When you decide to go into business one of the first decisions you need to make is whether to trade as a single self employed trader or whether you want to trade through a company. If you decide the latter then you have two choices, one is to form a CB (Comunidad de Bienes) and the other is an SL.(Sociedad Limitada)

 This month we look at a CB and next month an SL.

Firstly what is a CB company? Well basically it is two or more people who decide to form an association to run their business through the difference between this and an SL company, is that all members of the CB will be personally liable for any and all debts that may be incurred by the company or business rather than being limited to the capital value of an SL Company. Also the cost involved in setting up a CB is substantially less than that for an SL. As I said the minimum number of people required is two, however there is no maximum number. When you are setting up your CB you will be asked to allocate the percentage share that each of the members will hold in the newly formed company, this does not have to be an even split although it is usual that is it. However if one party is investing more money than the other then this can be dealt with within the share issue. A point to bear in mind is that whatever you state as capital investment you will have to pay Stamp Duty (ITP) on that figure at 1% of the total. It is quite usual to state an investment of 100.00Euro per investor so as to reduce the Stamp Duty (ITP) tax due. This does not mean that you cannot spend more on your new business it just caps the tax due. Once you have decided on the name for your company it will be necessary to seek the services of an accountant (Gestor) or a lawyer (Abogado) prepare all the paper work and registered with the Tax authorities. It does not matter whether you decide to trade through a CB or simply be self employed in both cases you will need to become what is known as “Autonomo” in Spain which means you will need to pay Social Security each month, usually this will be in the region of 240.00 Euros a month. It is dependent on your age and not your earnings. A question I am often asked is can a Self employed “Autonomo” employ other people, the answer is yes, but with a proviso, if the tax authorities think that you are doing it to avoid paying 2 sets of social security payments as you would do with a mutual CB , then they may fine you. Forming a CB will allow you to formalise your business negating any problems which may arise in the future if you get into a dispute over who owns what within the company. That may sound negative but it is a fact of life that the best laid plans can sometimes go wrong and protection at the beginning will make resolving these so much easier. If you would like further information on starting your own company please contact the Business Doctor at Link Point Legal and Business Services on 96 626 0500.