August 24, 2016 No Comments

Starting or Restarting Your Own Self-Employed Business in Spain

If you are planning a move to Spain and want to continue your self-employed business over there, there are a few things you might be wondering about concerning legalities and how much it will cost to get set up.

If you are going to work from home and do not need premises, i.e. as a mobile hairdresser, handyman, decorator, etc, then you will still need permissions and licenses and should register yourself as self-employed (autonomo). You are advised to use the services of a “gestor” to put you on the right track and obtain the correct paperwork. A gestor, found in their offices, called a Gestoria, is like a British solicitor and accountant together. You might need a lawyer, called an abogado, and or an accountants; contable, for another task, but the gestor will be able to do just about everything you need when it comes to setting up a business without premises.

If you need premises for your business, your gestor will help you there too; advising on the business permits and licences you will need, and also helping you obtain them from the town hall. If you don’t speak the language, you will find most gestorias have at least one member of staff who speaks English; especially in tourist resorts. If they don’t, you will need to take an interpreter along.

Premises

Presumably you have scouted out the town where you want to settle, or if not then you should. Take at least a month’s holiday there first, in one or two visits, to find your way around and get to know the place and the local people. Look for resorts with a large expat community if you plan on working with mainly British people. You will get a year-round clientele from the local expats and any tourists in season will be a bonus.

Before laying down any money for premises, you must speak to locals to find out as much as possible about the area you are thinking of setting up in. There is no doubt that the part of town you choose can make an enormous difference to your success depending on the type of business you are opening. The best person to advise you here is an estate agent who is well-established due to spending many years in your chosen town, or a property finder.

It is tempting to go for premises with the cheapest rent, but depending on the type of business you open, the location can make all the difference! Paying a few hundred euros extra a month in rent is well-worth the small additional expense due to the added income you will earn from being in a prime location. See our article about opening a bar in Spain for more information on choosing the right location.

When questioning locals, find out what type of businesses were previously run from the premises (if any), how long the business survived, and any other information they are willing to share. If you find a certain premises has housed several different types of business in the last five years – all of which only lasted a season, it should be clear the area is not lucrative. However, if the same premises was opened by three different owners and each time as a greengrocers – it may not necessary mean the location is poor – just that it is not a good street for a greengrocers. A hairdressers, jewellery repair shop or nail salon could do well in the same shop. Do your homework, ask expats living in the area, and consult as many friendly real estate agents as possible for advice.

If you plan on opening a hair or beauty salon, be sure there are not too many to begin with, as locals will already have their favourites, and you may struggle to find clients. Offering mobile services to the clients’ homes will give you an edge, but another salon may be one too many.

If you are a builder/decorator/handyman, try to talk to expats and see if they think there is work enough for you. As a British expat, you most likely won’t do too well with Spanish clients, who will much prefer to deal with their countrymen, but expats will likely be pleased to work with you as you speak their language. However, if there is already a well-established British locksmith, computer-fixer, TV-satellite installer, landscaping firm, builder, or whatever your skill set involves; you will likely be better asking them for work, or trying to get a job with a Spanish company to get a feel for the amount of business in the area before starting out on your own.

There is no doubt that if you can bring a skill to the table, you have a fair and improved chance of getting work with a company once you get to know people and learn some Spanish, than if you are looking for unskilled work that just about anyone could do. This could well be a better option for you than starting out on your own immediately, so do consider you choices carefully.

Employees

If you intend to employ others, then you must comply with the law and make sure everyone is legally contracted and contributions paid. Here again your gestor will advise you on salaries, contributions, etc, and will draw up contracts for you. Spanish workers will already have ID cards and social security numbers, but any foreign workers will need to apply for these in order to work legally. This again is where the gestor can help; they will apply for the NIE number (Numero de Identificacion Extranjeros, or Foreigners’ Identification Number) for each employee, and register them with social security (Seguridad Social). Employees should be informed that any contributions will count alongside their own at home, provided their home country is in the EU.

Business Taxes

You can decide to pay your taxes in the usual manner, by saving receipts and declaring all expenses as well as all income, or you can choose to pay in ‘Modulos’, which means you pay a fixed amount for every trimester. This amount is calculated by the size of the establishment, how many people it holds, and other considerations. If you choose this approach, you must pay for the full 3 months even if you are only open for say 6 weeks that trimester, meaning that you must plan ahead if you want to close for vacation for example, because if you plan to close for a month’s holiday, you may be better off closing for the full 3 months, depending on income and tax payable. Your gestor will advise you here and also of which type of taxation is more beneficial to you and your business.

Licenses

Ask your gestor about licensing for your particular trade, as you may find that not only do you have to license your premises, but you may need a personal license to undertake your work. You will definitely need professional insurance for both yourself and your premises, as well as for any employees if in a hazardous occupation. You will find most regulations similar to those in the UK, now that both are in the EU, but you will also encounter some differences; some much stricter than in the UK, others more lax.

As long as you make yourself and your business legal and follow the laws, you shouldn’t have too much trouble re-opening your business in Spain, but beware if you try to cut corners; fines over here can be high enough to cancel out all your profits so far; even cause you to close down. If you break the laws more than once, they will probably close you down anyway.

While it should be noted that some expats earn enough to get by working “black”; i.e. not obtaining any type of licence, getting customers by word of mouth, and not paying a penny in tax, it is not a path that bodes well for long-term success. Word soon gets round, and local trades people who do stick to the rules are likely to report you. Any number of other incidents could occur – if a job goes wrong a client may want to make a claim on your non-existing insurance, or perhaps report your to the authorities when you can’t produce an official invoice. It rarely pays to try to outwit the law; especially where taxes are involved. It is better to stay legal and enjoy your new business.


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