Essential steps, tips and practical advice to start a business in Spain.
It’s your business’ first asset 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:
These are the pillars of a successful business in Spain. Note that 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.
A good business name is your business’ first asset in Spain. You can choose to register your business name, 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 Spanish Patent and Trademark Office (Oficina Española de Patentes y Marcas). In Spain, sociedad businesses 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.)
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):
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, but here is one such outline of a business plan’s elements (in English). However, there are two additional things that you should keep in mind in Spain:
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.
Adequate business financing is key to any business, so don’t discount any option just yet, including the following:
Personal Financing Especially for small businesses that don't require a large amount of capital, 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.
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.
You’ll need licenses and permits.
Once you’ve considered who your customers are, where they will come from, what kind of facilities you will need to accommodate your business (i.e. Will you need space for dressing rooms? Will you need a warehouse? Do your delivery drivers need parking?) and whether you need to be near certain other types of businesses, then you can start searching for a location for your business. Walk around your intended area and look for signs such as “traspaso”, “en alquiler”, “local disponible”, etc. Jot down the phone number and give them a call. Or use an experienced local real estate agent. Or try a website such as Fotocasa.es or idealista.com, which lists offices and commercial locations all over Spain for lease, rental or purchase.
You’ll need licenses and permits from your respective municipal and regional governments. Check with your local ayuntamiento and comunidad autónoma for the latest requirements. To get an idea of what may be required, in the city of Madrid for example, a license (licencia urbanística) must be obtained if you intend to build, renovate or demolish anything (interior or exterior) where you will conduct your business. (You won’t need a license though if you just want to paint the interior or change something small inside your unit.) License fees vary depending on what exactly you’re doing and how many square meters you’re doing it in. On a regional level in the Comunidad de Madrid, certain business activities are required to obtain activity-specific licenses, such as travel agencies, tattoo parlors, auto body repair shops, etc. Some licenses you will have to pay a fee for. Depending on what your proposed business is, other types of licenses may be required as well. Not a license per se, but you should also be prepared to charge Value Added Tax on goods and services (Impuesto sobre el Valor Añadido, IVA), which ranges from 4-21%. The tax rules are governed by different plans (regímenes) depending on what your business is. Check with the national Agencia Tributaria and your tax or financial advisor regarding your tax and reporting obligations. Your business will also need a “Visitors Book” (Libro de Visita). You must acquire it from your province’s Dirección Provincial del Ministerio de Trabajo y Asuntos Sociales and have it available at all times for labor and Social Security inspectors. Once you’ve successfully chosen a name and a legal structure for your business, created a business plan, found financing and a location, and secured licenses and permits, then you can start to hire employees, create a website, advertise and perform all the other tasks that will contribute to the success of your very own Spanish business.
It may be possible to secure a work visa based on opening a business in Spain. However, among other things, you will need to prove that the business will be able to support you after the business costs have been deducted, that you are qualified to do whatever it is that you propose to do in Spain and that you can finance the proposed business. You must also apply for the visa in your home country. Contact a Spanish embassy or consulate in your home country for details.
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