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The first stage of an entrepreneur's life is filled with a whirlwind of doubts and questions about how to get started.
Beyond their strategic mind, having shaped their idea and defined the first lines of investment to promote a startup, the first bureaucratic questions also appear: What do I need to start it up, what procedure do I have to follow to legalize my company, do I have to incorporate a company?
The answer is yes, and we will tell you why. First of all, you should know that although it may seem a tedious procedure and you should go to specific professionals to carry out the whole procedure, incorporating your business through a company will not only serve to regularize the business activity, but it will also guarantee you a promising future and will bring you closer to solid funding opportunities, as well as shield you against possible future problems, both internally and externally of the startup.
What steps should I follow to incorporate a startup in Spain?
To legally formalize your company, you must choose a corporate form, draw up its bylaws and incorporate it before a notary. For this, the role of a lawyer will serve you as a legal guide in all decisions and will be your maximum support in all the management. In Spain, the bureaucratic procedures can take at least 10 days and can be divided into different legal steps.
To begin with, the first thing to do is to define the legal form your startup will have. When deciding on the type of company, there are different options and you will have to understand which one is the most appropriate. This will depend on the capital you have available, whether loans or other forms of investment are needed, and the approximate profits you think you will be able to obtain. If more than one person is involved in the business venture, it is best to form a business partnership. If you are two or more partners, it is advisable to regulate very well the management and administration of the company, the role of each partner within the startup and their percentage of participation, or the possible entries and exits of new partners. All these issues are established through a document known as the partners' agreement.
Registration and tax formalities
Depending on the legal form that you have finally assigned to your startup, other essential steps follow, such as the registration of the name or trademark in the Central Mercantile Registry. Currently this is a procedure that can be done online.
The next step is to make the bank deposit with the initial capital required by the type of company. To do this, you must first open a bank account in the name of your startup.
It is also time to draft the articles of association and present the public deed of incorporation for signature before a notary; this drafting will also depend on the type of company assigned.
Lastly, we come to the direct formalities with the Treasury, which include: applying for a Tax Identification Number (NIF), registering with the IAE (Tax on Economic Activities) or census declaration, and filing the registration as a company in the Commercial Registry.
What else do you need to know?
From the incorporation of your company you will have to assume a series of new responsibilities, such as the payment of taxes or the presentation of monthly or annual declarations as a company. It also implies the realization of periodic assemblies as control measures between the existing partners to carry out the decision making.
But the value of incorporating and formalizing your company will always be the set of benefits you will have access to, starting with access to credit and financing, something vital for the evolution and expansion of your business. If the time comes to create a team and establish a staff, you will be able to hire your employees with all the guarantees and benefits of law. And of course, we cannot forget the advantages of establishing a separation of assets between partners and company. In the event of a debt, the liability falls solely on the company and not on the individual partners. In this sense, the liability of the partners is limited only to the capital they have contributed.
In short, incorporating a company is the way to legalize your business activity and to guarantee the success and growth of your company in a legal way. A step that is essential if we are talking about a startup that is about to begin its journey.
