InPortugal, the number of entrepreneurs has been increasing in recent years. However the process of starting a business can generate some doubtsespecially if you are not yet familiar with some legal and financial terms. This process is simple, but it should be thought through and analyzed in advance.

In this article we explain how much it costs to start a company, and what expenses and procedures you should take into account before starting your business.

Before starting a business, find out more about it

Starting a business is an increasingly easy process in Portugal. However, those who have never researched the subject may find themselves with several doubts when it comes to setting up their company.

One of the first things you should consider is the type of company you want to create. It's very common for people to have doubts about the legal form of their company, as there are a number of possibilities.

For example, if you are going to be the only partner in the company you should take a good look at the pros and cons of a sole proprietorship or whether it is better to be an individual entrepreneur. If there is more than one partner, you should jointly analyze the most advantageous legal form for everyone.

In addition you should find out about the tax and financial responsibilities you will have depending on the type of company and business you intend to open.

What types of legal forms are there for companies with just one partner?

When you want to open a company that will be solely your responsibility, there are two legal forms you should consider:

• Sole proprietor
• Private Limited Company
• Limited Liability Individual Establishment

The choice between these three legal forms should be well analyzed, and if possible talk to an accountant to help you with this decision.

Sole proprietor

If you choose to be a sole proprietor, you should know that:

• You will have to fill in your Declaration of Commencement of Activity;
• You need to register with Social Security;
• If your net annual income does not exceed 200,000 euros, you can opt for simplified accounting. You will be taxed under category B of the IRS. In this case you are not obliged to hire a Chartered Accountant.
• If your income does not exceed 10,000 euros, you can apply for VAT exemptionThis can be advantageous in the first year of small business activity, when income is low.
• Individual entrepreneurs are not required to have a minimum share capital to start their business. However, it is important to know that if you choose this legal form your personal assets may be liable for the debts incurred by your company, if the company is unable to pay them.
• The name of the company must be the full or abbreviated name of the founder. In addition to the name, you can add an expression related to the type of activity.

Private Limited Company

If you want to open a sole proprietorship, you should know that:

• You will be the sole shareholder of your company, but your liability is limited, as your personal assets will not be liable for the company's debts;
• This type of company is taxed under IRC,
• You will need to hire the services of a Chartered Accountant (TOC);
• You will have to define your share capital, a minimum of one euroand open a bank account for your company;
• You will have to get the certificate of admissibilitymake the deposit the share capital and carry out the constitutive act of the company;
• To open your company you will have to register it, and after the name it must contain "Unipessoal" or "Sociedade Unipessoal", followed by "Limitada" or "Lda."
• Open a business at a tax office and register with Social Security;
• After registering your company you can request your company card.
• A sole proprietorship is a more complex arrangement, but one that can compensate compared to being a sole proprietor when the level of turnover is higher and the business is high risk.

What types of legal forms are there for companies with more than one partner?

If you want to open a company with more partners, the two most common legal forms are:

• Limited company: May be made up of two or more partnerswho share the company's capital. However, in a private limited company the minimum amount of share capital is only 1 euro per partnerand the liability is limited to the value of the share they hold.. In addition to the business name and any other expression that may be added, it must also contain "Limitada" or "Lda."
• Public limited company: In this type of company the share capital is divided into shares, by a minimum of 5 partners. A liability is limited to the value of the shares subscribedThey have no liability beyond the share capital invested. O he total share capital of a public limited company may not be less than 50,000 euros. In addition to the name and expression relating to the business, the company must also include "Sociedade Anónima" or "SA".

In addition to these two companies, there is General Partnership and the Limited Partnership. If you wish to consult the characteristics of these legal forms, you can do so through the Commercial Companies Code.

How do I set up a company?

In order to simplify the procedures for starting a business, the Empresa na Hora, which can be found in citizens' stores and branches of the institute of registries and notaries. This service helps to simplify the whole process, as it has lists of pre-approved company names and memorandums of association that speed up the creation of a company.

To create a company, the first step, once you have decided on the legal form, is to go to the Empresa na Hora website and look at the lists of pre-approved company names and articles of association. This will give you an idea of the names and agreements that already exist, so that when you get to the counter you have several options to choose from. However the name of the company will only be reserved when you register it at the counter.

At the counter, you will then choose the name of the company, which is different from the commercial name of your company, and will be followed by the name of the legal nature of the company (Unipessoal, Limitada, S.A, etc). You will then need to indicate the pre-approved memorandum and articles of association you want. A memorandum of association is the contract for your company. It defines the rules, members, value of shares, registered office, activity, share capitalamong other rules.

What can you do after setting up your company?

It's important to know that not everything has to be done on the same day. After opening your company, you have 15 days to submit the Declaration of Commencement of Activity to the Tax Office, which must be signed by your Chartered Accountant. In addition you have 30 days from the incorporation of the company to request the Central Register of Beneficial Owners.

The shortest period you have after setting up your company is linked to the depositing the amount of the share capital in the account in the name of the company. The deadline for this deposit is 5 days after the incorporation of your company. However, you can also choose to have it paid into the company's coffers by the end of the first financial year.

How much does it cost to start a business?

The cost of starting a company will depend on the legal form and the number of partners who will be part of the company, but also on the movable and immovable property associated with it. The main costs of starting a business are

• Cost of registration through Empresa na Hora: 360 euros;
• Certificate of Admissibility for setting up a company: 70 euros for normal applications or 150 euros for urgent applications;
• In companies with entries of real estate or shares that have to be registered50 euros per property or share;
• Companies with movable property30 euros for each asset;
• In the case of mopeds, motorcycles, tricycles or quadricycles with an engine capacity of up to 50 cm3. with a limit of 30,000 euros: 20 euros per vehicle.

What other expenses should I take into account when starting a business?

The most common additional expenses for setting up a company are:

• TOC and Lawyer: All companies are obliged to have a Chartered Accountant and invoicing software that is certified by the Tax Authority.. So if you're setting up a company, you should include these costs in your company's budget. As far as lawyers are concerned, some businesses require more than others. However, you should find out what you might have to spend if you need legal services.
• Company headquarters and business premises: Unless your capital is very high, the most common thing at the start of a business is to rent the place where the premises and the respective company headquarters will be. In this area, you should bear in mind that you will have to pay the deposit, the rent and equip the premises so that they function properly and are attractive to customers.
• Suppliers: In many businesses, suppliers represent a very high expense, and you should take this into account early on. Do the math well, analyze what is essential to get started, and try your best to negotiate values at the beginning of your business.
• Services: Remember that when you have a business there are indispensable services that have to be paid for on a monthly basis. These include electricity, water, telephone, internet and gas. As well as these, don't forget the insurance you'll have to take out, security costs and vehicles, if necessary.
• Employees: Employees represent a heavy financial burden on a company's expenses. That's why you should find out more about your obligations as an employer, as you will have to pay wages, allowances, social security contributions, insurance and other costs.

In addition to the expenses mentioned above, it is important to note that many businesses need licenses in order to operate legal. Also don't forget that you need a complaints book. If you take out a loan when you first start out, make sure you take a good look at the fees associated with it, and bear in mind the monthly payment you'll have to make in your budget.

What taxes will I have to pay when I open a company?

In addition to all the expenses mentioned here, you should never forget the taxes you have to pay.

Here are the four main taxes you may pay when you set up your business.

• IRC: When you open a company through a partnership it is taxed through Corporate Income Tax, IRC. This tax is applied to your company's profits and represents a rate of 21%.. SMEs benefit from a rate of 17% on the first 15,000 euros of profit. Only when this figure is exceeded is the 21% rate applied.
• VAT: VAT rates can vary between 6%, 13% and 23% in Portugal, depending on the goods or services provided by your business. However, companies bear VAT and pay the same. The difference between the two is reported to the AT every month or three.
• TSU: Taxa Social Única is the contribution that is paid to Social Security for each employee a company has. Currently the TSU represents a rate of 23.75% on each worker's salary.
• Municipal surcharge: This is a tax that will be paid to the municipality where the company is based. The municipal surcharge is applied to company's profits, and cannot exceed 1.5%. The amount can vary from city to city.

In addition to these four taxes, if your company transfers real estate, you may have to pay IMT, Municipal Tax on the Transfer of Real Estate. If your business makes a profit of more than 1.5 million euros, you will have to pay a tax called the state surcharge, which can be as high as 9%.

The most popular residence visas in Portugal are:

✔ Study or Internship Visa
✔ Work Visa
✔ Entrepreneur Visa
✔ Self-Employed or Retired Visa
✔ Golden Visa
✔ Startup Visa

Want advice on visas? 

Follow the link: http://ow.ly/qkju50ARtPg

To reside legally in Portugal, you must apply for a visa before traveling to Portugal. 

You'll find out with the Orientation: 

What types of visas are available;
Which visa is right for you;
What are the procedures;
What are the steps for obtaining a visa; 

Instagram: @vp_viaportugal
WhatsApp: +351 920 493 758
Email: viaportugal@veportugal.com 

#cometoportugal #portuguesecitizenship #portuguesenationality #vistoparaportugal #viaportugal #visas #goldenvisa #visagold #investiremportugal #maputo #mozambique #visas #national visas #portugal #livinginportugal #livinginportugal #security #luanda #angola #caboverde #Brazil