Business Formation: Essential Steps and Legal Compliance
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Business Formation: Key Administrative Procedures
Economic Tax on Activities (ALIAE)
The ALIAE (Economic Tax on Activities) is a tax levied on local businesses and professionals engaged in specific activities. Only companies with a legal form that is a social factor and an annual turnover exceeding €1,000,000 are subject to this tax.
Declaration of Commencement of Activity and Tax Options
This document provides essential information regarding the characteristics of the business activity, its location, and the chosen tax regime. This declaration must be submitted by the employer or professional to the government treasury before the start of any activity.
Prior Declaration Before Starting Activity
A general declaration may be required prior to the official commencement of business operations.
Income Tax Regime Selection
Income tax is a direct personal tax levied on individuals, based on their income and personal/family circumstances. An individual entrepreneur is subject to this tax based on the revenue generated by their company.
Social Security Registration for Companies
Before commencing activities, all employers must register with the general Social Security system for their contracted workers. A natural person applicant must provide their ID card. If the applicant is a company, a certificate of commercial registration of its existence is required. This registration generates an identification number that must always be used in all interactions with Social Security agencies.
Self-Employed Social Security Registration (RETA)
This special scheme applies to all freelancers who regularly perform a personal or economic activity for profit, without holding an employment contract, and who may or may not hire other people. A monthly fee is paid to Social Security.
Legalization of Official Accounting Books
- Individual Entrepreneurs: Requires a journal book, inventory book, annual accounts book, income and expense books, investment goods register, and invoices numbered by date and grouped quarterly.
- Companies: Requires a journal book, inventory book, annual accounts, and minute books.
- Cooperatives: Requires a register of members, capital contributions book, minute books, and journal.
Drafting of Public Deed of Incorporation and Bylaws
The bylaws, which establish the rules for the company's operation, are included in the public deed of incorporation and are of significant importance. This drafting typically involves qualified professionals and adheres to specific regulations governing different company types.
Additional Administrative Steps for Business Setup
Acquisition of Negative Name Certificate
Before registering a business, it's essential to verify that the chosen name is not already in use by another existing entity. This requires requesting a certificate of non-coincidence from the Commercial Registry.
Notarization of Constitution and Bylaws
Granting of a public deed by a notary public for the approval of the company's constitution and bylaws.
Bylaws Approval Application
Application for the official approval of the company's statutes.
Settlement of Asset Transfer Tax and Documented Legal Acts
Payment of taxes related to asset transfers and other documented legal acts.
Commercial Registry Enrollment (Specific Companies)
Registration in the Commercial Registry for specific types of companies, such as anonymous societies.
Registration in the General Register of Cooperatives
Specific registration for cooperative entities.
General Commercial Registry Enrollment
General registration of the company in the Commercial Registry.
Obtaining Tax Identification Number (NIF)
Acquisition of the company's unique Tax Identification Number.
Worker Social Security Registration and Affiliation
Registration and affiliation of all contracted workers with Social Security.
Partner Social Security Affiliation
Affiliation of company partners with Social Security.
Employment Contract Formalization
Conclusion and formalization of employment contracts for staff.
Operating Licenses and Other Business Requirements
Activity Licenses and Workplace Opening
- License for activities classified as nuisance, insalubrious, harmful, or dangerous.
- License for qualified activities (those not falling into the above category).
- Communication of workplace opening.
Sealing and Registration of Visit Books
Acquisition and official registration of visit books, often required for labor inspections.
Work Calendar Preparation
Preparation of the company's annual work calendar.
Company Procurement and Contracting
Procedures related to the company's acquisition of goods and services, potentially involving communities.
Local Purchase or Lease Agreements
Formalization of agreements for local purchases or property leases.
Application for Textbooks License
Application for a specific license related to textbooks, if applicable to the business activity.
Patents and Trademarks Registration
Registration of intellectual property, including patents and trademarks.