Start a Business in Spain

Essential steps, tips and practical advice to start a business in Spain.

In this article we will focus on the practical aspects of starting a business in Spain. However, we assume that before you begin to start your Spanish business and undertake the parade of legal requirements, that you:

1. already have a solid business idea;
2. have done sufficient market research to confirm the economic viability of your proposed business (if you don’t know how to do this, I recommend that you go buy a book on the subject or hire a consultant);
3. ideally have previous experience in your intended industry;
4. speak, or one of your business partners speaks, fluent Spanish.

These are the pillars of a successful business in Spain.

Note: The information contained here in “Start a Business in Spain” is just a guide and should not replace the professional advice of a lawyer, gestor, business consultant, accountant and/or financial advisor. I encourage you to make friends with these professionals early in the start-up process.

Start a Business in Spain: the Six Essential Steps

1. Choose a name for your business (and register it).
2. Choose a legal business structure.
3. Create a business plan.
4. Find financing.
5. Find a location.
6. Secure licenses and permits.

1. Choose a name for your business

A good business name is your business’s first asset in Spain. You can choose to register your business name with Spain’s Business Name Registry (Registro del Nombre Comercial), which in theory gives the nameholder the exclusive right to use that name for commercial purposes. Business name registration is optional and is handled by the Industrial Property Registry (Registro de la Propiedad Industrial). When you register a business name, you will need to provide proof of registration for IAE tax (Impuesto de Actividades Económicas).

The various sociedades can have a brand or commercial name different from their official business name. (See Companies in Spain: The Types of Business Entities for Companies in Spain for more information on sociedades.) 

2. Choose a legal business structure

Spain offers several legal business structures, also known as business entities, to suit a variety of needs, each one with a different set of legal and fiscal responsibilities. Choosing the right one is important to accommodate your business-to-be’s present and future goals. The legal business structures in Spain are (links take you to the relevant bit on our Companies in Spain: The Types of Business Entities for Companies in Spain page):

• Sole Trader or Sole Proprietor (Empresario Individual or Autónomo)
• Comunidad de Bienes (C.B.)
• Partnership (Sociedad Civil)
• Public Limited Company, or Corporation (Sociedad Anónima or S.A.)
• Limited Liability Company (Sociedad de Responsabilidad Limitada, S.R.L., or S.L.)
• New Enterprise Limited Company (Sociedad Limitada Nueva Empresa)
• Worker-Owned Company (Sociedad Laboral)
• General Partnership (Sociedad Colectiva)
• Limited Partnership (Sociedad Comanditaria)
• Cooperative (Sociedad Cooperativa)

3. Create a Business Plan

Whether to attract investors or create a road map for growth, every business needs a business plan. Any good start-up business book should contain a chapter outlining the essential elements of a good business plan. Here is one such outline of a business plan’s elements (in English). However, there are two more things that you should keep in mind:

Language. If you plan on looking for Spanish financing or investors, your business plan needs to be in Spanish. On the other hand, if you plan on looking for a combination of Spanish and international investors, you should have both a Spanish and English version of your business plan available for everyone involved.

Getting help. The local Chambers of Commerce in Spain (Cámaras de Comercio) offer free business plan advice and support for entrepreneurs. Find a Chamber of Commerce in your area. 

4. Find financing

Adequate business financing is key to any business, so don’t discount any option just yet, including the following:

Personal Financing

Especially for low-capital intensive small businesses, dipping into your savings (or asking friends or family for gifts or loans) might possibly be the shortest and best route to getting your business started.

Loans (Préstamos)

Available for residents and non-residents alike, loan conditions vary according to the size of the loan needed (or if it’s considered a microloan), the amount of collateral, the financial institution and other factors. You may be required to pay the loan back in as little as three years or in some cases as many as fifteen. Payments could be required monthly, quarterly or semestrally. Check with Spain’s ICO (Instituto de Crédito Oficial, in English and Spanish) or any major bank (banco) or savings bank (caja de ahorros). Just be sure to shop around.

Grants (Subvenciones or Ayudas)

Grants are available to new and existing businesses on the municipal, provincial, regional, national and European Union level. Grant conditions vary widely, but grants are commonly available for businesses in certain industries or sectors, creating employment in particular areas or employing certain disadvantaged populations.

Check with your municipal, provincial and regional government, or your local Chamber of Commerce, for available grants. Check DGPYME (Dirección General de Política de la Pequeña y Mediana Empresa) for Spanish grants and Guide for European Union grants.

Angel Investors or Business Angels

Angel investors are private investors who invest in new or existing businesses for a variety of personal or financial reasons. But angel or not, angel investors expect a good return on their investment like any financial institution would. The advantage of an angel investor is that investment conditions, and the amount of risk they are willing to assume, vary widely. Sometimes when a bank turns you down for a loan, an angel investor might just come to your rescue. Check with the Spanish Business Angels Network (Red Española de Business Angels).

Lines of credit (Cuenta de crédito or póliza de crédito)

A line of credit during the start-up phase can be considered a peace of mind loan for those extra unanticipated costs (which there will be and you should plan for, by the way). You pay interest on the borrowed money when you need it, and a commission for the privilege of having a line of credit when you don’t. Interest rates can be fixed or variable and terms are often for one year.

 

…Continue reading PART 2 of
Start a Business in Spain, Six Steps to Your Business in Spain

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Last updated 30 01 2008