Business Legal Structures and Terminology
Core Legal Concepts
- Legal Form: Identification of a legal entity before the administration, customers, and suppliers.
- Disclaimer: The obligation to respond to business claims, which may be limited or unlimited.
- Capital Contribution: Assets, goods, or labor provided by partners to form a company.
Types of Business Entities
- Sole Trader: An individual with legal capacity who conducts business in their own name or through representatives. They are personally liable for all obligations without distinction between civil and commercial assets.
- General Partnership: A society where all partners participate in commercial activities with equal rights and obligations. Liability is unlimited.
- Limited Partnership: An organization with both general partners (unlimited liability) and limited partners.
- Limited Liability Company (LLC): Requires one or more partners and a minimum capital of €3,005.06, fully paid and divided into shares.
- New Enterprise Limited Company: A specific entity type with social capital between €3,012 and €120,202, offering limited liability.
- Public Limited Company (Sociedad Anónima): Constituted by one or more members with a minimum social capital of €60,101.21, divided into shares.
- Labor Company: An SA or LLC where the majority of capital belongs to workers who provide services directly under indefinite employment contracts.
- Cooperative: A non-profit entity created by natural or legal persons for economic and social interest. Membership is voluntary, and capital is variable based on the number of partners at any given time.
Commercial and Operational Terms
- Royalty: Fixed or income-based payments made to a rights owner in exchange for permission to use their property.
- Know-How: The specific methods, processes, and management techniques used to run a business.
- Franchise: A commercial contract where a franchisor grants a franchisee the license to use a trademark and business methods in exchange for periodic fees.
- One-Stop Shop for Business: Integrated centers designed to simplify enterprise creation by providing processing and advisory services.
Taxation and Compliance
- Income Tax: A direct, personal tax levied on natural persons based on their income and personal or family circumstances.
- Self-Employed: Individuals who perform a lucrative economic activity directly and personally, without being subject to an employment contract, even if they hire others.
- Building Permits: Mandatory planning permission required from the local council for any construction or renovation work in business premises.
