Business Setup and Funding: Taxes, Registration, and Financing
Proceedings of Constitution
1. Formalities in the Ministry of Economy and Finance
- A. High-statement in the Economic Activity Tax (IAE)
- B. Declaration Census (CENSUS)
- C. Presentation of the books in Hacienda
2. Paperwork at City Hall
- A. License Activities and Facilities
- B. Licensed Works
3. Formalities at the Ministry of Labor and Social Affairs
- A. Enrollment in Social Security
- B. High Free-Lance
- C. High in Social Security
- D. Regime of Openness in Communication Workplace
4. Formalities in the Trade Register
- A. Social Documentation
- B. Accounting Documentation
Aid and Subsidies to the Company
It may come from:
- A. City Hall
- B. Autonomous Administration
- C. Central Administration of the State
- Deductions and Tax Credits
- D. European Union Grants
- Regional Development Fund (ERDF)
- European Social Fund (ESF)
Sources of Financing
1. Own Funding Sources
Those that appear as capital and reserves as liabilities. This capital consists of contributions of members, and reserves are due generally to the withholding of benefits.
Types of Reserves
- A. Legal Reserve: The law requires allocating 10% of profits until the reserve reaches 20% of the capital.
- B. Voluntary Reserve: By choice, in order to retain and capitalize on the business benefits.
- C. Statutory Reserve: The will of the shareholders’ meeting, so it has determined that the statutes of the society.
2. External Funding Sources
Income from outside the company. They can be:
- A. Business Loans: Financing that providers provide us allows us to pay our purchases at a later date than the date of purchase. Financing is usually at no cost, but sometimes when applying the deferred payment, we lose the cash discount.
- B. Discount Shopping: Involves obtaining from a financial institution the amounts of receivables (bills of exchange, checks, etc.) before the maturity of them. You have to pay interest or fees to the bank.
- C. Loans: An operation in which a financial institution (bank, *caixa*) gives money to the enterprise since it is a contract to repay the principal plus the interest received as agreed. The way in which it is agreed to repay the loan and interest is:
- Amortization at the end of the agreed period of capital and interest.
- Repayment at the end of the agreed period of the agreed capital but pay interest periodically to be accrued.
- Amortization periodically paid in capital and interest.
In these loans, the lender always requests a guarantee for repayment.
- D. Leasing: Is a contract for the lease of movable or immovable property with an option to purchase at the end of the contract. This funding has fiscal benefits for the company. There are three elements involved:
- A company that needs financing.
- A financial company that facilitates the operation.
- A company that sells the property that needs financing.
The one drawback is that it has a higher cost than a normal loan.
- E. Credit Policy: It is a contrast to a financial institution through which this allows the company to make payments from the current account from overdrafts with a limit set. It must pay interest and commissions agreed upon.
- F. Factoring: Is the sale of the collection portfolio to customers at a specialized company, making short-term sales in a cash payment, assuming that the risk of insolvency of such debts. The financial institution buys us such cash payments made.
- G. Renting: A lease on the property to be obtained with maintenance and replacement of it. At the end of the contract, there is also an option to buy.