Similarly with an architect that designs the foundations of a construction, the legal structure is the format by which your startup is based and that will directly affect growth, success and protection of your startup. The first thing you probably need to know is that 9 out of 10 start-ups fail within the first 5 years. While there are many causes, a lack of solid legal footing is key—creating a pro-startup legal framework can make all the difference.
In this extensive guide we will also take you through a ride to de-mystify the legal maze so that you know how to select the legal structure of your startup. We will discuss the various alternatives at your disposal, examine some of the major aspects to be considered and give you the suggestion and tips you need to make a sound decision.
Understanding the Legal Framework for Startups
In December last year, the Congress voted unanimously to pass the Law to Promote the Ecosystem of Emerging Companies, commonly referred to as the Startups Law, whose primary target is to have a particular regulatory framework that helps in the establishment and expansion of emerging companies. An array of tax benefits will follow, to be in effect since the 1 st of January this year, on investment in startups.
Which will increase the flow of investments in this area and will contribute to financing the development of such firms. Legally it will be more secure because of the regulation of intellectual property registration. It is particularly critical to startups which tend to conduct business despite the protection of their ideas and technologies to guarantee their future success.
What is Startup Law?
To invest their energies in building their businesses. The services of the notary play a central position in establishing and registering a startup. Due to his legal background, he is able to assist the entrepreneurs on the procedures required to set up the new company and what the laws of that particular country will be. They also play a significant role on the issue of registration of intellectual property of the startup.
The primary purpose that the Startup Law, which is formally referred to as Law 28/2022, of December 1, 2022, the Law of the Promotion of the Ecosystem of Emerging Companies, serves as the stimulus of Spanish startups in terms of growth and internationalization.
Company Formation and Structure
To this middle, a line of actions has been formed which enables the formation of such companies, their financing, and conducting. To obtain the benefits provided under this law, it is necessary that the companies planning to avail of them fulfill a set of conditions: To start with, one should consider the fact that the company must not be older than 5 years since its development or 7 years in the case with the company in energy, industrial or biotechnology sectors. It has to have its registered office or domicile in Spanish territory.
Through merger or conversion of firms. The permanent employees are to contain no less than 60 percent of workers having the employment contract in Spain. It should be a company with an innovative project, and it should have a stable and scalable model business. The next requirement that your startup must fulfill is the fact that it is a technology-based company.
Conclusion
It implies that the activity of the company implies the need to produce or to utilize the scientific knowledge and make use of technologies in the development and creation of products or services of the company. What advantages can you get using the Startup Law? Varying between the first Entrepreneur Support Law of 2013 and the current Law 18/2022 Create and Grow.
With this new package of regulations, new entrepreneurs will be able to enjoy considerable benefits in their commercial governance as well as extremely favorable taxation. The direct objective of the new regulatory framework is to promote the entrepreneurship culture and to support the establishment of innovative enterprises with the institutional environment.