Spain Company Formation

Start A Company in Spain – The Ultimate Guide

It’s a pleasure for us to present to you our guide, Start a Company in Spain – The Ultimate Guide.

If you’ve ever visited Spain on your holidays, you might already know it is easy to get lost in the country’s mesmerizing culture and history. However, Spain is more than just a prime tourist destination. It is also an excellent place to start a business.

Any entrepreneur that has established a business in this Mediterranean country will praise its business-friendly environment, strategic geographic location, and highly-skilled worker force. If you’re interested in starting a business in Spain, you might be wondering how to go about doing so.

This guide will describe all the steps you will need to follow when starting a company in Spain. We hope this information sets you on the right track so that you too can benefit from running a business in this European country.

Why So Many People Are Setting Up Businesses in Spain

Before going over the steps to set up your business, it is worth examining why so many people choose to start businesses in Spain. Entrepreneurs favour this Mediterranean country for the following reasons:

Great Geographic Location

Spain is located conveniently close to Europe, Africa, and the Americas. This makes it the perfect gateway for international trade activity. Businesses in Spain can benefit from this by exporting finishing products and also import raw materials and other resources from these continents with ease.

The country also boasts fantastic transport infrastructure. It has a well-developed highway network, ports, railways, and airports. Each of these facilitates the transportation of goods and worker, thereby making business activities easier to perform.

EU Membership

Spain is also a member of the European Union (EU). This EU membership benefits businesses in the country in many ways. For example, Spanish businesses get access to a massive European market consisting of over 440 million people. They can sell goods and provide services to consumers in these countries without having to pay tariffs or being subjected to trade barriers.

Spain can also request funding from the EU for special research and development or regional development projects. This could benefit small and medium-sized Spanish businesses that have limited capital.

Access to a Skilled worker Pool

Entrepreneurs who choose to start businesses in Spain can benefit from having access to the country’s skilled worker pool. Spain’s workforce is highly educated and much of the country’s workers have technical training and education under their belt. This educational background makes them skilled and qualified to serve in many types of roles in the business world.

Spain’s workforce is also multilingual, and many of its workers speak several languages such as English, German, and French. This can benefit businesses who intend to conduct business with France and Germany.

Business-Friendly Laws and Regulations 

The Spanish government has also implemented numerous laws and regulations to make the country’s business environment more favourable to local companies. This includes corporate tax reductions, simplified administrative procedures, and worker market reforms that increase hiring flexibility.

How to Start a Company in Spain

Once you’ve read through our Ultimate Guide to set-up a Company in Spain, you should follow the steps described below to start a company of branch in Spain and read more about FAQs about opening a business  in Spain

Choose a Company Type

Assuming you already know what type of product or service you intend to offer consumers, your first step in the company-founding process should be to select the company type. To do this, you should first understand the different company types recognized in Spain and understand their structure before making your choice. These company types include:

Sole Proprietorship

This company type is suited for foreigners who wish to start and operate a company as a single person. Many entrepreneurs choose this company type because it means they aren’t answerable to any company co-owners or directors. However, they will be held solely liable for all company debts. 

Stock Corporation

Stock corporations in Spain are officially known as Sociedad Anónima (SA). As the name implies, this company is owned by several shareholders. This offers many benefits and drawbacks. For example, each shareholder will have limited liability, so their personal assets will be protected from company debts or if the business runs into legal issues. However, this company type has a complex legal structure and must follow more regulations than a sole proprietorship.

Limited Liability Company

Limited Liability Companies in Spain are known as Sociedad de Responsabilidad Limitada (SRL). This company type is popular among small and medium sized businesses founded by a single owner. As with SA, the shareholders in this company have limited liability. 

This company type is flexible, so it can be adapted for many kinds of businesses. Forming an SRP is also generally less complex than a SA. 

2. Choose a Suitable Location

Once you have decided what type of company you wish to establish in Spain, you will need to choose a suitable location for your operations. Selecting the right location is crucial if you want your business to succeed. To do this, you will need to consider many factors such as your business type, budget, and target market.

For example, many entrepreneurs set up operations in Madrid due to its strong economy and thriving business environment. This location is ideal for businesses in the tourism, technology, and finance sectors. Local companies can also benefit from the city’s excellent transportation infrastructure, which allows workers to travel to neighbouring cities or other parts of Spain quickly.

Similarly, some entrepreneurs set up businesses in Valencia. This port city has a fast-growing economy centred on the manufacturing and agriculture sectors. Its port is one of the busiest in Europe and helps facilitate imports and exports for thousands of businesses on a daily basis.

3. Register Your Business

Next, you must register your business. As explained in our Ultimate Guide to start a company in Spain, business registration in Spain is a relatively straightforward process. To do this, you must first come up with a company name and then apply for a no-name coincidence certificate with the Registro Mercantil Central (RMC). This certificate confirms that there are no other companies in Spain that are already using the company name.

Obtain a Tax Identification Number 

Any foreigner that intends to start a business in Spain must acquire a tax identification number. You can apply from this at the Consular Office of Spain in your country. If you’re currently residing in Spain, you can apply for your tax identification number through the Spanish Tax Agency. 

You must obtain your tax identification number within one month of registering your business.

Obtain a Company Tax Identification Number

You will also need to obtain a company tax identification number before you are allowed to conduct business activities. Following this you can apply for this at the Agencia Tributaria website by filling out and submitting some forms. These forms ask for vital company information such as the business name, contact number, and address.

Obtain Licenses and Permits

You may also need to obtain specific licenses and permits depending on the type of business you have or the industry you will be operating in. For example, you will need a general business license in most cases. If your business will generate waste or air emissions, you will need to get  environmental permits.

Hire worker

Now that the main registration is complete, you can focus on hiring staff to run your business. You should ensure you follow Spain’s worker laws when doing this. This includes respecting the country’s minimum wage, providing all employees with written contracts, providing paid vacation time, and offering proper notices before terminating employees.

Start Running Your Business

Once your business setup is complete, you can start operating it. Be sure to stay up-to-date with the latest laws and regulations in your industry to ensure your business complies with them properly. Businesses that fail to comply with these laws and regulations face heavy fines and may even be shut down. 

At the end of the day, your business’s success will depend on your planning and daily efforts. So be sure to do your best, because succeeding in Spain means you can expand to other European countries and take your business venture to the next level.

Why Choose Company Formation Org?

As you can see, starting a business in Spain isn’t difficult, especially if follow our Ultimate Guide to start a Company in Spain. However, you will need to familiarize yourself with many local laws and regulations. It can be challenging to understand these and comply with them if you aren’t already residing in the country.

If you need assistance with setting up your business in Spain, consider reaching out to Company Formation Org read more about setting up a company in Spain.

 Our experts are well-versed in company setup procedures across Europe and can guide you through the process with confidence. Make your dream of running a business in Spain a reality with Company Formation Org’s expert guidance.

Alternatively, you can look to acquire an existing Shelf Company in Spain and please read through our Guide to Spanish Corporate Taxes.