Spain can be an attractive country for launching a business. There is demand for local services, cafés, restaurants, shops, salons, professional services, franchises, and digital projects.
However, starting a business in Spain should not be approached with the mindset of “we’ll open first and figure it out later.” Many expensive mistakes happen at the very beginning: choosing the wrong business structure, overlooking licensing requirements, leasing premises that are not suitable for the intended activity, hiring employees without proper formalities, or failing to include taxes in the financial model.
That is why, before launching, it is important to check not only how to register the business, but also whether the structure will actually be able to operate in practice. LFT Advisors is here to explain everything for you from A to Z.
1. Business Structure: Autónomo or Company
One of the first mistakes is choosing a business structure without high-quality assistance (advisor’s help). For example, an entrepreneur may want to start quickly and register as an autónomo. For small-scale self-employment or the initial launch of a service-based activity, this may be a reasonable option.
However, if the business involves several partners, potential investors, a need to limit personal liability, or a high level of financial risk, it is worth assessing whether opening a company (an SL) would be more appropriate.
In other cases, the opposite may be true: setting up a company may create unnecessary costs and obligations where a simpler model would be sufficient at the start. The form of registration affects:
- taxation;
- accounting;
- liability;
- hiring options;
- maintenance costs;
- future scalability.
Therefore, the first question should not be “what is faster to register?”, but rather “which structure reflects the actual business model?”
2. Business Activity and Licences: Details That Can Harm the Launch
In Spain, it is not enough simply to register a business. It is also important to correctly define the business activity and check the required permits in advance. This is especially important for cafés, bars, restaurants, salons, shops, medical practices, educational businesses, and service-based companies.
For example, you are opening a café or bar and plan to place several tables outside. From the owner’s perspective, this may seem like a minor detail: there is a premises, there are customers, there is a terrace — why not add one more table?
For the municipality, however, this may already be a licensing issue: how many tables may be placed, where exactly they may stand, whether they obstruct pedestrian access, and whether the setup complies with the conditions of the licence.
If the actual use of the space does not comply with the permit conditions, this may lead to refusal in the context of issuing or renewing a licence, a requirement to remedy the violation, a need to alter the layout, or administrative liability.
And this is not an exception. Similar nuances may relate to signage, terraces, alcohol sales, opening hours, sanitary requirements, fire safety, ventilation, or accessibility of the premises. In some municipalities, the same type of activity may be subject to different requirements depending on the city.
That is why licences should be checked before launch — not after the business has already leased premises, bought furniture, hired people, and opened its doors to customers.
3. Leasing Premises: Technical, Legal, and Contractual Nuances
There are many commercial premises available in Spain. In some cities, ground floors are often occupied by non-residential spaces: offices, shops, salons, cafés, or service points. Sometimes a commercial premises may look very attractive: a good location, affordable rent, and sufficient space. But before signing the lease, it is important to check whether the premises are actually suitable for your specific business activity.
For example, water may be listed in the documents, but, in practice, the water supply may be inactive, or the contract with the provider may need to be transferred. Electricity may already be connected, but the authorised power capacity may not be sufficient for a kitchen, air-conditioning systems, or professional equipment. High-speed internet may also be unavailable in the building, or its installation may require additional work.
Note that it is also important to check the lease agreement itself. Even if the premises are technically suitable for the business, the lease may contain:
- restrictions on certain types of activity;
- renovation;
- changes to the layout;
- signage;
- subleasing;
- transferring the premises to another company, etc.
For commercial premises, the building rules or comunidad may also matter. In some cases, they may set additional restrictions on certain types of activity, working hours, noise, use of common areas, or external elements the business plans to place.
If an entrepreneur is buying an existing business through a traspaso, it is necessary to check not only the premises. It is important to understand the transfer terms, the validity of the licences, the scope of rights that are actually transferred to the new owner, and whether the lease agreement allows the business to continue operating in the required format.
For an office, these issues may already create inconvenience. For a café, salon, medical practice, or production-based format, they may cause launch delays and additional costs. It is also necessary to check whether the required permits can be obtained specifically for these premises. Different types of activity may involve requirements relating to ventilation, restrooms, accessibility, fire safety, layout, equipment, or staff qualifications.
4. Employees: Salary Is Not the Full Cost of the Team
Hiring in Spain is not simply a matter of agreeing on a salary with a person. It is necessary to consider the type of employment contract, minimum pay requirements, social security contributions, tax obligations, employee documents, and the employee’s right to work.
The actual cost of an employee for the business is usually higher than the amount discussed as salary. In addition to paying the employee, the employer must account for social security contributions and other mandatory payments.
It is also important to check the employee’s documents: whether the person has the right to work, whether their documents are valid, and whether their status corresponds to the intended form of employment. It is not enough to rely on so-called “yes, everything is in order.”
There are also less obvious nuances. In certain situations, for example, in the case of enforcement proceedings, additional obligations may be imposed on the employer. Therefore, it is important to correctly process salary calculations, contributions, and taxes, and to respond to official requests on time. Hiring is not just about “finding people.” It is an ongoing process involving contracts, salaries, contributions, documents, deadlines, inspections, and employer responsibility.
5. Taxes and IVA: The Launch Budget May Be Higher Than It Seems
Taxes in Spain should be calculated before the launch, not after the first sales. The business structure, type of activity, income level, expenses, employees, rent, work with clients and suppliers — all of these factors affect the financial model.
A separate issue is IVA, the Spanish equivalent of VAT. The standard IVA rate in Spain is 21%, while reduced rates also apply to certain goods and services. In practice, this matters because prices in commercial offers are often stated without IVA.
For example, you may face an office rent listed at EUR 3,000. But if this is EUR 3,000 + IVA, the actual payment will be higher. The same story is about contractors’ services, renovation, equipment, legal support, or accounting services.
Another important point is expenses. Before launching, it is therefore worth checking:
- what taxes will arise;
- how IVA applies to your specific type of activity;
- which expenses can be recorded in the accounts;
- what the real cost of employees will be;
- whether taxes, contributions, and IVA are included in the financial model.
Not everything a business owner purchases can automatically be treated as a business expense. The expense must be related to the business activity, supported by documents, and correctly reflected in the accounting records.
6. Inspections & Ongoing Compliance
A business in Spain must be prepared not only for launch, but also for regular operations. Questions may arise from Seguridad Social, Inspección de Trabajo, Hacienda, or Ayuntamiento regarding employees, social security contributions, taxes, licences, premises, or whether the actual activity corresponds to the declared business format.
That is why it is important not simply to “open,” but to maintain order every day: contracts, salaries, contributions, reporting, permits, documents, and operational processes. Otherwise, the business may face not one major problem, but a series of recurring smaller risks that consume time, money, and management attention.
7. Spain Is a Market of Opportunities, Not a Market for Improvisation
Spain is not a country where doing business is impossible. On the contrary, it may offer opportunities for small and medium-sized businesses, local services, franchises, professional services, and digital projects.
It is possible to launch a business from scratch, buy an existing business, enter a franchise, start as a self-employed professional, and gradually scale. But the key condition is preparation. Before launching, it is necessary to understand:
- the business structure;
- tax model;
- licences;
- employee requirements;
- premises;
- payments;
- accounting;
- ongoing maintenance.
The right question at the start is not “how quickly can I open a business in Spain?” The right question is: “What structure will allow this business to operate in practice, hire employees, accept payments, pass inspections, and scale without constantly fixing mistakes?”
LFT Advisors helps entrepreneurs and companies launch and maintain businesses in Spain: from choosing the right form of registration and checking regulatory requirements to taxes, bank accounts, accounting, licences, and ongoing support.
Planning to start a business in Spain?
Contact us — we will help assess your model before launch.
