1. What is your idea or niche?
So you have an idea for starting a business in Spain or you’ve seen a Spanish business opportunity? Before you become self-employed (autonomo) in Spain, or start a Spanish company (an S.L) be sure of what you have to offer. Your future success will depend on having a unique service or your ability to do something better than your competitors.
2. Research, Research, and Ask Everyone’s opinion.
You will need to sell your service or product to make your business a success. Research who your clients will be and how can you tell them about your business. There is a good chance that on the Spanish Costas your clients will be ex-pats. Ignore the Spanish market at your peril. Costa Blanca hosts twice the number of Spanish residents as foreign ex-pats. The Spanish market is more stable than the ex-pat population, with the Spanish staying for many years and the ex-pats coming and going.
3. Learn the lingo
In many parts of Spain that are popular with ex-pats, Spanish is not a pre-requisite for day to day living. For a successful business, a reasonable level of skill in Spanish will be a great asset. Your language skills will not only gain you access to the lucrative Spanish market but will save you money on translation costs and professional fees. There are many free courses arranged by Town Halls for ex-pats to learn Spanish for free, take advantage of them.
4. Go legal or Get fined
Once you’ve made the decision to start your business, you need to do it legally. Don’t be lured by cash payments, PayPal or other tax avoidance methods. The Taxman (Hacienda) are very sophisticated and the fines for non-compliance are severe. You might keep under the radar for a bit, but sooner or later you will have to register.
Register as Self-Employed in Spain
For most new businesses it is easier to employ a “Gestor” to help navigate the legal requirements of running your business. It is possible to register yourself without assistance but for a small fee, you can leave it in the hands of a professional. They will also be able to advise about Government discount schemes that are available for new registrations. These discounts can be substantial so it is worth it to not miss out.
Self-Employment Taxes in Spain
Once you are registered, your obligations begin. Social security payments are taken monthly on the last day of the month. Unfortunately, your monthly payment is not linked to your income and will be charged at a flat rate regardless of your earnings. The current rate for the lowest, non-discounted scheme is around €300 per month unless you qualify for a discount.
5. Ask the Professionals
Employ a trusted accountant and solicitor. Find an experienced Estate agent if you are searching for a commercial property. Ask around other businesses and get recommendations. As with every country, the tax system is complicated and the taxman in Spain is notoriously harsh on errors. A good accountant will save you more than their fees each year by using the system to your advantage.
Once you’ve been self-employed for a while and have a good understanding of Spanish, you’ll be able to do your tax returns yourself, if you wish, and save paying an accountant.
6. Small businesses help
The Spanish government and regional authorities have many resources to assist small businesses. They can provide advice, subsidies, grants and free training. These services are particularly being aimed at women, so go and ask at your Town Hall.
7. Get yourself known
Get out into your local community and make yourself known. Use all the tools at your disposal, Facebook, Instagram and Google business, but don’t forget old fashioned footwork. Visit local businesses to offer your services or use networking events. Supporting Charity events can help get your name out there. Don’t underestimate business cards and flyers, anything that can get you noticed.
8. It is not all plain sailing
Running a business in Spain is far from easy so keep your expectations realistic.
Obligations: Remember those bills will keep coming in no matter what. Ensure you budget for sufficient funds for social security payments as there are financial consequences for late payment.
Insecurity: Self-employment is a roller coaster. There will be months where you feel like a king and others where you can barely scrape by. Customers’ loyalty can be fickle, a loyal customer one week, a one-star review the next. Try to budget funds from the good months to help out the finances in the lean months.
Fall back position: Although you will be paying for social security, the system in Spain is unique to Spain. Some of the benefits you will have had as an employee are not available now such as sick pay and holiday pay.
9. Banking
Although it is not a requirement, opening a business bank account is a shrewd move. Keep all your business transactions through this account and all of your financial obligations for social security and tax can be dealt with through this account.
Many banks offer incentives for new businesses such as free debit and credit cards or free banking for a set period. It is wise to shop around for the best deal for you.
10. Remember why you did it
It can be easy to dwell on the difficult sides to running your own business or being self-employed in Spain, but there are plenty of upsides. Remember, you are in charge of your destiny, you can works hours or days to suit your lifestyle, it can be very lucrative, and you are in sunny Spain.
Livin La Vida Loca
