If you are a person who is seriously rated the possibility of go from self-employed to LimitedSociety, but you have different doubts that make you not entirely sure when it comes to taking the step, from AYCE Consultores we will try through this post to solve them so that you make the best decision.
Let’s look at when it is appropriate to go from self-employed to Society and when not, as well as the main advantages of doing so, or what are the steps and procedures to be followed to make the change from self-employed to Limited Society.
When to go from self-employed to Limited Society?
The answer to when to go from self-employed to Limited Society will depend on different factors.
The first is that your business has grown enough to make the switch from freelancer to S.L. profitable.
You should keep in mind that changing your legal form will not only affect tax side, but also taxation,this being a differential factor.
That said, if the annual profits of your business range from 40,000 to 60,000 euros, constituting an SL would be more profitable than continuing as a self-employed person.
Taxing corporation tax as a Limited Company could offer you significant savings at the tax level,as this is a fixed tax. Instead, as an autonomous you would continue to pay for IRPF, which will increase as your income increases. This is one of the main advantages of a limited company over an autonomous.
If on the contrary you’ve just started your career in the business world and you haven’t managed to consolidate your business yet, it would be best to delay the switch from self-employed to limitedsociety, as you would almost certainly find it more profitable to continue as an employed person.
Go from freelancer to Limited Society to protect your personal heritage
Another reason for the registration of self-employed to society is to protect your personal heritage.
Every business has a risk, and being autonomous you will have to respond with all your personal heritage in case things were not as you expected.
The situation changes as you move from autonomous to a one-person limited company,as that liability is limited only to the company’s capital, without endangering the health of your estate.
How to move from self-employed to Limited Society?
If you have finally decided to form an S.L., take note because we will see how to move from autonomous to Limited Society.
Step 1: Unsubscribe from the Special Regime of Self-Employed Workers
The first step in making the change from self-employed to Limited Society is to unsubscribe from the Special Regime of Self-Employed Workers (RETA),which will take effect from the 1st of the following month. The unsubscribe can be processed by telematics or face-to-face.
In the event that you were to be the administrator of the S.L. and become a corporate autonomous, youshould not cause a leave, but modify the corresponding information in Social Security.
In any situation, the presentation of model TA521/6will be necessary, document informing the variation of any data in the RETA.
Step 2: Create the Limited Society
The next step will be the establishment of your Limited Company,and for this you must meet a number of essential requirements:
- Obtain the Certificate of Social Designation in the Commercial Register: document that ensures that the name of your company is the original, and that no one can use it once registered.
- Open bank account: it is necessary to open a bank account in the name of the S.L., whose capital is not less than 3,000 euros.
- Draft bylaws: you must draft the company’s bylaws, which will have to include the name of the company, the tax domicile,the share capital and the manner of management.
- Notary: you will have to go to a notary to legally constitute the company.
- Obtain NIF from the Limited Company.
- Register the S.L. in the Commercial Register.
Advantages of a Limited Society over an autonomous
Now that you know when it’s good to go from freelancer to Limited Society and how you should do it, let’s look at the main advantages of a Limited Society over an autonomous.
As we have already mentioned, starting to tax on corporation tax and protecting your personal heritage are two of the most outstanding advantages. However, here are others worth assessing:
There is no doubt that by switching from freelancer to Limited Company you will improve the image of your business,since you will present as S.L. and not as a freelancer.
The reason, beyond the image of freelancers in our country for large suppliers and large companies is not excessively positive, is that the Limited Company transmits the image of a consolidated project with a strong business structure,with greater capacity and room for manoeuvre to overcome adversity.
Working with partners
Switching from self-employed to Limited Society will also allow you to work with other peopleor partners, and therefore distribute the workload, obligations, responsibilities and, of course, also the benefits.
With the registration of self-employed company you will enjoy a series of deductions in corporation tax very to take into account.
Once the first worker has been hired, if the worker is under 30 years of age and is given an indefinite contract,the deduction to be applied will be 3 000 euros.
The recruitment of more employees,provided that the company does not have more than 50 workers, will be accompanied by a bonus of 50% of the amount of unemployment benefit outstanding to be received by the worker, at the time of recruitment.
In short, if you have been a freelancer for several years,your business enjoys good health, has serious growth possibilities, and you are looking to make a leap in quality that allows you to partner and work with large suppliers, moving from self-employed to Limited Society should be one of your main objectives.
In this post we have told you when it is advisable to go from freelance toSociety, the steps that need to be taken and the main advantages of doing so. If you have any questions left in the inkwell, contact our team of advisors and we will offer you all the advice and information you need.