Types of commercial companies in Spain: which one best suits your needs?
Posted: Mon Dec 23, 2024 5:50 am
When setting up your company, if you have not chosen a corporate formula, it is important to know which type of business corporation best suits your needs.
Company Creation
Tags: Businesses , Self-employed , Entrepreneurs
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types_of_business_companies.jpg
When setting up your business and if you have chosen a corporate formula (an alternative to the possibility of developing your activity as an individual entrepreneur), it is important to know which type of commercial company best suits your needs. There are four main types of commercial companies in Spain. They are the public limited company, the limited partnership, the general partnership and the limited partnership (or “en commandita”).
Below we explain what each one consists of, as well mexico phone lookup their advantages and disadvantages.
Limited liability company: This is the most common type of company in Spain for decades, as entrepreneurs do not have to personally respond with their assets for the company's debts, liability is limited to the capital contributed, it is a form in accordance with the usual requirements of an SME and the capital needs are lower than those of a public limited company. It is characterised by the fact that the liability of the partners is limited and because the share capital is divided into shares.
For its incorporation, a minimum capital requirement of 3,000 euros is required, which must be paid in full when signing the public deed (although it is possible to proceed with a successive foundation of the SL with a lower figure, in which case the promoters, until the minimum capital figure is reached, are subject to special limits and obligations to reinforce the entity's own resources). The minimum number of partners for its incorporation is one.
Advantages: liability is limited, so that the partners do not have to pay any losses with their own assets; the procedures for incorporation and operation are simpler than those for a public limited company; incorporation requires a reasonable amount of capital and can be done by a single person; from a certain level of profits (40,000 euros), taxes are lower than those of a self-employed worker and with a company the self-employed worker can deduct his salary as an expense. It is possible to incorporate a company in a very short period of time by electronic means (express companies).
Disadvantages: shares are not easily transferable, partners have priority (which can be understood as an advantage if what is desired is to restrict third party access to the business activity), so it is not a convenient type of business company if you intend to attract a large number of investors.
Public limited company: This is the second most commonly used type of commercial company. It is characterised by the fact that the capital is divided into shares that can be freely transferred – the opposite of a limited company – as well as by the large number of partners that can participate in it.
For its incorporation, a minimum capital of 60,000 euros is required, with 25% paid at the time of the public deed. The minimum number of persons required for its incorporation is one.
Advantages: the company is divided into shares that are freely transferable, the liability of the partners is limited to the capital contributed, it can be a sole proprietorship and it can be listed on the stock exchange. In addition, certain activities such as banking, pharmaceutical, insurance, pension fund management companies, etc. require this type of commercial company.
Disadvantages: the minimum capital required is high, the presence of people outside the company cannot be controlled and the procedures for incorporation and operation are more complex than those of, for example, a limited company.
General partnership : This is a type of personal business company in which the partners play a very important role, as they not only invest capital but also contribute their work and manage the company directly. Therefore, the status of partner is not freely transferred, and the figure of the industrial partner is also provided for, whose only role is his work. On the other hand, their liability is unlimited, so they are personally liable for the company's losses. The beginnings of this type of company date back to the Middle Ages, when "merchant societies" or "societas mercatorum" operated. Currently, their use is practically residual.
As regards its constitution, no minimum capital is required and its name must include the name of at least one of the partners plus the words “and Company”, without being able to add the name of another person not related to it. It can be formed by two people.
Advantages: The structure and operation are simple and no minimum capital is required for its incorporation. Access to the entity by persons outside the entity can be controlled.
Disadvantages: liability is unlimited, personal and joint and it is not possible to delegate the management of the company to an external professional.
Limited partnership (or limited partnership) : This is similar to a general partnership, but it differs in that in this type of partnership, it is possible for a certain type of partner not to be directly responsible for the management of the company. Therefore, there are two types of partners: general partners, who are unlimitedly liable for the company's debts and participate in the management of the company, and limited partners, who do not participate in management and whose liability is limited to the capital contributed or committed. There are also two types of limited partnership: simple limited partnership and limited partnership by shares.
Advantages: it does not require a minimum capital for its incorporation and, in its share-based form, it allows it to attract the capital of others who do not participate in the management.
Disadvantages: The structure and operation are more complex and non-limited partners cannot vote or participate in any act of the company's administration.
Company Creation
Tags: Businesses , Self-employed , Entrepreneurs
Image
types_of_business_companies.jpg
When setting up your business and if you have chosen a corporate formula (an alternative to the possibility of developing your activity as an individual entrepreneur), it is important to know which type of commercial company best suits your needs. There are four main types of commercial companies in Spain. They are the public limited company, the limited partnership, the general partnership and the limited partnership (or “en commandita”).
Below we explain what each one consists of, as well mexico phone lookup their advantages and disadvantages.
Limited liability company: This is the most common type of company in Spain for decades, as entrepreneurs do not have to personally respond with their assets for the company's debts, liability is limited to the capital contributed, it is a form in accordance with the usual requirements of an SME and the capital needs are lower than those of a public limited company. It is characterised by the fact that the liability of the partners is limited and because the share capital is divided into shares.
For its incorporation, a minimum capital requirement of 3,000 euros is required, which must be paid in full when signing the public deed (although it is possible to proceed with a successive foundation of the SL with a lower figure, in which case the promoters, until the minimum capital figure is reached, are subject to special limits and obligations to reinforce the entity's own resources). The minimum number of partners for its incorporation is one.
Advantages: liability is limited, so that the partners do not have to pay any losses with their own assets; the procedures for incorporation and operation are simpler than those for a public limited company; incorporation requires a reasonable amount of capital and can be done by a single person; from a certain level of profits (40,000 euros), taxes are lower than those of a self-employed worker and with a company the self-employed worker can deduct his salary as an expense. It is possible to incorporate a company in a very short period of time by electronic means (express companies).
Disadvantages: shares are not easily transferable, partners have priority (which can be understood as an advantage if what is desired is to restrict third party access to the business activity), so it is not a convenient type of business company if you intend to attract a large number of investors.
Public limited company: This is the second most commonly used type of commercial company. It is characterised by the fact that the capital is divided into shares that can be freely transferred – the opposite of a limited company – as well as by the large number of partners that can participate in it.
For its incorporation, a minimum capital of 60,000 euros is required, with 25% paid at the time of the public deed. The minimum number of persons required for its incorporation is one.
Advantages: the company is divided into shares that are freely transferable, the liability of the partners is limited to the capital contributed, it can be a sole proprietorship and it can be listed on the stock exchange. In addition, certain activities such as banking, pharmaceutical, insurance, pension fund management companies, etc. require this type of commercial company.
Disadvantages: the minimum capital required is high, the presence of people outside the company cannot be controlled and the procedures for incorporation and operation are more complex than those of, for example, a limited company.
General partnership : This is a type of personal business company in which the partners play a very important role, as they not only invest capital but also contribute their work and manage the company directly. Therefore, the status of partner is not freely transferred, and the figure of the industrial partner is also provided for, whose only role is his work. On the other hand, their liability is unlimited, so they are personally liable for the company's losses. The beginnings of this type of company date back to the Middle Ages, when "merchant societies" or "societas mercatorum" operated. Currently, their use is practically residual.
As regards its constitution, no minimum capital is required and its name must include the name of at least one of the partners plus the words “and Company”, without being able to add the name of another person not related to it. It can be formed by two people.
Advantages: The structure and operation are simple and no minimum capital is required for its incorporation. Access to the entity by persons outside the entity can be controlled.
Disadvantages: liability is unlimited, personal and joint and it is not possible to delegate the management of the company to an external professional.
Limited partnership (or limited partnership) : This is similar to a general partnership, but it differs in that in this type of partnership, it is possible for a certain type of partner not to be directly responsible for the management of the company. Therefore, there are two types of partners: general partners, who are unlimitedly liable for the company's debts and participate in the management of the company, and limited partners, who do not participate in management and whose liability is limited to the capital contributed or committed. There are also two types of limited partnership: simple limited partnership and limited partnership by shares.
Advantages: it does not require a minimum capital for its incorporation and, in its share-based form, it allows it to attract the capital of others who do not participate in the management.
Disadvantages: The structure and operation are more complex and non-limited partners cannot vote or participate in any act of the company's administration.