The limited company (SL) is the most widely used corporate form in Spain by entrepreneurs and small businesses, due to its flexibility and the fact that the partners, except in certain exceptional cases, are not personally liable for the company's debts. However, it is often the case that the legal obligations which are assumed by the SLs.

In this article we take a simple look at these key obligations in order to avoid sanctions, internal conflicts or even personal liability of the partners.

 What are the obligations of a limited company?

From its incorporation, an SL must comply with a series of legal and formal requirements, among which are the following:

1. Entry in the Commercial Register

Once the public deed of incorporation has been executed before a notary, the company must be registered in the Commercial Register. This registration confers full legal personality on the company.

2. Registration with the Inland Revenue and Social Security

Before starting its economic activity and invoicing, the company must register with the Tax Authorities, using form 036, and it must also register with the Economic Activities Tax (IAE). 

On the other hand, companies that are going to hire personnel must notify the registration, variation or cancellation of the workers and pay the social security contributions of the workers to the Social Security.

3. Release the bank account

If the SL has been incorporated with monetary contributions, we will have opened a bank account and deposited the share capital. Therefore, in order to be able to operate with this account, the deed of incorporation of the company, duly registered in the Mercantile Register, must be taken to the bank office.

From this moment on, the funds contributed can be used to cover the company's financial obligations. Depending on the bank's internal policy, it is possible that they may also request form 036 to register the company's activity with the tax authorities.

4. Book-keeping and legalisation of accounts 

Every SL must keep orderly accounts in accordance with the Commercial Code and must draw up and keep its books for at least six years. The compulsory books are:

  • Accounting books: Journal, general ledger, inventory ledger and annual accounts.
  • Fiscal books: Book of invoices issued, Books of invoices received, Books of investment goods and Books of Intra-Community Transactions (if any).
  • Corporate books: Minute book, Register of shareholders, Register of contracts with the sole shareholder (for sole proprietorships).

The accounting and company books shall legalise telematically at the Commercial Registry corresponding to the registered office of the companywithin 4 months of the end of the accounting year. As in most companies the financial year coincides with the calendar year, the deadline for the legalisation of their books is 30 April of the following year.

5. Preparation, approval and filing of annual accounts

Each financial year, the directors must draw up the annual accounts within the following time limits three months after the end of the financial year, The resolution must be recorded in the minutes and filed with the Companies Register within the period specified by the shareholders' meeting. period of one month since its adoption.

6. Tax filing

The company must comply with its tax obligations such as filing VAT, corporate income tax, personal income tax withholdings, declaring transactions with third parties, etc.

7. Compliance with the Articles of Association and the Capital Companies Act (LSC)

SLs must act in accordance with the Articles of Association, the Capital Companies Act (LSC) and subsidiarily, for matters not provided for in the Articles of Association or the LSC, the Civil Code shall apply.

 Legal advice on limited companies

Whether you are thinking of setting up a limited company or are already part of one, it is important to be accompanied by a specialised professional.

Contact with us to receive personalised advice and legally protect your company from day one.