profit and 22% on the rest, falling to 19% and 21% by 2029.

Can an SL administrator be personally liable for company debts?

Yes, an administrator can be personally liable if the company should have been dissolved or filed for insolvency and was not, for example when net assets fall below half of share capital. They are also liable for damage caused by acts against the law or bylaws. Banks and landlords often ask for a personal guarantee (aval), which makes you liable for that debt.

Can I lose my home to business debts as an autónomo?

Yes, your main home is not automatically protected, because you answer with all present and future assets. Some income and tools of the trade are partly protected. The Second Chance law can cancel debts for an individual in good faith, and registered autónomos can protect the main home in limited cases for tax and Social Security debts. Ask a lawyer about your case.

What paperwork does an SL add compared with an autónomo?

An SL files corporate tax returns (modelos 200 and 202), prepares annual accounts, approves them at a general meeting and files them at the commercial registry. It also keeps corporate books such as minutes and a register of members. An autónomo mainly files income tax (modelo 130 or 100) and VAT (modelo 303), with simpler bookkeeping and no registry filing.