Comparison of Business Entities

🏢 Comparison of Company Types

1. Limited Liability Company (S.L.)

🔹 What is it?
The Limited Liability Company (S.L.) is one of the most common legal structures for small and medium-sized businesses in Spain. It offers limited liability for partners and has a flexible and easy-to-manage structure.

🔹 Main features:

• Limited liability: Partners are only liable up to the amount of capital contributed. 💼🔒

• Minimum capital: €3,000 is required to set it up. 💰

• Number of partners: Can be created by one or more individuals or legal entities. 👥

• Taxation: Subject to Corporate Tax (Impuesto de Sociedades) at a rate of 25%. 📊💸

• Self-employment regime: Partners who work in the company pay social security as self-employed. 🧑‍💼

• Management flexibility: Easy to administer with fewer formal requirements than other company types. 🛠️

🔹 Advantages:

• Limited liability for partners. 🙌

• Highly recommended for small and medium businesses. 🏢

• Flexible profit distribution. 💵

🔹 Disadvantages:

• Requires minimum starting capital. 💰

• Certain legal and formal steps needed for formation and management. 📝

2. Public Limited Company (S.A.)

🔹 What is it?
The Public Limited Company (S.A.) is a more complex legal entity suited for large companies. It can be listed on the stock market, and shares are freely transferable.

🔹 Main features:

• Limited liability: Partners are liable only up to their capital contribution. 💼🔒

• Minimum capital: €60,000 is required. 💰

• Number of partners: Can be formed by one or more people. 📊

• Taxation: Same corporate tax as S.L. 🏦

• Shares: Shares can be freely transferred. 📈

🔹 Advantages:

• Can issue shares and attract more investment. 💸

• Ideal for large companies or those aiming for rapid growth. 🚀

• Greater prestige with investors or banks. 🏢

🔹 Disadvantages:

• High initial capital requirement (€60,000). 🏦

• More complex and costly procedures for creation and maintenance. 📝

• More rigid management than an S.L. ⚖️

3. Sole Trader (Autònom)

🔹 What is it?
A sole trader is a natural person who carries out an economic activity independently. It’s the simplest option to start with, but involves unlimited liability.

🔹 Main features:

• Unlimited liability: The individual is personally liable for all debts. 💣

• No minimum capital required. 💸

• Taxation: Pays income tax through IRPF (Personal Income Tax). 📊

• Simple management: Less bureaucracy than with a company. 🛠️

🔹 Advantages:

• Simple and quick to start. 🚀

• No initial capital needed. 💸

• Can start alone without needing other partners. 👤

🔹 Disadvantages:

• Unlimited personal liability. 😬

• Limited growth potential compared to companies. 🚫

• May find it harder to obtain funding. 🏦

4. Cooperative Society

🔹 What is it?
A cooperative is a company managed democratically by its members. It’s a good option for workgroups with a shared objective.

🔹 Main features:

• Limited or unlimited liability: Depends on the cooperative type, but most have limited liability. 🔐

• Minimum capital: Depends on the cooperative type, but lower than that of an S.A. or S.L. 💰

• Democratic management: Each member has one vote, regardless of capital contributed. 👥

• Taxation: Subject to Corporate Tax, with possible deductions for cooperatives. 📈

🔹 Advantages:

• Democratic and participatory structure. 🗳️

• Greater social and community focus. 🌍

• Eligible for subsidies or support for cooperatives. 💡

🔹 Disadvantages:

• More complex internal management due to democratic structure. ⚖️

• Less flexibility than an S.L. or S.A. in many cases. 🏛️

📊 Final Comparison Table: