Autónomo vs SL: Everything You Need to Know About Registering a Business in Spain

If you want to start your business here, you will surely have questions: how to register, which documents to gather, and what to expect during the process.
I will try to share everything you need to know based on my experience. How to register a business in Spain, or rather, compare the two most popular business structures: Autónomo (self-employed entrepreneur) and SL (Sociedad Limitada, limited liability company).

Autónomo: Self-Employed Entrepreneur
What is an Autónomo? It’s a natural person who carries out economic activities under their own name to generate profits. An Autónomo works independently without being employed by someone else. A self-employed entrepreneur can work alone or hire up to five employees. In this case, the business is registered in the owner's name, though a trade name can also be used.

Advantages of Autónomo:

• Less bureaucracy. Registration is very simple and takes only 1-2 days.
• No minimum capital required. Becoming self-employed doesn’t require large startup investments.
• Full control of the business. All decisions are made by the entrepreneur.

Disadvantages of Autónomo:

• Unlimited liability. The owner is personally liable for all debts and obligations, risking their personal assets.
• Taxes. For high incomes, the tax rate can be quite high—up to 47%.
• Risks. In financial difficulties, personal assets may be at risk.

This is an ideal option for small businesses and freelancers who want to keep things simple and aren’t planning on scaling up their activities. However, if your income exceeds 60,000 euros per year, it’s worth considering a more advantageous business structure.


SL: Sociedad Limitada (Limited Liability Company)

Now, let’s talk about Sociedad Limitada (SL)—a limited liability company, the most popular corporate structure in Spain. SL allows founders to limit their liability to their capital contribution to the company, protecting their personal assets.

Advantages of SL:

• Limited liability. Founders are not personally liable for the company’s debts.
• Lower business taxes. For example, if the company’s revenue is between 40,000 and 100,000 euros per year, the tax rate will be 25%, which is more favorable than the progressive rates for Autónomos.
• Easier to obtain bank loans. Banks are more likely to lend to companies than to self-employed individuals.

Disadvantages of SL:

• Complex registration. Registering a company takes several weeks, unlike Autónomo, which can be done in 1-2 days.
• Higher startup costs. You’ll need to pay for notary services, the commercial registry, legal fees, and other expenses, which can amount to around 2,000 euros.
• Requirement for accounting. The company must submit financial reports and pay corporate taxes.

SL is the optimal choice for those who plan to scale their business, expand their team, and minimize personal risks. It’s also the preferred choice for entrepreneurs who want to protect their assets from potential company debts.


Comparison: Autónomo vs SL



Which Structure Should You Choose?

If you’re just starting your business and your annual income is below 60,000 euros, Autónomo is a quick and convenient way to get started. It’s perfect for freelancers, specialists, and small shops. However, be prepared for the risks to fall on you, and taxes could rise significantly if your income increases.

On the other hand, if your business is growing, you need to scale up, or you want to minimize personal asset risks, SL would be the better choice. Despite the more complex registration process and additional costs, this structure provides more protection and potential benefits, especially for larger projects.

Taxes: What to Consider When Choosing a Business Structure

VAT (IVA) The Value Added Tax (IVA) in Spain varies depending on the type of business and the goods or services you provide. For most companies, the VAT rate is 21%. However, some categories of goods and services have reduced rates:

• 0% for certain goods and services (e.g., export).
• 4% for some essential goods.
• 10% for certain products and services, such as food and healthcare.

So, whether you choose Autónomo or SL, you’ll need to account for the VAT rate that applies to your business.

Income Tax For self-employed individuals (autónomos), the income tax rate ranges from 19% to 47%, depending on the level of income. The higher your income, the higher the tax rate. For SL companies, income tax rates are lower, ranging from 15% to 25%, depending on the type of company and the size of the income.
Therefore, if your business is focused on a small income and you only want to work for yourself, the Autónomo structure may be more beneficial.

However, SL companies with larger turnovers can take advantage of more favorable tax rates and benefits for scaling.

Social Security Contributions Social security contributions are an important aspect of taxation to consider when choosing a business structure in Spain.

Autónomo For self-employed individuals, the minimum monthly contribution is about 86 euros in the first year.
It’s important to understand that this contribution guarantees access to healthcare, social security, and the ability to retire in the future. As your income increases, the amount of contributions may rise.

SL companies are also required to make social security contributions for their employees. Unlike Autónomos, these contributions vary depending on the number of workers and their wages. In the first year of creating an SL, contributions may be minimal, but as the company grows and the number of employees increases, so will the contributions.


Accounting: What Costs Can You Expect?

Autónomo
If you decide to work as a self-employed individual, accounting costs will be relatively low. On average, accounting services for Autónomos cost about 50 euros per month. Keep in mind that you’ll need to handle your own financial reporting and taxes unless you hire an accountant.

SL
An SL company requires a more serious approach to accounting. The cost of accounting services for an SL starts at 150 euros per month and depends on the volume of work, the number of invoices, and the financial reporting. The more transactions you have, the more expensive the service will be.

Investments and Scaling: What Opportunities Are Available to You?

Autónomo
Attracting investments for a self-employed business in Spain is quite difficult because Autónomos are considered individuals rather than full-fledged companies. This can be a major obstacle if you plan to expand your business or attract external investments.

SL An SL company has more opportunities for scaling and attracting investments. Being registered as a legal entity makes the company appear more serious and professional in the eyes of investors and financial institutions. Also, SL offers more opportunities for obtaining government and private grants, as well as participating in investment programs.


Visas and Opportunities for Foreigners

Startup Visa If you plan to move to Spain and create an innovative startup, the SL structure would be preferable. Startups require investment, and a registered company with a trade mark will be more attractive to investors. Spain provides support to startups through grants and investment programs, and it’s important to have a registered company for this.

Nomad Visa and Student Visa If you’re coming as a freelancer or on a student visa, the Autónomo structure may be a more convenient option. It allows you to officially work for yourself without creating an additional legal structure. For students who want to start a small business, the Autónomo structure is a good option, avoiding unnecessary complications.


Importance of Consulting with Tax Professionals

Before choosing a business structure, it’s crucial to consult with a tax professional. In Spain, taxes can be complex, and the wrong choice may affect not only your financial reporting but also your visa extension and ability to get a loan in the future.
For a comprehensive approach, it’s recommended to work with experts who can help you navigate both tax and visa issues. If you’re planning to start a business in Spain, working with qualified professionals will help you avoid mistakes and ensure your business develops successfully.

Conclusion: What to choose for your business?

The choice between autónomo and SL depends on many factors: your goals, the scale of your business, and visa requirements.
If you're starting small, not planning rapid expansion, and working solo, the autónomo structure will be optimal. However, if you want to scale your business, attract investments, and hire employees, SL will be a more suitable option.

It’s important to analyze in advance the taxes and contributions you’ll need to pay, the documents and permits required for your visa status and business. Don't forget to consult with experienced specialists to choose the most profitable and suitable business structure for you. Each case is unique, and the approach should be personalized.

If you have any remaining questions or would like a consultation on business registration in Spain, feel free to contact us! We’re always happy to help you navigate the complexities of taxation, visa matters, and choosing the right business structure. Our experts will provide you with all the necessary information and help you make the right choice.

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