Business Formation: Legal Forms, Procedures, and Benefits

Posted on Jan 16, 2025 in Law & Jurisprudence

**B. Procedures and Requirements for Establishing Companies**

The promoters must make a series of steps in different government agencies from different geographical areas, namely:

  • Local and Provincial: Municipalities, Provincial Councils.
  • Autonomous: Governing Boards, Councils of the Autonomous Communities.
  • State: Ministries, National Institutes.
  • Community: Bodies of the European Union.

Another way to obtain this information is through Single Points of Business Calls (VUE) and the Centers or European Information Centers (BICs).

Specific Transactions for Companies:

  • Certification refusal of the name.
  • Memorandum and its execution.
  • Payment of tax on capital transfers and documented legal acts (ITP, AJD).
  • Entry in the Commercial Register.

Other General Procedures for All Enterprises:

  • The Census Statement: This is a process that businesses must undertake to inform the tax authorities of the commencement of business and indicate the arrangements or procedures for VAT and income tax that the employer can choose.
  • License Application Opening: Intended to authorize the use of the premises and facilities after verification that these are duly completed and ready.
  • The Property Tax (IBI): This is a direct tax, real, binding, and of municipal fiscal management, which corresponds to the municipalities.
  • Other specific transactions.

**C. Analysis of Economic and Social Benefits Derived from Creating Enterprises**

The final analysis for the choice of the most appropriate legal form for each business should consider, first, the characteristics of each project and, secondly, the establishment costs and tax benefits and economic incentives, depending on the legal form adopted, that could be obtained. The economic incentives that are commonly used can be classified under two headings:

Public Limited Company

The partners (shareholders) provide equity, and social debts respond only to the amount of their contribution. Liability is limited. Its features are:

  • It is a capital company; the partner has no birthright to the management of the company.
  • The capital is divided into shares.
  • Social capital can not be fully disbursed. The shares into which it is divided must be subscribed or paid at least 25% of their value.
  • Its legal limitation is that the capital can not be less than €60,101.00.

Labor Society

This society is a form of corporation or limited liability company in which employees are members of the company. Its features are:

  • It is a capital company since it is divided into shares or participations.
  • It is governed by the will of its members, meeting in a general assembly.
  • The form of organization and management of the company and its primary data are reflected in its statutes.
  • The name of the company should be followed by the indication “Labor Corporation” (SAL) or “Limited Liability Labor Partnership” (SLL).

Cooperative Society

A non-commercial society that does not seek profit but to satisfy the common needs of its members. From a business standpoint, it is the worker cooperative. Its features are:

  • Its members provide the capital and perform the work. Their liability is limited or unlimited.
  • The name of the company should include the words “Cooperative Society” (S. Coop.).
  • The capital consists of contributions from the cooperative, which will be reflected in registered securities, and may be disbursed by 25% or more upon constitution.