Spain has managed to recover very well after being hit hard by the global recession and downturn during the late 2000s. As 2017 dawns, Spain’s economy is growing at an impressive rate and is currently one of Europe’s success stories. So if you are considering starting a business in Spain or expanding your company into the country, now could be the perfect time to take advantage of the favourable conditions in the market.
However, Spain has always been a country that has suffered from the challenge of economic bureaucracy, so if you are going to start a business here you need to be prepared. Here are eight steps for how to set up a business in Spain in 2017.
Step One: Do your market research
Yes, Spain’s economy is doing well at the moment but that’s no excuse to jump into anything with doing the proper research into whether your business is a smart proposition. Is there a gap in the market for the product or service that you are going to provide? If not then you could find yourself out of business quickly. And if your idea does look good on paper it’s still a smart idea to discuss the prospect with a consultant who is familiar with the market and location you’re looking to start your business in.
Step Two: Take legal advice
Spain has a relatively complicated legal system and it’s absolutely vital that if you are going to start a business here, you need to take professional legal advice and speak to some lawyers in Spain on how best to move forward in your situation. There are many expert legal firms that have extensive experience in advising foreign nationals in the legal steps they need to take in order to launch a business in Spain.
Step Three: Get Spanish help
Given the bureaucracy and complexity of the legal procedures here, you need to have a very strong command of the Spanish language. If you are not a fluent Spanish speaker then you need to have a trusted business partner who is. Trying to fulfil all of the legal obligations is challenging enough without having to battle through a language barrier. That’s before you even begin trying to sell your product or service, which will be clearly much easier if you can speak Spanish fluently.
Step Four: Register the business name
As with starting a business in any part of the world, a good name can take you a long way. Once you have come up with a name for your business you need to register it. This will then give you the exclusive rights to use this name commercially. For complete peace of mind regarding this you could also opt to trademark the name – again this is an issue that you would need to discuss with your lawyer.
Step Five: Chose a legal structure
In Spain there are a number of legal structures that you can choose from when you set up your business. Choosing the right one is important for the structure of the business and the responsibilities you’ll have. Here’s a basic overview:
- Sole Trader – the simplest business type, where the business is considered to be the same as the person who runs it. That means that the individual is liable for all the debts.
- Jointly Owned Company – similar to a Sole Trader except with more than one individual in the company. Each member is liable to an equal share of the debt.
- Cooperative – this is a type of company where the people who work together have democratic control of the business. There are two grades of cooperative. Grade one cooperative have at least three people. Grade two cooperatives are made up of two or more cooperatives.
- Partnership – this is a business where two or more people together contribute money, equipment, facilities or labour and divide the profits between themselves.
- Limited Liability Company – this is a legal entity that requires an minimum initial investment of €3,000.
- Public Limited Company – a more complicated entity with a large number of regulations governing it. This type of business requires annual audits and decisions are taken by majority. The minimum initial investment in a Public Limited Company is €60,000.
- New Enterprise Limited Company – a simplified version of the Limited Liability Company. There is a maximum of five initial founders and the initial investment must be between €3,000 and €120,000.
- Worker-Owned Company – this is a type of Public Limited Company where the shares are held either by workers or those who don’t work for the business. It is relatively complicated as workers who directly contribute labour must own at least 51% of the business, while workers who do not own shares in the business must not work more than 15% of the total hours worked in a year.
Step Six: Create a business plan and get finance
Now you need to finalise your business plan. Once you’ve done so you can begin to attract investors. This could be through bank loans, business grants or even private investors. You’ll need to have a comprehensive plan in place if you want to convince investors to work with you – just as you would anywhere in the world. Of course, if you’re lucky enough to be able to finance the business yourself you can skip this step.
Step Seven: Choose your location
Next you’ll need to select a location. Assuming that you already know the area that you are looking to start a business in, you’ll need to scout around to find the right premises. Understand the facilities that you will require and consider issues such as parking and public transport before you settle on the right place for you.
Step Eight: Get permits and licences
Finally you’ll need to attain the correct permits and licences from regional and municipal governments. Once again, these will differ from business to business so you’ll need to consult with your lawyer on exactly what you need before you can get started.