How to set up a Startup in Spain and the legal processes

Startups represent a new concept of company, based on the business application of technological solutions. Despite the challenge it represents, there is already a legal framework that protects this type of company in Spain. Below, we are going to determine how to create a Startup and what are the legal conditions required for this type of company..

What is a Startup

Before we start looking at the necessary legal conditions, it is important to define correctly what a start-up is.

A Startup is a technology company that does not need a very high financial investment to start its activity. Agility and speed are two concepts closely linked to this type of company, and one of the keys to a Startup is its ability to adapt to all kinds of changes.

Another of the key concepts of startups is risk. It is precisely risk that means that a startup must adapt and grow with less capital than other sectors, although this is what makes them so profitable for initial investors.

The business plan of a Startup

Prior to the legal aspects involved in the creation of a start-up, it is also important to analyse the basis of the business plan for this type of company.

• The first thing is to decide on a business idea. A Startup is usually focused on the development of a product or service related to the use of technology, therefore, we must define what kind of service we want to provide and if we are able to develop it first on a small scale, and then scale it up.
• It is also important to carry out a market study, in which we determine whether our idea has strengths and what its potential weaknesses are. The next step is to define the target audience, i.e. to which profile we are going to sell our product..
• So far we have developed ideas related to the business model itself, but it will also be important to create a brand identity. For any company it is very important to generate an image that the consumer perceives, and relates it to your company and your products.
• Next, it is necessary to form a working team. We have talked about the need to streamline all the processes involved in a Startup, so the objective is to create a small team capable of developing the first versions of the product.
• Finally, we establish the financing channels that will be needed to start the business, and the potential channels for scaling up.

The minimum viable product for your Startup

One more concept, before analysing how to create a Startup from its legal basis.

The minimum viable product is the first sample of the service or final product that we want to offer to our potential consumer.

Traditional companies launch highly finished products on the market, which are likely to undergo few variations in the future, but this concept is very different when we analyse the activity of a Startup.

The MVP allows us to launch a service or product in the development phase, which continues to be improved once it is marketed. What this strategy allows us to do is to estimate the public reception, the costs and the general suitability of our idea.

The partnership model for a Startup

Startups have the same business model as any other company, which means that they can choose between the following options:

• Self-employed
• Limited Company
• Public Limited Company
• Community of Property

It is true that there are special commercial companies, but the majority of Startups created in Spain take a legal form expressed in one of the above options.

The importance of the legal framework between partners

Spanish law allows a wide freedom to determine the responsibilities of the partners in a company, precisely for this reason it is essential to create an adapted legal framework, which allows to work in the long term.

A start-up is a variable business, but legal responsibilities must be very clear and established from the outset.

With a shareholders’ agreement we have a legal and binding document, in which the obligations and rights of each of the owners of the company are detailed.

Registration at the Spanish Patent and Trade Mark Office

Another fundamental step in the creation of a Startup is the registration at the Spanish Patent and Trademark Office.

On the one hand, we will register the commercial name of the company and the graphic elements that identify it, but in addition, in the case of Startups it is important to register their activity, provided that it is original and there is no competition. If your Startup is going to offer a new product or service, it is advisable to register the intellectual property.

Labour agreements and contracts in the creation of a Startup

In principle, the legal framework of a company establishes the contractual conditions that are developed between partners, however, when hiring an employee, it is necessary to resort to the Labour Code, so that the hiring of workers complies with current legislation.

It is advisable to start managing this type of contract in advance, in order to be able to make decisions that protect the interests of the company itself.

Taxation

Every start-up will have a series of tax and social security obligations. The procedures with the Administration can be very complex, especially in relation to this type of company, whose activity is not completely defined in many cases. Contacting specialists in labour taxation beforehand is an advantage in order to establish an appropriate tax strategy.

Asesoría Orihuela Costa, legal advice for Startups

At Asesoría Orihuela Costa we offer you all the legal services you need for your Startup to start its commercial activity with the legal protection it needs.

If you are looking for a law firm specialised in the incorporation of companies, able to advise you on everything related to how to create a Startup, contact Asesoría Orihuela Costa now and establish a legal framework capable of protecting your business.