Editor’s note: This article was first published in January 2011. The “new” unemployment protection for the self-employed dates from 2010, the call to pay VAT only on collected invoices predates Spain’s optional cash-basis VAT scheme (2014), and the €3,000 minimum capital for a limited company (SL) has since been reduced.
The new unemployment protection for self-employed workers (autónomos) has been very well received by the sector, but they still face risks that the group itself is complaining about. The biggest problems for these workers are late payment on the one hand and the demands of the public administration on the other.
The self-employed are asking to pay VAT when they collect on an invoice rather than when they issue it, because if the client doesn’t pay, they have to pay VAT on money they haven’t received and in many cases never will.
That’s why starting your own business as a self-employed worker may be something to think twice about, because, as we’ve discussed on other occasions, a self-employed worker, on top of the tax disadvantages (which some see as advantages), is liable for any problem with all of their personal assets, and their name is tarnished if the business doesn’t go well.
These days, the only incentive for someone to set up as self-employed is that they now have unemployment benefit approved, but that’s not enough. If you’re going to register as a business, we still advise you to do so as a company, because you can adopt this legal form from €3,000, and if there are problems, you are only liable for the capital you’ve contributed, that is, those initial €3,000. You’ll find the advantages and disadvantages of these two legal forms in Self-employed or limited company? Which legal form to choose.
Further reading
- How to be a successful business owner
- Profitable businesses to start in 2011
- The advantages of starting a business in a crisis
- The dangers of the commercial contract
Featured image: Zarateman, CC0 1.0, via Wikimedia Commons.
