If you’re thinking about starting a business, choosing the legal form of your company is one of the most important decisions. This choice will determine key aspects such as partner liability, required capital, or tax obligations.
In Spain, there are almost twenty legal forms, but the six most commonly used are:
-
Individual Entrepreneur (Self-employed)
It’s the simplest option to start a business. The self-employed individual is solely responsible for the company and answers with their personal assets for potential debts.
- Advantages: easy to establish, no minimum capital required, and fewer administrative procedures.
- Disadvantage: the entrepreneur assumes all risks and is liable with their personal assets.
-
Limited Liability Company (SL)
It’s the most common legal form for small and medium-sized businesses. A minimum capital of 1 euro is required, and the partners’ liability is limited to the capital contributed.
- Advantages: protects personal assets and allows greater stability in the company.
- Disadvantage: involves more procedures and accounting obligations than being self-employed.
-
Public Limited Company (SA)
Designed for large companies, it allows raising investment through shares and requires a minimum capital of 60,000 euros.
- Advantages: ease of obtaining financing and limited liability of shareholders.
- Disadvantage: greater administrative complexity and high management costs.
-
Civil Partnerships (SC)
A contract by which two or more people pool capital with the purpose of sharing profits among themselves. It is characterized by being a contract through a private document, in which the partners’ contributions are integrated into the partnership and the liability is joint and unlimited among the partners.
- Advantage: Simpler and more economical constitution than commercial companies as public deeds, minimum capital, or registration in the Commercial Registry are not mandatory (except in certain cases).
- Disadvantage: Unlimited liability of partners for the partnership’s debts contracted with third parties.
-
Cooperative Society
A company democratically managed by its members, where each member has one vote. It is common in social projects or collaborative economy initiatives.
- Advantages: democratic management and tax benefits.
- Disadvantage: requires a minimum number of members and a more complex organizational structure.
-
Limited Partnership
Combines two types of partners: those who manage the business with unlimited liability and those who only invest, with limited liability.
- Advantages: allows attracting investment without limited partners having to manage the company.
- Disadvantage: more complex administration and greater coordination between partners.
If you have doubts about which legal form best suits your business, we offer a team of specialized technicians who will advise you without obligation. Contact us by filling out the questionnaire and receive personalized guidance to launch your company with the best legal structure.
