Quick guide: How to set up an SME or start-up in Spain in 2025

INDEX

1.Introduction

• Entrepreneurship in Spain in 2025: Opportunities and Challenges
• The Entrepreneur Today
• Key Differences Between an SME and a Startup
• How to Know Which Option Fits Your Project Best

2. Defining Your Idea and Business Model

• Validating the Problem and Value Proposition
• Market and Competitor Analysis
• Designing the Revenue Model

3. Legal Aspects and Legal Structure

• Types of Legal Structures (SL, SA, self-employed, cooperative, etc.)
• Key Considerations When Choosing a Legal Structure
• Company Registration and Incorporation
• Tax and Census Requirements (IAE registration, NIF, etc.)

4. Initial Administrative and Operational Aspects

• Bank Account and Capital Contribution
• Corporate Books and Bylaws
• Obtaining Licenses or Permits (if applicable)
• Social Security Registration and Labor Obligations

5. Initial Financial Plan

• Forecasting Expenses and Revenues
• Fixed and Variable Costs
• Initial Financing Needs
• Pricing Strategy

6. Team and Organizational Structure

• Recruitment and First Key Roles
• Defining Shareholdings and Shareholder Agreements
• Culture and Values from Day One

7. Protection and Intellectual Property

• Trademark and Trade Name Registration
• Industrial Property and Patents (if applicable)
• Confidentiality and Non-Compete Agreements

8. First Steps in Marketing and Sales

• Branding and Initial Positioning
• Customer Acquisition Strategy
• Sales Channels and Commercial Strategy

9.Access to Financing

• Sources of Funding to Get Started
• Differences Between Equity, Debt, and Public Aid
• Practical Tips for Seeking Financing from the Beginning

10. Common Mistakes When Creating an SME or Startup

• Not validating the market before investing
• Choosing the wrong partners
• Lack of financial control from the start
• Not protecting intellectual property
• Not establishing a solid legal foundation

1. Introduction

Entrepreneurship in Spain in 2025: Opportunities and Challenges

Starting a business in Spain in 2025 remains a challenge. Although some conditions have improved—such as digital procedures, tax incentives, and specific support for startups—the reality is that entrepreneurship is still a demanding path, full of uncertainty, difficult decisions, and a lot of unseen work. Bureaucracy, tax burdens, access to financing, or simply knowing where to start remain common obstacles for anyone launching their own project.

Moreover, entrepreneurship means living with risk, the pressure of keeping a business afloat from scratch, and the constant need to adapt to a changing market. Those who choose this path do so knowing there are no guarantees, but also with the conviction that building something of your own is worthwhile. In this context, having clarity from the start about the type of company you want to create—a small or medium-sized enterprise (SME) or a startup—will help you make more realistic decisions aligned with your goals.

The Entrepreneur Today

The entrepreneur in 2025 is not just someone with a brilliant idea, but someone resilient, clear-minded, and highly capable of execution. By definition, an entrepreneur is courageous. It doesn’t matter if they come from a tech background or are building a traditional business: entrepreneurship involves taking risks, leaving the comfort zone, building something from scratch, facing chaos, solving problems daily, and staying motivated even when things don’t go as expected.

Being an entrepreneur today means assuming personal and financial risks, leading without a safety net, and making complex decisions with limited information. It’s not for everyone—and that’s okay. But it remains an option for diverse profiles: young innovators, professionals seeking reinvention, university-born teams, or people viewing self-employment as a viable path. While each path is different, all share the challenge of creating value from a blank slate. If you’re willing to commit at that level, this guide is designed to help you reduce friction and move forward with more certainty than doubt.

Key Differences Between an SME and a Startup

While a startup can technically be an SME and vice versa, this is not always the case. Understanding the difference in business models is key to defining your strategy and needs.

An SME (small or medium-sized enterprise) is a legally and operationally recognized entity under European and Spanish regulations, characterized by a limited number of employees and business volume. SMEs often seek stability, profitability, and sustainable growth, frequently with a local or national focus, prioritizing medium-term profitability and consolidation. They can be traditional or innovative businesses but generally grow progressively and steadily.

A startup, on the other hand, is an emerging company with high growth potential, typically based on information and communication technologies (ICTs), aiming to scale its business model rapidly. It is characterized by innovation, disruptive problem-solving, and a focus on scalability: growing with limited resources and reaching many customers efficiently. Startups operate in high-uncertainty environments, as they are still validating their business model, which increases risk but also potential profitability.

Startups are often temporary by nature: an initial and transitional phase of a company’s lifecycle, with the goal of evolving into a scalable and consolidated business.

How to Know Which Option Fits Your Project Best

The choice between creating an SME or a startup depends on the type of project and your personal and professional objectives. If your proposal is innovative, has the potential to scale quickly, and you’re willing to deal with uncertainty and seek external investment, you are likely on the path of a startup. If, instead, you aim to build a stable business with recurring income and controlled growth, your structure is better suited as an SME.

In any case, the goal is not to fit into a label, but to have clarity from the beginning. This will help you make better decisions regarding legal structure, financing, team organization, and growth strategy.

This guide provides everything you need to know to start a company in Spain in 2025, from validating your idea and choosing a legal structure, to complying with legal obligations, defining your financial model, attracting initial clients, and seeking funding.

2. Defining Your Idea and Business Model

Before worrying about procedures, financing, or marketing, you need a solid foundation: knowing exactly what problem you are solving, for whom, and how you will generate revenue. This initial phase is critical, as many projects fail not due to lack of effort or resources, but because the idea wasn’t properly validated from the start.

Validating the Problem and Value Proposition

Having an idea is not the same as having a business. The first step is to identify a real problem that someone is willing to pay to solve. It’s not enough that the idea seems interesting to you: you need to go out, talk to potential clients, understand their needs, frustrations, and habits, and launch a Minimum Viable Product (MVP) to collect early feedback.

Don’t fall in love with your idea without testing it: one of the most common mistakes is launching a product without confirming there are enough paying customers. Validate as early as possible whether your solution fits the market, as this reduces risk and allows early adjustments. A strong value proposition clearly explains what you offer, for whom, and why it is better (or more convenient) than existing solutions. Try summarizing it in a short, concise sentence. If you can’t, your approach likely needs refinement.

Market and Competitor Analysis

Understanding the environment in which you will operate is essential. How big is the market? Is it growing or saturated? Who are the main competitors, and what are they doing well (or poorly)?

Analyzing this helps you differentiate yourself and avoid mistakes already made by others. Understand what they offer, their prices, their channels, and determine how you will stand out. Many small businesses fail due to inadequate market research, entering a saturated or low-demand niche. Don’t make that mistake: studying competitors provides clues on how to do things better or differently. Identify your target customer in detail (demographics, preferences, habits) and detect unmet opportunities.

For an SME, analysis can focus on a local or national environment. For a startup, you need to understand global trends and identify scalability opportunities from the start. The point is not only to collect data but to use it strategically.

Designing the Revenue Model

Finally, you need to define how your project will make money. Will you sell a product? Charge for a service? Operate on subscription, commission, licenses, or freemium models?

Detail your revenue sources and ensure they align with customer behavior. The revenue model must be consistent with your value proposition, target market, and resources. It doesn’t need to be perfect at first, but it must be viable. Design tentative pricing and estimate sales volumes needed. Consider how you will start generating revenue early on, even if modest, as this gives autonomy and validation. A clear revenue model is also essential when seeking financing.

Before formalizing your company, define and validate your business idea: ensure a market exists that values and pays for your solution, understand your competition, and know where revenue will come from. A validated idea and solid business model are the best insurance to proceed confidently. Remember the entrepreneurial mantra: “fail fast, fail cheap, and learn.”

3. Legal Aspects and Legal Structure

One of the first essential steps when creating an SME or startup in Spain is choosing the correct legal structure. This decision affects multiple factors: legal liability, taxation, administrative procedures, relationships between partners, and even access to financing or public aid. Therefore, it’s important to understand the main options available and which best fits your situation.

Types of Legal Structures

In Spain, there are various legal forms that can be adopted to start a business. They are classified into five main groups:

• Sole proprietorship (self-employed)
• Commercial companies
• Non-commercial companies
• Associative and foundational forms
• Other legal entities (which, while not used to create a typical business, are useful to know)

Below are the most common forms for creating an SME or startup:

Self-employed (Sole Proprietor)
The simplest form to start if operating alone. There is no separation between the individual and the business: you are personally liable for debts. Minimal procedures, taxation via IRPF (personal income tax), suitable for low-financial-risk individual businesses.

Limited Liability Company (SL)
The most common choice for startups and SMEs. Liability is limited to the capital contributed. Since the “Crea y Crece” law of 2022, it can be created with just €1 of capital; if less than €3,000, 20% of profits must be allocated to legal reserves. Flexible in management and protects personal assets of partners.

Public Limited Company (SA)
Designed for larger businesses or those planning to go public or attract institutional investment. Requires a minimum capital of €60,000, a more complex structure, and stricter regulations. Less common for startups unless rapid growth or international expansion is planned.

Other business forms

• Worker-Owned Companies (SLL / SAL): majority ownership by employees.
• Cooperative: collective ownership by several partners with equitable decision-making.
• Joint Ownership (CB): two or more people starting together without forming a commercial company.
• Civil Partnership (SC): similar to CB, based on a private contract between partners.

These forms are less frequent in tech startups but may suit social, local, or cooperative projects.

Other relevant non-business forms:

• Associations
• Foundations
• Professional companies
• Economic interest groupings (AIE)
• Temporary business unions (UTE)

These entities are not designed to run a regular commercial business but are worth knowing in the legal ecosystem.

Key Considerations When Choosing a Legal Structure

Factors to consider:

• Number of partners: alone, start as self-employed; multiple partners, usually better as a commercial company (SL or SA).
• Liability: self-employed = personal liability; SL/SA = liability limited to social capital.
• Financing needs: investors prefer capital companies for share acquisition.
• Access to public aid: many grants require a commercial company.
• Taxation: self-employed pay IRPF (progressive); companies pay corporate tax (generally 25%, 15% in first years if under Startup Law). Certain profits levels may favor forming a company.

Many tax deductions (e.g., R&D) or investor incentives apply only to commercial companies.

Incorporation and Registration Procedures

Once the legal form is decided, the basic steps to incorporate a company are:

1. Negative name certificate to reserve the company name at the Central Mercantile Registry.
2. Draft bylaws defining the company’s purpose, capital, administration, etc.
3. Execute the deed of incorporation before a notary, signed by founding partners.
4. Contribute social capital into a corporate bank account.
5. Register at the provincial Mercantile Registry; the company acquires legal personality.

Since 2022, the process can be done online via Entrepreneur Attention Points (PAE) and CIRCE, coordinating automatically with the notary, tax office, social security, and registry—allowing an SL to be created in just a few hours.

Tax and Census Obligations

• Register in the Entrepreneur Census (form 036 or 037).
• Apply for the definitive NIF.
• Register for Business Activity Tax (IAE) for the relevant category.
• Register in the Intra-Community Operators Registry (ROI) if operating in the EU.
• Choose VAT regime and taxation method (IRPF or IS, depending on legal form).

Protecting the Name and Trademark

Registering the company name at the Mercantile Registry does not protect the commercial brand. To do so, register it with the Spanish Patent and Trademark Office (OEPM) to guarantee exclusive use. It is advisable to do this as early as possible to prevent third parties from registering your brand first.

4. Initial Administrative and Operational Aspects

Once the company is incorporated, essential administrative and operational tasks must be executed to operate correctly:

Bank Account and Capital Contribution:
Open a bank account in the company name. Separate personal and business finances. Use it to deposit social capital, manage payments, and maintain clear traceability.

Recording Contributions:
Document all contributions (cash or in-kind, e.g., equipment, vehicles) in the incorporation deed.

Legalizing Corporate and Accounting Books:
Mandatory for SLs, SAs, etc. Include minutes book, partners/share register, and accounting books. Legalization is done electronically at the Mercantile Registry.

Consulting and Using Bylaws:
Bylaws establish internal rules—administration, shareholder meetings, transfer of shares. Keep a copy accessible.

Licenses, Permits, and Sector Regulations:
Depending on activity, municipal licenses or sector-specific permits may be required (health, education, finance, etc.). Comply with data protection regulations (LOPDGDD, GDPR).

Social Security Registration and Labor Obligations:
Administrators must join the Special Regime for Self-Employed (RETA). Hiring employees requires registration, contracts, Social Security contributions, and occupational risk prevention plans.

Operational and Fiscal Organization:
Organize corporate documents, contracts, invoices, payroll, etc. Use invoicing/accounting tools and maintain a fiscal calendar for VAT, tax prepayments, and IRPF withholdings. Separating personal and business expenses is essential.

5. Initial Financial Plan

The financial plan is the compass for any SME or startup. It estimates needs, foresees risks, and guides decision-making. Key steps:

• Identify all expenses: fixed (rent, salaries, insurance) vs. variable (materials, commissions, shipping). Include one-time startup costs.
• Project revenues: estimate sales per channel/product/service; define pricing strategy and consider seasonality.
• Calculate break-even: the sales volume needed to cover all costs. Example: fixed costs €2,000/month, gross margin 50%, need €4,000 revenue to break even.
• Estimate required capital to cover startup and operational costs before sufficient cash flow. Determine if funding will come from personal funds, loans, or public aid.
• Pricing strategy: cover variable costs, contribute to fixed costs, and leave margin. Compare with competitors.

Use Excel templates for balance sheet, income statement, and cash flow projections. Keep them coherent, updated, and review regularly.

A well-designed financial plan clarifies viability, anticipates needs, allows timely adaptation, and increases the chances of success.

6. Team and Organizational Structure

Building a solid team from the start is critical. Identify key roles according to activity:

• Startup: developer, business/marketing, operations.
• SME (commercial): store manager, administration.

Avoid doing everything alone: evaluate strengths and weaknesses, delegate strategically.

Founding Partners: define share distribution, roles, commitment, investor involvement in a shareholder agreement. Include intellectual property, exclusivity, non-compete, and vesting clauses.

Hiring Employees: each hire should add real value. Consider outsourcing vs hiring. Prioritize versatile, committed profiles. Establish culture and values from day one.

7. Protection and Intellectual Property

Intangible assets—name, brand, ideas, technology—are as important as cash. Protect them from the start:

• Brand and Trade Name: register at OEPM (10-year protection, renewable). Consider EUIPO for international plans.
• Patents, Utility Models, Industrial Designs: protect technical inventions or novel designs. Patents = 20-year exclusivity, require novelty.
• Copyrights: automatic protection, but registration helps prove authorship. Assign rights via contracts.
• Confidentiality and Non-Compete: NDAs for sensitive info; include non-compete clauses when relevant.

Proper intellectual property protection adds value and security for investors.

8. First Steps in Marketing and Sales

Branding: name, logo, colors, fonts, tone, values (innovative, premium, accessible, etc.). Maintain consistency.

Positioning: define how you want to be perceived versus competitors.

Online Presence: functional website, mobile-optimized, clear value proposition, SEO basics.

Customer Acquisition Channels: content marketing, social media (1–2 key platforms), launch strategies, email marketing, partnerships, influencers. Measure results, scale effective channels.

Set achievable goals: e.g., first 50 customers in 3 months, target revenue first semester. Marketing and sales are continuous; adapt and refine your approach.

9. Access to Financing

Financing is a major concern for SMEs and startups. Options:

• Early stage: personal funds and support from family/friends (“3Fs”).
• Microloans / Bank lines: ICO loans with lower interest rates.
• Public aid: ENISA Young Entrepreneurs (25,000–75,000 €), regional grants, crowdfunding, accelerators (SeedRocket, Lanzadera, Wayra).
• Mixing sources: combine personal savings, close support, public aid, angel investors, crowdfunding.

Aim for strategic funding without compromising sustainability or control.

10. Common Mistakes When Creating an SME or Startup

• Not validating the market: test with MVP, surveys, interviews. Avoid developing a product no one wants.
• Wrong partners or lack of team: choose complementary partners, align expectations, establish agreements.
• Lack of financial control: track cash flow, expenses, and revenues from day one. Keep a buffer.
• Not protecting intellectual property: register trademarks, patents, NDAs. Avoid losing competitive advantage.
• Weak legal foundation: comply with incorporation, tax registration, licenses, contracts, data protection, shareholder agreements.

Avoiding these mistakes doesn’t guarantee success but increases chances of moving forward confidently.

At Kleo, we emphasize: dreaming big is not enough—you must execute wisely. With the right knowledge and guidance, launching an SME or startup in Spain can be clearer, faster, and more successful.