X1.1 - Starting a Business Flashcards

1
Q

What are Economy’s 2 Sectors

A
  1. Private Sector
  2. Public Sector
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2
Q

What is a Private Sector?

A
  • Owned by private individuals or Companies
  • Most companies in Spain belong to this Sector
  • Over 99% are Small and Medium Enterprises (SMEs) that only operate within Spain
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3
Q

What is a Public/ State Sector?

A
  • Includes central and local government, Government owned businesses
  • Found in strategic areas such as: Communications, Transport, Defence, Energy (E.g: postal service, AENA, Renfe)
  • The size of the public sector varies by country: higher in emerging economies
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4
Q

What is a sole trader/ self-employed?

A
  • owned by one person
  • simple to start with, basic legal requirements
  • No minimum capital needed (can use personal Bank account)
  • Full liability for business debts ( Personal assets at risk)
  • Pays for income tax (IRBF) on earnings
  • Must register with: Tax Office, social security
  • No need to register with the companies office
  • Common for small businesses
  • Legal status: Individual, as the person and businesses are the same
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5
Q

What are General Partnerships

A
  • Owned by two or more people
  • Easy to start with basic legal requirements
  • No minimum capital required
    partners share full liability for business debts (personal assets at risk)
  • Each partner pays income tax (IRBF) on earnings
  • Must register with: Tax Office, Social Security
  • Common for personal Businesses
  • Legal status: Individual, as the partners and the business are the same
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6
Q

What are Private Limited Companies?

A
  • Owners are legally separated from the business (1 - 50 owners)
  • Must Register with the tax office for its own tax number, company office
  • requires a separate bank account for the company
  • at least 1 director must be appointed
  • A minimum capital of $3000 is required
  • the company pays corporate tax
  • a company secretary must be named (often an external professional, E.g: accountant or solicitor)
  • Legal Status: Social, as the company has its own legal identity
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7
Q

What is a Public Limited Company?

A
  • Owners (Shareholders): Legally separate from the business; no real limit on the number of shareholders
  • Shares: Trades on the stock market
  • Registration: Must register with the tax office for a tax number and with the company office
  • Bank account: Must be separate from the owners
  • Minimum capital: $60,000
  • taxes: pays corporate tac
  • legal status: social, as the company has its legal activity
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8
Q

What are Limited Partnerships?

A
  • Owners: Two or more people.
  • Requirements: Easy to start with basic legal steps.
  • Capital: No minimum required.
  • Liability: At least one partner has full liability for debts (general partner).
  • Other partners (limited partners) are only liable for the capital they invested.
  • Taxes: Partnership pays corporate tax.
  • Registration: Must register with: the Tax Office (Hacienda), and Social Security (Seguridad Social).
  • Common for professional businesses.
  • Legal Status: Individuals, as people, and the business activity are seen as one.
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9
Q

Limited Liability Entrepreneur

A

Limited liability entrepreneurs is like sole traders, with full responsibility, but their house is excluded (they cannot lose their home if they end up with lots of debt)

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10
Q

Public limited or private limited worker-owned companies

A

Public limited or private limited worker-owned companies where the workers also invest most of the capital

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10
Q

Cooperatives

A
  • Cooperatives have social and economic objectives, and usually some democratic decision-making processes.
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10
Q

How do you start a Business

A

1) Go to the Business registry and register your company name.
2) Choose a bank and and ask to create a business bank account.
3) Go to a notary and create a company document (company name, partners’ names, capital each one is putting in, business activity, etc). How much capital will determine the ownership percentages).
4) Register one of the partners in the social security as administrator.
5) Bring the documents from the notary to the bank and transfer the 3,000 or 60,000 euros into the company bank account.

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11
Q

Holding Companies and Franchises

A

Holding companies and franchises are ways of doing business.
* They are not a legal type.
* When you create a holding company or start a franchise operation, you still
have to decide whether to be a sole trader, partnership, ltd company, or plc.
* Generally, a holding company will always be registered (not a
sole trader) due to the legal complexities of owning other companies.
* Small franchise operations may be run as a sole trader, more complex ones
will require that you set up a Ltd company.
272019-20

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12
Q

Franchises

A

A company (franchisor) allows a person or another company to do
business using their brand, business model, or products.
* The franchisor receives a fee from the franchisee
(usually a starting fee and then a % each year based on sales)
* Franchisee usually registers as a limited company, a sole trader, or some
type of partnership.
* Franchises are very popular and represent a large percentage of new
business that opens up.

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13
Q

3 Main Types of Franchies

A

Business Model
- Franchisor provides a
business model using their
name and trademark. They
offer assistance in starting
and managing the
company. The franchisee
pays a fee or royalty in
return.
- E.g.- McDonald’s, Dunkin
Donuts, and many retail
operators

Product
- Manufacturer allows
franchisee to distribute
their goods, using the
name and trademark of
the manufacturer.
Franchisee pays a sales fee
or promises to purchase a
minimum inventory of
stock.
- E.g.- Baskin Robbins, car
dealerships.

Manufacturing
- Franchisee manufactures a
product under license and
sells it to the public, using
the franchisor’s name and
trademark. Often used in
the food and beverage
industry.
- E.g.- Coca-Cola.
There are three main types of Franchises

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14
Q

Positives (+) and Negatives (-) of Franchises

A

Flexibility
- Lack of flexibility on operations, suppliers, training, and maybe even opening hours

Company Image
- Business is tied to the image of the franchise company. If they have a financial or product-related scandal, your franchise will be affected
Franchise Fees
- Costs can be expensive. E.g.- An average hotel franchise, including licensing and location fees, can cost as much as $6 million to start.
- Average franchise royalty fee per
month is between 3-8 % of monthly sales.

15
Q
A