The word self-employed or “autónomo” is a word we have heard a lot more of in recent months given the dire labour situation in Spain. The unemployment rate in Spain has reached an all time high of just over 25%, the highest in Europe, so it is no wonder that many have decided to try to take control of their lives by leaving the unemployment office behind and joining the self-employed ranks to set up their own businesses. Is that your goal for 2013?
What exactly does it mean to become self-employed?
It is when an individual works for him/herself instead of being under contract. Self-employed persons earn their income by means of conducting profitable operations from a trade or business but it should not be confused with the term “business owner” as they own the business but do not get involved in the day to day operations whereas a self-employed person is hands on.
- As of 31st December 2012, there are 1.909.916 registered autónomos; 66,5% men and 33,50% women
- 100 people registered as self-employed during the 3rd quarter 2012, largest increase since 2006
- 7,4% of all registered self-employed persons in Spain are foreigners
- 218 are registered in the Canaries; highest number, 317.196 are in Andalucía
- 1 out of 4 new autónomos in Europe are registered in Spain
Before making the crucial decision, consider the pros and cons of taking the plunge and registering as “autónomo”.
- Nothing beats being your own boss
- Managing your own time (the typical 9-5 work model will go right out the window because it takes a lot of effort to keep a business afloat but working for yourself allows for more flexibility)
- It is the quickest, easiest and most cost-effective
- You will have total control and management of the business as you don’t have Partners to consult. You can set your own work policies and standards and ensure they come together
- Ideal for sole-proprietors and small business models
- Reduced legal procedures during the set-up, therefore lower tax advisor and accounting fees
- You can spend your time doing something you truly enjoy
- No safety net of a fixed, regular monthly income
- Does not differentiate between personal and company assets so in the event you run up debts with third parties, your personal assets (present and future) will be called into play
- If the annual net profit is high (in excess of 45.000 euros), you will be more than likely end up paying more tax than a limited company for example
- Under Spanish Law, it isn’t possible to hire blood relatives up to the second degree (parents, siblings, children, unless, nephews, grandparents…) under this business model
- A limited company may offer a more professional image when approaching banks, certain clients and suppliers as well as Public Administration office
- You take on board additional expenses such as your monthly social security contributions, taxes, advisory fees, office rent and utilities, materials and equipment, insurance, personnel wages…
- There’s nobody to hide behind. The success or failure of the business depends entirely on you but this can also be a good thing
If the self-employed route is something you have been thinking about yourself, your mind is probably going at 100 miles an hour wondering whether there are different types of autónomos, approximate costs etc. Well, don’t worry; I’ll get around to answering these questions in upcoming articles. You might be surprised, maybe 2013 is your lucky year!
*Provided by the Instituto Nacional de Estadística and the Ministerial de Empleo y Seguridad Social