Spain is an attractive place to start a business, thanks to favorable market conditions. In addition, the high standards of living that this country has. It is important to highlight that there are two ways to set up a company in Spain. The first is as a self-employed person and the second is as a Limited Company (LLC). The main difference is how to respond to the company’s situation. If you are self-employed, you are the company. While, if you are an LLC you have partners who help you answer about the company.
In this article, we will give you answers to interesting questions about setting up a company in Spain. In principle, we will show you the benefits of starting an LLC-type company in this country. Additionally, you will see all the steps to follow on how to set up a company in Spain. We will give you all the details and a step-by-step guide so you can be successful in the process. Finally, we will show you what benefits and rights workers have in Spain.
Benefits of Starting an LLC Company in Spain
If you want to open a company in Spain, you must know about the benefits of an LLC company. However, first, you should know what this refers to. In this way, a Limited Liability Company, or LLC, in Spain is known as an LS or Limited Society. In essence, it is the Spanish version of an LLC.
Additionally, it is a very popular option for both foreigners and locals who want to set up a company in Spain. For this reason, one of the reasons why it is so popular is that it is very flexible. In this way, partners will be able to establish the rules of their own company. Thanks to this flexibility, the LLC in Spain is one of the first options for small and medium-sized companies.
Setting up a company in Spain with this structure brings with it these benefits:
- Own 100% of its shares even if you are a foreigner.
- Personal risk is only limited to what you invest in the company.
- You may start with only one shareholder and one administrator.
- With only 3,000 euros you can start.
- Registration can be done online and it is quick.
- Belonging to the EU opens many doors to different markets.
Therefore, if you want a business structure that is flexible, low-risk, and EU-compliant, the LLC may be your best opportunity. However, you must know other aspects of companies in Spain such as their tax planning.
Legal Structure and Requirements
An LLC in Spain requires a minimum share capital of 3,000 euros; which you have to deposit in full during the entire constitution procedure. In this way, all companies that carry out commercial activities in Spain must open a corporate bank account for their business.
You need to know that in the LLC the capital must be divided into shares. In this way, the shares cannot be transferred, but different exemptions apply to the transfer between shareholders or to close relatives of the shareholders. Additionally, a Spanish LLC can be registered with a single shareholder. This may be represented by a legal or natural person.
If the company is constituted by a single shareholder who owns full ownership of the shares, it is necessary to notify the Commercial Registry. On the other hand, you can choose to register a simplified version of the LLC, the new limited company in Spain. However, you must keep in mind that this type of company can only be established by shareholders who are natural persons.
In addition, the shareholding structure can consist of a maximum of 5 investors. In this new type of LLC, you must also have a capital of 3,000 euros. Even the maximum capital that can be invested in the company is 120,000 euros. Because LLCs are designed for small and medium-sized businesses, your company can benefit from lower income taxes.
Flexibility in Management and Ownership
They can be sole proprietorships if you wish. In this way, all correspondence must be registered as such in the Commercial Registry. In addition, the company’s commercial documents must recognize this exclusive property. On the other hand, there are no limits on the maximum number of shareholders in a Spanish LLC.
In this way, the contributions made by the partners must be divided into shares. Furthermore, these shares must be recorded in a public document and are not negotiable securities. they can transmit it to ascendants, other shareholders, descendants, or companies in the same group. All this unless otherwise provided in the articles of incorporation or its statutes.
The law allows an LLC to appoint a board of directors between 3 and 12 members. Additionally, you can have one or more administrators to manage daily operations. Administrators and directors may be legal or natural persons. However, directors do not have to be shareholders but can be appointed for an indefinite period.
Additionally, articles of incorporation can provide different types of management structures, thus adapting to the needs of the LLC.
Adaptability for Different Business Models
An LLC offers many significant advantages and its great adaptability is one of them. In this way, flexibility in decision-making and management structure can help you. Compared to other more rigid companies, the LLC allows its partners to establish internal agreements, and distribute roles and responsibilities according to needs and preferences.
Thanks to this, you will have better control over the direction and operation of the company; being able to adapt more easily to the business model that shareholders have in mind. Additionally, if the LLC faces debt or lawsuits, the partners will have no personal liability beyond what they have invested in the company.
In this way, you have financial protection that provides you with greater security and peace of mind when starting a business.
Process Take to Start a Company in Spain
After seeing an overview of the advantages of setting up a company in Spain, it is time to delve into the steps to follow. Below, you can read an explanation of all the steps you have to follow to set up a company in Spain.
Register the company name: The first step to registering a company in Spain is to send the application with the company name. The Spanish Commercial Registry only fails to present a list with a maximum of five names. You can establish the order of preference that seems best to you.
Status project: Subsequently, you have to draft the statutes. In them, you have to include relevant information about the company. For instance, object, address, share capital, organization, and how decisions will be made on behalf of the company.
Register public deed: Subsequently, you have to write the deed in the Spanish commercial registry. In Spain, the public deed of the company is the legal document that allows the creation of a company to be formalized. In it, you can find it contains all the relevant information about the company. For instance, the object, share capital, name, and identity of its shareholders and directors.
Sign public deed: At this time, shareholders have to sign the company’s public deed. A legal team or a notary prepares the public deed of a company. To do this, you must certify the authenticity of the signatures of the shareholders and directors. In addition, you have to certify the accuracy of the information present in the document.
To have the signature and certification of the public deed, you have to register it in the Spanish Commercial Registry. That is the official registry of companies in Spain.
Bank Account Setup in Spain
To open an account in Spain, it is best to go in person to the bank of your choice and request an account. Generally, banks have working hours from Monday to Saturday from 09:00 to 14:00. Many do not have English-speaking staff. That is why to book an appointment in English you have to bring a translator. Bringing a friend who speaks both English and Spanish is enough.
Generally, the account opening process is almost immediate. It lasts approximately a minimum of 1 day and a maximum of 5 days. On the other hand, you will have the documentation and credit cards available within two weeks.
Most Spanish banks accept non-resident accounts. That is, you will be able to set up an account before moving to carry out the process of setting up a company in Spain. In addition to the standard documentation, you will have to prove that you are not a resident. For this, you have to provide a non-residency certificate. If you want to get it, you have to apply at a Spanish police station.
Therefore, this option is extremely useful for people who want to spend a considerable amount of time in Spain. But, without the intention of living in the country, that is, they want to reside somewhere else.
On the other hand, most of the large Spanish banks provide business banking. In these accounts, entrepreneurs have access to products, such as insurance and loans. If you want to set up a company in Spain you can consult different account options on the websites of Spanish banks.
In addition to standard documentation, you have to provide a business address. If the business is an LLC, you will likely need to provide official company documentation. You also have to have two signatories on the account.
Hiring Employees & Employment Regulation
Before setting up a company in Spain it is important to know Spanish labor laws. In essence, these laws can be found in the Spanish constitution. In addition, collective dismissal agreements, the status of workers, and judicial decisions of labor courts.
The main objective of Spanish legislation is to prioritize the protection of workers. These labor laws had to be adapted to changing trends in the labor market. Thus, they can ensure a comprehensive framework to protect all types of workers. This can be for a full-time worker, intern, part-time employee, or technology professional. Labor laws in Spain consider all these cases.
Part-time and full-time employees in Spain can enjoy several legal rights. For instance, protection against unfair dismissal, the right to collective bargaining, and a minimum wage. These employees have access to benefits, for example, leave and social security. Thanks to this, workers have a guarantee of a safe working life according to the law in Spain.
On the other hand, temporary and fixed-term employees in Spain have protection under Spanish labor legislation. Contracts must specify the duration of the contract and the reason for the temporary nature.
Labor law in Spain ensures that even apprentices and interns have protection. Companies have to offer internships; they have to offer fair working conditions. In some cases, they even have to provide tutoring and remuneration.
As remote work becomes more common, Spain released specific legislation to protect teleworkers. Royal Decree-Law 28/2020 establishes the duties and rights of remote workers and employers. In summary, it addresses key issues in this matter. For example, reimbursement of expenses, the right to digital disconnection, and the right to privacy and data protection.
Employee Benefits and Rights in Spain
It is important to understand the minimum conditions of employment according to labor legislation in Spain. Especially for those people who want to set up a company in Spain and want to employ technological talents. Thanks to this, you can comply with legal obligations and ensure respect for employee rights. Thus, you can promote a productive and healthy work environment according to the scope of labor legislation.
In Spain, the maximum work week is 40 and a half hours. That is a maximum of nine hours of work a day. Some exceptions are included in flexible work arrangements. Employers must keep records of the hours employees work. Thus, they can guarantee compliance with Spanish labor legislation and avoid overwork.
Additionally, there are overtime regulations. Essentially, these cannot exceed 80 hours per year. At least it is compensatory overtime.
According to the Spanish government, the minimum wage must be set annually. The Minimum Interprofessional Wage (SMI) must guarantee that all workers. Regardless of the function or industry, workers must receive fair compensation for their work.
Employers must be aware of these annual adjustments. This way, they can comply with them and avoid legal problems with Spanish law. In addition to the base salary, remuneration may include bonuses and supplements. All this must be clearly defined in the employment contract.
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