George (left) and Dan (right) co-founders of Hubbub Labs, at Startup my rooftop back in September.

By Dan Shepherd, Director of Operations, Hubbub Labs Content and Digital Marketing Agency, Barcelona.

Barcelona is one of those cities that you visit and instantly fall in love. I know. I came with the intention of staying a month… and that was seven-and-a-half years ago.

It’s hard to put a finger on exactly what it is, but I’m sure the climate, the culture and history, the year-round street festivals, the amazing food and the fact that you can go skiing in the Pyrenees and be back in time to watch the sunset on the beach, has something to do with it.

But with the infamous Spanish bureaucracy and archaic banking practices, is it really a good place to start a business?

The fact that Barcelona is home to the largest mobile conference in the world and with numerous tech giants including Amazon, Airbnb and WeWork setting up shop in the Catalan capital, it certainly seems so.

Advice for founders

We truly believe that Barcelona is an amazing place to base your business. But having recently been through the setup process (read: ordeal), there are a number of things you should look out for if you want to make it out the other side without a head full of grey hair.

1. It takes a lot longer than you think

During the process there were a number of things which took much longer than my business partner and I had envisioned. We naively believed the whole thing would take about 4-6 weeks. In the end, it was well over 3 months before we were officially trading as a Sociedad Limitada (S.L). For comparison’s sake, it takes about a day to do the same in the UK.

2. There is a lot of misleading information online

While there are various online guides to starting a business in Spain, you should be aware they all say different things, quoting different stages, costs and waiting times. So pay attention to when they were published because the law often changes.

This guide from Transferwise was one of the better ones I came across.

3. Registering the name of the business with the Registro Mercantil Central is sloooow

Early on you’ll need to check that your business name hasn’t already been registered in Spain. There are a few forms to fill out and you have to pay a small fee.

It takes three days to get a response on average. After about two weeks of waiting patiently, we phoned to find that there was a problem with the address and the post office were returning it to Madrid. They informed me they would send it back as soon as possible. A week later, it arrived, and it came with an additional and unexpected postage charge of €15. 

4. Banks come with their own challenges

I already have a personal account with ING, so with relatively favourable conditions for startups, plus the promise of “stress free” online banking, it seemed like an easy choice.

In order to open a business account in Spain you have to deposit €3000, the initial minimum investment required to set up an S.L. Once you have paid this money in, you should receive a certificate confirming it.

Of course, rather than the two or three days we had been promised, this took around nine days to be delivered. My frantic phone calls and drop-in visits to the bank where I had to explain how we had a very important appointment with the notario (notary) looming did nothing at all to speed things up.

“Stress-free”, I discovered, is a relative term.

5. Getting a N.I.F definitivo

My partner and I went to the notario, signed the deed of incorporation, visited the tax office, registered for IVA (VAT), signed endless pieces of paper and after a week or two were issued with a provisional N.I.F.

This effectively meant we could start issuing invoices in our company name!

Was this it? Were we a company?

No.

What we hadn’t realised is that ING doesn’t allow you to operate a business account without a N.I.F definitivo. This meant we couldn’t access the initial startup funds and we couldn’t receive or make payments. Something which makes running a business quite tricky.

Our takeaway here is that when you open a business account in Spain, make sure you ask them if you can operate with a NIF provisional. This will save you time and make your life a lot easier.

6. Registro Mercantil is still sloooow

Our next step was to officially register the business with the Registro Mercantil, after which we could finally apply for the N.I.F definitivo. This shouldn’t take long. But after a few weeks, we were still waiting.

By now, we were pretty desperate to use the business account. Although we still hadn’t started operating, it was the end of the quarter and we had to pay the IRPF (income tax) that had been retained from the notario. If we didn’t pay by a certain date, we’d get a fine. Great.

At last we got confirmation and now just had to wait for the N.I.F definitivo to arrive. You’ve guessed it, this took much longer than normal, so I booked an appointment at the tax office and went to find out what was going on.

The person I spoke to seemed surprised we hadn’t received it already, but there was nothing she could do. I pleaded with her until she passed me onto a colleague. Luckily he was in a better mood and managed to find the problem. He printed the N.I.F definitivo. Nearly there.

Back to the bank and after yet more paperwork we had to wait another eight working days for the account to be activated. So we were told.

Of course this meant we missed the tax deadline and couldn’t pay our accountant for ages. But finally, after a few further technical issues on the bank’s end (misplacing documents, etc,) and several dozen more (increasingly heated) phone calls, our business bank account was activated. Drinks on Hubbub Labs, hurrah!

Major takeaway: Hire professional help

I honestly don’t think we would have made it through this ordeal without the help of a gestor. He talked us through every step of the way, booked the appointment with the notary, and helped fill in reams of paperwork. He also answered our daily cries for help and reassured us when we started questioning whether the whole thing was worth it. Accounting and quarterly tax returns in Spain can be equally confusing so it’s definitely wise, to get someone to do it for you.

There are also companies, such as OneCoWork’s very own English speaking law firm, Lecuidy, who will take care of the whole process for you. This obviously comes at a cost, but is certainly worth it, if paperwork is not your thing.

Now that we are up and running and back to enjoying the (almost) carefree way-of-life which Barcelona is famous for, I look back at the ordeal and ask myself, would I do it all again? You bet I would!

If you have any (basic) questions about starting a company in Spain, feel free to send me an email on [email protected] or come and say hi one day. I’d be more than happy to help.

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