What differentiates the self-employed person from the corporate self-employed person?

The most important differences

In a company the liability is limited to capital, while in the case of the self-employed this liability extends to private property. So, if at some point business failure comes, as a self-employed "you will be shielded."

The constitution of a company is a more expensive and extensive process over time, than the registration as a self-employed person, as you will have to choose a company name, make a public deed of incorporation or go to the Mercantile Registry, among others. other procedures.

As a self-employed person, you will have tax, commercial and accounting obligations that are easier to manage than if you set up a company.

As for Social Security bonuses, from this year as a self-employed person you will be able to enjoy the flat rate. In order to benefit from it, it must have been two years since you were last registered as self-employed. The main requirements for enjoying a reduction in self-employment are that you have not incurred debts with the Social Security or the Tax Agency. From January onwards, you must first choose the contribution base and, depending on this, you will see the amount you have to pay monthly to the Social Security. If you choose the minimum contribution base, which is 1,234.86 euros, the flat rate would be around 85 euros for the first twelve months. From the 12th to the 18th month, the rate would have a 50 percent reduction and from the 18th to the 24th a 30 percent discount on the fee to be paid.

The self-employed person pays personal income tax, a progressive tax for which you will pay more as your turnover increases. On the other hand, in the case of the company, a fixed percentage is paid regardless of the corporate tax benefit, so it will be more beneficial to set up a company in the face of certain income.

In addition to these differences and your willingness to opt for one or the other option, there will be cases in which it is compulsory to register as a self-employed person.

Who is required to register as a self-employed person?

You will be obliged to register as a self-employed person depending on whether or not you have control of the company and what your functions are within it. In fact, if you do not work for the company, there is no obligation to contribute as a self-employed person.

It is understood that you have effective control of the company when you own a minimum of 50 percent of the shares or participations of the company, or when you own:

• At least 50 percent of the capital added to your shares, those of your spouse and those of your relatives by consanguinity, affinity or adoption up to the second degree, as long as it coexists.
• At least 33 percent of the company's share capital.
• At least 25 percent of the capital and executive and management functions.

Therefore, the partners with effective control who must be registered as self-employed are:

• A partner with effective control who is an administrator of the company (regardless of whether the position is remunerated or not) as long as he / she actively holds this position, carrying out management and management tasks.
• Partner with effective control, administrator of the company, but who only carries out passive actions (limited to formal functions and is another person who runs the business), will only be listed as a self-employed person if he also works in the company and receives remuneration for this.
• If the partner with effective control is not an administrator, he will only have to contribute to the RETA if he also works for the company and receives remuneration for it.
• And if the partner with effective control is not an administrator or works for the company, he will not have to contribute to Social Security.

If you need more information do not hesitate to contact DATA and SERVICES.