Setting up a company

Setting up a company

The process of creating a company can be divided into two phases:

• The first consists of setting up the legal structure, which means incorporating the company so that an economic activity can take place.
• Once it is incorporated, for it to operate, it must be entered in the corresponding register and any licences and permits required for the business activity must be obtained.

Both processes involve some formalities that are dealt with at various administrative levels: central, regional and local.

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Incorporation of a company

When founding a company, you must choose what legal form it will have. This choice will depend on a series of factors, such as the number of partners, the amount of share capital, liability towards third parties, whether a physical establishment is needed for the business or not, etc.

Depending on the form chosen, some particular formalities will need to be completed in order to adopt a legal personality.

Legal forms for doing business

In Spain there is a broad range of possibilities with respect to the legal forms that are available for doing business.

• Commercial companies

  • Sociedad Colectiva (partnership)
  • Sociedad Comanditaria Simple (limited partnership)
  • Sociedades de Capital (companies or corporations):
    • Sociedad de Responsabilidad Limitada [SRL] (limited liability company)
    • Sociedad Anónima [SA] (joint-stock company)
    • Sociedad Comanditaria por acciones (limited partnership with share capital)

• Special commercial companies (subject to obligations and rights that do not exist for other companies)

  • Sociedad Laboral (Limitada y Anónima) (worker-owned limited company)
  • Sociedad Cooperativa (Cooperative)
  • Professional companies
  • Sociedad Agraria de Transformación (agricultural production company)
  • Economic Interest Grouping

The ones used the most are joint-stock companies and limited liability companies.

You can also engage in economic activity as a natural person, in your own name, taking on all the control and risk yourself. This is known as being self-employed. As a self-employed person, there is no obligation to found any kind of entity.

Choice of legal form

It is important to know the particular characteristics of each legal form in order to make the right decision. Below you can access a tool to guide you through the various forms a company can adopt to carry out business, enabling you to choose the one that best suits your needs.

Choice of legal form and incorporation procedures for each one

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Registration of a company

The process of entering a company in the commercial register is one of the steps involved in setting up a company, and is the moment when a company acquires its legal personality.

The company must be registered in the commercial register of the province where it has its registered address. For individual business persons, registration is voluntary.

You can use the following link to look at the different provincial commercial registers and find the one that corresponds to you.

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Founding and setting up a company online (CIRCE system)

Once you have decided on the most appropriate legal form for your business activity, you can proceed to set up your company.

You can carry out the procedures relating to the incorporation and start-up of certain commercial enterprises in Spain electronically using the unified CIRCE system, developed by the Directorate General for Industry and SMEs (DGIPYME) in 2003, which brings together all the procedures required by the bodies and administrations involved in the company incorporation process.You can also complete the procedure for terminating a business activity this way.

The types of companies that can be created online (CIRCE system) are the following:

• Individual business person (self-employed)
• Sociedad de Responsabilidad Limitada (SRL or SL)
• Joint ownership
• Sociedad Civil (non-stock corporation)

To carry out procedures via the CIRCE system, the Single Electronic Document (DUE, or Documento único Electrónico) must be filled out correctly; entrepreneurs may visit the Entrepreneur Service Points (PAEs, Puntos de Atención al Emprendimiento) for help filling out the document, free-of-charge. The PAEs also provide advice on actually starting up and carrying out the activity. You can locate the Entrepreneur Service Points at the following link.

Entrepreneur Service Point search

You may also set up your company on your own without the help of a PAE specialist, using the aforementioned CIRCE computer application. This application, with the virtual assistance of the PAE point of the Ministry of Industry and Tourism (PAE Virtual), streamlines the procedures for the incorporation and start-up of certain commercial enterprises in Spain.

Access the CIRCE system

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Other commercial establishments

There are other ways in which you can carry out a business activity.

Subsidiary

A subsidiary is a secondary establishment that has permanent representation and certain management autonomy, through which the activities of a parent company are performed entirely or only partially. A subsidiary does not have a separate legal personality from its parent company, but a notarial act must be registered in the provincial commercial register.

Procedures for opening a subsidiary

Franchise

A franchise is a system for selling goods, services and/or technologies, based on a close and continuous collaboration between independent companies (the franchisor and the individual franchisees).

The franchise does not have its own legal personality, given that a commercial contract is signed between two fully incorporated companies. However, if the companies have not been previously incorporated, the procedures associated with the chosen legal form will have to be executed.

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Information for each Autonomous Community

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