The objective of this guide is to provide a "road map" aimed at those who want to start a business adventure, small business managers, administrative staff, and who in one way or another need to know the formal and documentary obligations that administrations public will demand the company. It is a guide aimed at the field of commercial companies, and within them with more intensity to Limited Liability companies.
It is true that currently, the mere idea of having to face an unknown world full of regulations, various administrations, documentary obligations, etc. it causes such uneasiness at the outset that many people already give up on considering the option of starting their own business activity, and it really should be said that two determining factors are combined in this sense:
1. Lack of business training
2. The regulatory complexity that public administrations impose at the start of a business activity.
This entrepreneur's guide aims to facilitate in a simple and clear way all those basic obligations in which the company will be immersed by the mere fact of starting an activity. Obviously, in each area treated there are multiple specificities that are unapproachable in a guide such as this one, which will try to focus on what in the vast majority affects small and medium-sized companies.
The criterion to be followed is not going to be the strictly chronological one, which although it may seem clearer at the beginning, would suppose a constant overlap of different subjects, but a criterion based on the corresponding subject. Probably the order and structure followed may seem loosely from a doctrinal point of view, but it has been preferred to follow a practical and clarifying order in order to promote global understanding.
The structure of this guide will be based on the following subjects:
I. Mercantile
II. Accountant
III. Fiscal
IV. Labor
V. Administrative
SAW. Social
It should be noted that this guide is not intended to explain how things are done, but rather what the company must comply with before administrations and public bodies. The effective performance of certain tasks such as accounting, tax, labor, etc., must be carried out by people with specific training.
As far as possible, the Legislative reference will be dispensed with, since the continuous reference to Laws, Orders, Decrees, etc. it is not going to favor the intended clarity. However, at the end of this guide, a reference will be made to the basic regulations of the subjects covered.
Lastly, mention that this entrepreneur's guide can and should be used as a reference book for those points that are necessary, so that a reading is not required in the established order to understand or understand a later subject.
Chapter I. Commercial
I. The proper corporate form
One of the first questions that arise before the start of a business activity is the decision on what is the optimal way to adopt. Basically there are the following alternatives:
- With corporate form As an individual entrepreneur
However, the most important criterion is that of limiting the employer's liability.
Indeed, one of the issues that may most worry an entrepreneur is that, given the risk that the business activity does not work as expected, his or her private assets are affected by possible claims from suppliers, workers, clients, or administrations.
It is the commercial corporate forms that allow limiting (although not absolutely) the responsibilities that may arise from the activity itself. The classic corporate forms of our legislation are the Public Limited Company and the Limited Liability Company.
A commercial company implies creating an organization with its own legal personality: the company is a different and separate “person” from its owners, partners or administrators. The purpose of the company is to allow the union of different partners, who through the contribution of capital and perhaps also with their work have a superior capacity and strength to implement an activity. But "society" presents itself to the market with its own name, with "its" economic resources, with "its" obligations. As the mercantile company is a “person” other than its partners, it is understood that the company must be responsible for its obligations to third parties.
In contrast, business activities carried out by a natural person or through a non-commercial company (eg civil companies), imply a direct financial liability of those who are developing the business.
Our Legislation allows the creation of commercial companies, specifically a Limited Liability company with a minimum capital of € 3,006, this being the most widely used legal form today.
In short, it should be said that before an activity involving a certain investment and / or risk, it is preferable to adopt a commercial form that limits future economic responsibilities.
II. The partners
As if it were a dangerous journey when constituting a society, it is essential to correctly choose the companions who will accompany us on the journey.
Partner conflict is known to be one of the most common causes of business failure. In this sense, and to minimize the risk of failure as far as possible, the following issues should be considered:
- The partners must clearly establish what the purpose of the partnership is: "what they are going to do" and in the most specific way possible., experience in the sector, and in general means that contribute to the corporate purpose, etc. If you do not have anything prior, it is practically impossible for the business to prosper. You have to have some competitive advantage no matter how small it is. Evaluate the investment: do all the partners have the necessary capital? Starting with third-party financing (bank credit) makes things even more difficult. Finally, perhaps most importantly: Small businesses can survive on the work and effort of their partners. Although a limited company is a capital company,the vast majority of them are made up of partners who are themselves workers. If two or more partners start a micro company, they must be able to get fully involved in the project, with a clear distribution of functions. In small companies, the idea of participating as a mere capitalist partner, while waiting to receive dividends from society, is still an unrealistic aspiration. The reality is that the growth of the company will probably have an impact on the improvement of the wages and salaries of the working partners or, as the case may be, on the capitalization of the company so that it has more own funds.In small companies, the idea of participating as a mere capitalist partner, while waiting to receive dividends from society, is still an unrealistic aspiration. The reality is that the growth of the company will probably have an impact on the improvement of the wages and salaries of the working partners or, as the case may be, on the capitalization of the company so that it has more own funds.In small companies, the idea of participating as a mere capitalist partner, while waiting to receive dividends from society, is still an unrealistic aspiration. The reality is that the growth of the company will probably have an impact on the improvement of the wages and salaries of the working partners or, as the case may be, on the capitalization of the company so that it has more own funds.
From the legal point of view, the partners of a limited company are holders of "social shares", there are no physical titles such as the "shares" of a corporation.
In the company it is obligatory to have a partners book, in which the people who are partners of the company, number of participations, and the subsequent transmissions that may be registered It is a book that serves the administration of the company to control who are the holders of the participations and in what percentage. Said book must be submitted to the corresponding Mercantile Registry for its legitimation before anything begins to sign up.
Commercial companies are known to be governed by a majority system: the General Board of Members is the supreme decision-making body. Obviously, whoever holds the majority has the power of decision. However, although what is said legally is true, the reality is that in small societies the majority system is very nuanced:
1. In small societies, partner-worker relationships must be based on trust and common goal. When it comes to the extreme of imposing wills via social majorities, something is no longer working.
2. Our commercial legislation protects minority partners from the abuses that they may suffer in society, so that they have legal tools to defend themselves in court.
In relation to the sale (or transfer in another way) of the social participations, limitations are normally introduced when it is carried out to «strangers», precisely because of the personal nature of this kind of companies. It is not customary to establish limitations if the transmission is to relatives (children, parents or spouse).
Commercial companies are a legal construction that is based on being a mechanism of union of several people (physical or legal). The original meaning of companies is determined by being a way of joining efforts to achieve objectives that would be very difficult to achieve alone. The truth is that the so-called "one-man" societies are still a very recent form and that it does not fit well with the idea of "society". The fact that a society is normally made up of several people makes it necessary to establish control mechanisms and minimum coordination between the partners (owners) of the company.
III
Mercantile legislation, basically the Mercantile Registry Regulation, the Limited Companies Law and the Public Limited Companies Law, establishes the need for partners to reflect their decisions in a Book of Minutes. It is logical that, being commercial companies, they are governed by a system of Majorities, the decisions are reflected in some document stating both the agreements adopted and the result of the votes carried out.
The books of Minutes must be acquired (most of the office supplies stores have them) and submitted to the Mercantile Registry for "Legitimation", that is, the Mercantile Registry numbers the pages of the Book, seals it and in this way it is intended that the Minutes book cannot be altered by deleting or adding new sheets. Actually Minutes Books can be kept in "bound" Book format, which requires the transcription of the minutes manually, or in "loose" sheets that facilitate the use of computer word processors.
The Book of Minutes is one of the great "forgotten" aspects of the day-to-day life of small companies: Trust, lack of knowledge, means that its use is dispensed with, however in case of conflicts between partners the non-completion of the Book Minutes can have devastating effects.
At the end of this chapter a mention will be made of the basic content of an Act.
IV. The member registration book
This Book is also easy to acquire in any bookstore-stationery store, and must also be “Legitimized” in the Mercantile Registry. Its function is to allow the Company Administration to have exact control and knowledge of who the holders of the shares or shares of the company It must be remembered that the shares or shares can be bought, sold, pledged, seized, etc. The company's administrative body must have a system to know at all times who the partners or shareholders are and the circumstances, loads, transmissions and concurrent vicissitudes.
On the other hand, said Book allows in any case to know who holds the majority, or what quorums are necessary for the approval of certain agreements.
V. The Annual Accounts
The preparation and deposit of the so-called "annual accounts" is one of the most important obligations of commercial companies. Without prejudice to a later, more in-depth definition, it should be said that the annual accounts are a compendium of financial documents that must allow knowledge public of the activity and real situation of a company. The sense of the obligatory nature of the deposit of the annual accounts in the Mercantile Registry is determined by the fact that it is considered necessary that everyone who is related to the company can know with "who »You are going to hire and« what »security does that company offer. Thus, banks, suppliers, customers, employees, public administrations, the partners themselves, can obtain from the Mercantile Registry relevant information about a company.
When a company does not present its annual accounts, the Mercantile Registry prevents the registration of any other deed (with very specific exceptions), until this problem is rectified.
In the next installment we will go into more detail on the formulation of the annual accounts.
Mercantile companies are obliged at the end of the year to deposit in the Mercantile Registry the company's annual accounts. The Commercial Code art.34 and ss, as well as the Regulations of the Commercial Registry, the Limited Liability Companies Law and the Consolidated Text of the Public Limited Companies Law contain the regulation on the aforementioned Annual Accounts.
The Annual Accounts, once deposited in the Mercantile Registry, are "public", that is, anyone can obtain a copy and thus know what a specific company is like. Nowadays this advertising is considered a guarantee that allows to provide legal security to both commercial traffic and financial investments, as well as customers, suppliers, shareholders, banks, etc. They can get to know the company and make their decisions accordingly.
To deposit the annual accounts, a series of procedures must be carried out and a certain calendar must be followed:
1. Formulation by the administrators of the Annual Accounts: within the first three months after the accounting closing of the company (normally 31-12), the administrators must prepare the Annual Accounts: Balance Sheet, Profit and Loss Account, Report explanatory and sometimes a management report. The deadline will usually be March 31 of each year.
2. Within six months after closing, the administrators must call the partners to a Meeting to submit the Annual Accounts to their approval. The deadline is usually 30-6 of each exercise.
3. Once approved, the administrators must issue a Certification of the Meeting agreement in which the Accounts were approved. The signature of the administrator that appears in said Certification must be legitimized by a Notary.
4. The presentation of the accounts for their deposit can be made on paper or through computer media. The deadline for submission is usually July 3 of each year.
5. Once the accounts have been deposited, the Mercantile Registrar checks that all the requirements have been met and if there is no qualification, it proceeds with its registration. After a period of 15 or 20 days, the deposit certificate issued by the Registry must be collected.
All these procedures are usually a burden for companies that, even though they are commercial, are small, with few partners, or purely family. Unfortunately, all companies, regardless of their size, must meet the same requirements. Small commercial companies usually delegate the entire administrative process to professional agencies or offices that drive the process and prepare all the necessary documents.
Currently, the lack of deposit of the Annual Accounts is sanctioned by the blocking by the Mercantile Registry of other documents subject to registration: capital increases, changes / renewals of the office, changes of address, etc.
SAW. Social administration.
Companies require the existence of a management body that acts as a representative of the company and executes corporate decisions.
Commercial companies can act represented in any of the following ways:
- A single administrator Several joint administrators, which requires joint action. Several joint administrators, which allow each of them to act individually. Board of directors.
The administrators of commercial companies have various functions, the most relevant being the following:
- The management of the company Convocation of the General Meetings Execution of the social agreements Representation of the company before third parties
The responsibility of the administrators
The administrators exercise their function at the service of the interests of the society, not for private interests, and in this sense it is required loyalty, fidelity and a prudent and diligent action in defense of the fulfillment of the social objectives.
When the administrators do not act in the indicated sense, the Corporations Law (articles 133, 134 and 135) stipulates the possibility of demanding responsibility for their management.
The appearance of social responsibilities requires:
1.- the performance of an illegal act, that is, an act contrary to the Law, bylaws or an act performed without the minimum diligence required.
2.-The production of real damage to society of an economic nature that can be evaluated.
3.-That the administrator has acted voluntarily or at least recklessly.
4.-That a causal link between the act performed and the harmful result produced can be determined.
5.-That in the corresponding judicial procedure each of the previous requirements is accredited.
The action of social responsibility can be exercised by:
a) The company itself
b) Partners who have at least 5% of the share capital
c) The creditors, when the company does not have assets to face the debts.
The position of administrator is subject to a whole series of personal risks that involve calm reflection when accepting said position. It is true that in small companies, the administrator will coincide most of the time with the partner with the most participation. The management of a small company involves less risk because the elements to be “controlled” are smaller and the direct management of the partner-administrator allows you to know the general state of the company almost intuitively.
Obviously there are no generic recipes to avoid responsibilities, only to convey the idea that the administrator who manages prudently will not have liability problems, and that in the face of market circumstances, force majeure or others that make the corporate project unfeasible, the administrator He saves his responsibility by calling the General Meeting and proposing either a capital increase or the dissolution of the company.
