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Spain > Articles


Starting A Small Business In Spain - 5 Things You Should Know

  Posted Tuesday February 18, 2014 (02:32:33)


Starting your own business is a dream for many people – it opens up the possibility of higher earnings, it brings freedom from a regular employment, and doesn’t involve many of the work-related restrictions that go with a regular job. But of course it also comes with a few potential downsides. For one, there isn’t a guaranteed income and you have to begin from scratch. Starting a business in a foreign country poses a few additional challenges.

Before you start your business in Spain, it is a good idea to ask yourself how your business is going to be different from existing business in Spain. Also, is there a market for your business? This initial research will help you start out on the right foot.

Once you’re ready to begin turning your dream into reality, give some thought to the following considerations. These are some important things to know for anyone who is looking to start a business in Spain.

Choosing your business structure

You may consider buying an existing business if you have the capital and want to get started quickly. An existing business that is already profitable will enable you to start earning right away, while avoiding the initial obstacles that go with setting up a new business. It is of course essential that you have your accountant check the details of the existing company first. An alternative business opportunity is starting a franchise. There are many such options in Spain.

There are different forms of businesses available in Spain, and you can decide on the one that is most suitable in consultation with your accountant. The different business structures include:

- Sociedad Civil or a partnership

- Sociedad limitada or a limited company with registered shareholders and set minimum trading capital in the bank.

- Sociedad anonima refers to a larger company with more shareholders and a greater amount of minimum trading capital.

Registering your business

• Foreigners need to obtain an N.I.E number for their business in Spain. This identification number is needed for several reasons, including buying or renting property. You can apply for the number at a police station, with your passport. You should be able to obtain it about three weeks later.

• To register your business, you need to obtain an opening license (licencia de apertura) from the town hall where your business will be located. This license defines the business and its mode of operation.

• The next step is to get another identification number called a CIF, which can be obtained after registering your business with the IVA office (this is similar to the Revenue and Customs office in the United Kingdom).

• Registration also needs to be done with the social security office. Your social security payments will be determined based on the type of business structure.

Finding the right premises

It makes good business sense to opt for smaller premises or premises that involve lower rent. Once you are reasonably sure that your business is running profitably, you can decide on a change of location. Spain is affected by a property crisis and it may take a good deal of bargaining, especially to acquire commercial premises. Avoid premises that need a lot of work before they become useable, as this can be quite expensive, and the costs will not be recovered if the business doesn’t take off. You should also have your lawyer study your lease to make sure it doesn’t hold you to any inconvenient or unnecessary obligations.

Hiring staff

Wages are not very expensive in Spain, but it is important to avoid over-staffing initially, as you are required to give severance pay to employees that have worked for you for more than a year. Once your business starts bringing in enough revenue, you can comfortably afford to hire more staff.

Generating business

It may be difficult for a new business to earn revenue in the early days. It takes some time to become established and build a positive reputation. A great way of putting your business on the grid is through the internet. It is an effective marketing tool, and having an online presence can provide a great boost to your business. You can also use more conventional marketing methods like print advertising, distributing leaflets and sponsorship. Avoid an expensive launch – this will bring in an early spurt of business, but will probably be difficult to manage both financially and logistically at such an initial stage. It is far better to build up your business in a slow and steady manner, as this gives you the time and space to work out potential problems, and also allows you to build a loyal customer base.


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