Key Decisions to Make When Setting up a Spanish Business

Before you start a business in Spain, there are a number of important decisions you will need to make. Spending the time at the outset to think about these issues and do some research can help you get the right business in the right place with the right structure, to giving you the best chance of long-term success.

What is the best type of business to start in Spain?

There are many types of business that you can start. Most people assume that they would be setting up a bar or restaurant, but there are many more opportunities available.

Think about what your experience is. If your only experience of running a bar is as a customer do you really know what it takes to run one in a different country? Playing to your strengths and experience means that the business is more likely to succeed.

Similarly, there is no point in opening a business just because you know how it works if there is already an oversupply of that type of business in the area. You might be more successful in another area or you may decide that there isn’t enough demand for yet another bar or restaurant in Spain.

Where is the best place to start a Spanish business?

When considering where to set up your business, you need to know whether that location is good for your customers and also your own personal life. There is no point in setting up a business close to home if your goods or services are not needed there and similarly there is no point in unnecessarily making things difficult for yourself with a long commute.

Am I best setting up a company or staying as a sole trader?

This is one of the most common questions that we get asked and also one of the most important decisions that you have to make. This is because how your Spanish business is structured has a major impact on how you run the business and what tax you pay. There is no “one size fits all” answer as each business is different and will have a different solution.

Who should own the business?

This is probably the most important decision that you can make. Getting this right can save you thousands in costs and taxes. Getting it wrong can be an expensive mistake.

The way that you would own a business in your home country is not necessarily the best way to own a business in Spain, so don’t assume that you can adopt the same approach as you have in the UK with your business in Spain.

There are many options for structuring a Spanish business, including:

  • Sole trader
  • Limited liability sole trader
  • Partnership
  • Limited liability partnership
  • Limited company
  • PLC
  • Co-operative

Again, there is no “one size fits all” solution that works for everybody as your circumstances and priorities are different from the next person. Our Spanish business lawyers are able to look at your circumstances and your priorities and advise you who should own the property based on that information. The solution may not necessarily be immediately obvious.

When deciding on the best form of ownership we would need to take into consideration both Spanish and UK tax and also a range of other circumstances such as your plans for the property in the future.

Is it better to start a new business or buy an existing one?

Having a business in Spain doesn’t necessarily mean that you have to set up a business from scratch. You may decide that a better option may be to buy an existing business.

The two options have advantages and disadvantages. Setting up a business allows you to do it in exactly the way that you want it to be. Buying a business allows you to hit the ground running with an existing name and existing clients. Of course, if you are taking over a business you need to fully understand why the existing owners are selling and whether there are any skeletons in the closet - you don’t want to be taking over somebody else’s liabilities or bad reputation!

Whichever way you decide to go you will need to think about licenses, staff and premises. How easy is it to set these up or transfer them to you?

If you are going to buy an existing business, you need to find out about the plans of the existing owners. Are they able to stay on to assist with the transition? What are their plans after they have sold (you don’t want them to set up down the road in competition to you!). Do you still want them involved?

Get expert legal help for starting a business in Spain?

Our UK-based Spanish legal team offer a thorough understanding of both UK and Spanish law, meaning we are very well placed to help British ex-pats to start businesses in Spain. We can advise you on all of the legal issues involved, including structuring your business, buying an existing business, understanding your tax obligations and buying Spanish property.

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