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Starting a business in Spain

Starting a business in Spain

Why start a business in spain?

Many people moving to Spain need to make a living. Work can be tricky to find and isn't well paid compared to Western Europe or America, so one solution might be to start your own business.

As with anywhere, the trick is to either offer something that no one else already is, or do it much better than the competition. And there is plenty of competition, with Spain still being the number one destination for Brits to buy abroad, but this does offer more scope in the way of targeting expats.

In fact, unless you are fluent in Spanish or can employ Spanish speakers, then you are pretty much limited to the expat market alone - but even so you will need to learn some Spanish to cope with basics.

When you start your own business in Spain you open up the potential for high earnings - there is no ceiling and no restrictions, but of course this doesn't mean it's without its potential downsides.

You should remember, like when starting a business anywhere, you don't have a guaranteed income, so you should allow time and make sure you have enough savings to live on for at least six months.

When you start your business from scratch, you'll have to build up a customer base. This will involve outlaying money upfront on advertising, setting up premises etc before you start generating any income, so make sure you've budgeted for this properly before you start. Ensuring you do your sums carefully before you start can be the key to long-term success. If your business can survive this difficult initial period you should start to reap the benefits of having your own business in Spain.

Sadly, the failure rate of new start-up businesses in Spain is high, so do your research thoroughly and ask yourself these questions:

  • Are there already too many other businesses in competition with each other? - How is your business going to differ from existing businesses?
  • What can your business do differently to get an edge?
  • Do you have a new business idea that doesn't exist yet in the region you are hoping to settle?
  • Is there a market there for this new business idea? Research it thoroughly first.

Top tip

If you want to start a business in Spain, have you considered buying an existing business or a setting-up a franchise? If you want to get up and running quickly and have capital to invest you may want to consider buying an existing business for sale in Spain. Major advantages are being able to see that it is already profitable so you can start earning from the business straight away, avoiding the difficult initial setting up period and hopefully improving the business even further with your new ideas and enthusiasm.

Ensure you accountant checks the detail of any company in Span you are thinking of buying, before you commit - when you buy a business in Spain, you become liable for any exiting debts that come with the business.

Alternatively there are now a number of franchise opportunities available in Spain and this again vastly reduces your risk of starting a business, particularly if you choose a franchise opportunity that is already successful in other parts of Spain.

Steps to take when starting a business in spain

If you intend to start a business in Spain you are going to need either a gestoria or an accountant anyway so get one now and pay them to set your business up - it's worth it!

Step one
Make sure you first get an N.I.E. number for your business in Spain. This is simply an identification number for foreigners which you may have already as it is needed for many purposes such as renting or buying a property. You can get this yourself by going to a police station with your passport to apply and then collect your number around three weeks later.

Step two

Together with your accountant, discuss the different business structures available in Spain and decide on the one that suits you and your business best.

  • Empresa individual is the equivalent to a sole trader in the UK with the business in Spain being run in one person's name.
  • Sociedad Civil is a partnership where several individuals will come together to form a business in Spain.
  • Sociedad Limitada is a limited company in Spain with registered shareholders and a set minimum trading capital in the bank. Fees are higher than for a sole trader but if sued then only the assets of the limited company are at stake.
  • Sociedad Anonima is a larger company with a large minimum trading capital and shareholders. This is similar to a plc in the UK.

Step three

Visit the local town hall where you are going to locate the business to register your business by getting a opening licence (licencia de apertura) which defines what your business is, and how it will operate.

Step four

Register your business in Spain with the IVA office which is the equivalent of the revenue and customs in the UK. Your Spanish business will then receive an identification number known as a CIF. The agencia tributaria collect your tax on any profit you make in your business in Spain - again, all this form-filling can be done on your behalf by your Spanish accountant.

Step five

You also need to register your business in Spain with the social security office and make social security payments, which vary depending on the structure you've chosen for your business. If you are a sole trader this gives you entitlement to the local health service such as doctors and hospitals (not dentist) and if you pay in for 15 years you qualify to receive a pension.

If your business is structured as a company then you have to pay social security on behalf of any employees and they have to have a proper written contract providing guidelines for both parties. Your Spanish lawyer can advise you on this.

Step six

Get your business in Spain going - work harder than you have ever worked before - never give up, make lots and lots of money and don't forget to enjoy it!

get more advice about buying and living in spain here >>

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