August 24, 2016 No Comments

Thinking of Starting A Business In Spain? Read This!

Many people dream of opening their own business and the costas of Spain are a choice location for those who wish to follow that dream. Here are a few pointers to consider before making any decisions:

Formation of the Business

To stay legal and follow tax and employment laws, any new business must have the correct legal basis. You can chose to make this a self employed basis, called Autonomo, or a partnership, called a sociedad civil, or a limited company, designated S.L., for Sociedad Limitada. Self-employment or partnerships are cheaper and easier to administrate, and probably the better option for a new business.

When a limited company is necessary, as in when high income is expected or when there are external investors, then there will be costs involved in setting up; a minimum €1,000. If the business is a subsidiary of an existing company abroad, or will be international, then subsidiary or offshore structures should be considered. In these cases professional help should be sought.


Anyone undertaking a new business venture should seek advice on all the necessary documentation, as the lack of just one paper could see your business closed down before you have really begun. You will need permission from the town hall to open, and in the case of licensed premises; several permissions; for music, alcohol, food service etc and there are strict hygiene and health and safety rules to follow before permissions are given. You will need a Gestor (a cross between an accountant and solicitor) to help you with registering for taxes and social security. You will need to be patient and allow plenty of time for all this, as the Spanish legal system takes its time. Also leave room in the budget for any unexpected extras which are sure to occur, as each permit and licence comes at a price.
You need to declare everything that you intend to cover with your business, like how many staff you will need, your expected turnover, whether you will offer accommodation, food or alcohol, and if you will be open to the general public or only guests (for example, with a hotel or hostal).


Choose your location carefully; decide whether your business needs to be central and therefore more expensive to house, or if you can use a locale in lower priced areas. In the case of bars and restaurants of course you want the best areas, but must be prepared to pay for this. If you are running an Internet business or something which doesn’t require premises to begin with, you can still get permissions to work from home.

Now is a good time to invest in business properties, if funds allow, as prices are at an all-time low and you should be able to negotiate a good deal. If you intend to rent, do not take anywhere that needs refitting, but find a place that is ready to go; you shouldn’t spend money in areas that don’t bring a financial return, until you are established, because in the case of failure, none of this will be returnable. Make sure that you do not sign up for any fixed time or deals you don’t understand; again this is where your Gestor will help.


Start with a minimum staff and stick to the national minimum wage (convenio) to begin with. Workers pay low income tax and social security, but employers pay highly. Once a worker has had a full year’s contract, they are considered in fixed employment and are thereafter entitled to severance for each year worked, in the case of dismissal. Most employers today take on new staff for a six month period, as a trial, and only when they are completely satisfied with the worker do they sign them to a fixed contract. Don’t take on extra staff until you start to see profits and you can no longer cope with minimum staff.


If you are new to an area and therefore have no followers, reputation, or hopes of word getting around, then you must work at generating business for yourself. Just because you open a business in a thriving resort town, does not mean that you will succeed just by opening the doors.

The greatest marketing tool in today’s society is of course the Internet. Set up a good website for your business and take advantage of social media. If you don’t have the skills, then pay someone to do it for you; this is money well spent, that will bring in revenue.

Print some posters and leaflets that can be distributed around town, find sponsorships, create promotional events and giveaways; basically splash yourself around until everyone has heard about you.

Don’t open with a huge launch party that costs a fortune; start as you mean to go on; show customers what they can expect on a daily basis.

Treat everyone as your favourite customer and allow your business to sell itself; for each satisfied client you will receive at least two more, as they pass on the word to friends and family. Word of mouth has always been the best marketing, so take advantage of that.

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