Limited Company or Freelancer
Choosing between registering as a freelancer in Palma de Mallorca or incorporating a Limited Company (SL) in Spain depends on your expected turnover, the risk of the activity, the need to protect your assets, and your growth plans. In this guide, we explain the key differences and in which cases each option is more suitable. If you need help, you can count on a Gestoría in Palma de Mallorca expert in entrepreneurship and Creating an SL in Palma de Mallorca.
Main differences between freelancer and SL
| Aspect | Freelancer | Limited Company (SL) |
|---|---|---|
| Incorporation | Quick and simple, few procedures | More formal: statutes, public deed, and registry |
| Liability | Unlimited (you are liable with your assets) | Limited to the capital contributed (min. €3,000) |
| Taxation | IRPF 19%–47% (depending on tax brackets) | Corporate Tax 25% (15% for the first two years with profits) |
| Initial Cost | Very low, no minimum capital | Minimum share capital €3,000 |
| Social Security | Flat rate from €80/month (depending on requirements) | Corporate freelancer (generally higher fee) |
| Accounting obligations | Simplified (income/expense books) | Formal accounting, books, and annual accounts |
| Image and financing | Less corporate, more limited credit | Professional image and better access to financing |
| Growth and partners | Focused on individual activity (possible subcontracting) | Allows multiple partners, scalability, and investor entry |
When is it better to be a freelancer?
- If your annual income is moderate (approx. €41,400–60,000 or less) and the activity is of low risk.
- When you want to start quickly, with little bureaucracy and minimal initial costs.
- If you don’t plan to incorporate partners or need a corporate structure.
When is it convenient to create an SL?
- If you expect a high turnover and want a fixed rate of 25% on CT (15% for the first two years with profits).
- To protect your personal assets from debts and claims.
- If you plan to grow, attract investment, or improve your image with clients and banks.
- When you need to professionalize the business with rules for partners and governance.
If you are considering Creating an SL in Palma de Mallorca, our Gestoría in Palma de Mallorca can handle the statutes, name reservation, deed, model 036, census registration, books, and commercial registry.
Quick decision checklist
- Risk of the activity: Do you need to limit liability?
- Expected turnover: Will it exceed ~€41,400–60,000 annually?
- Scalability: Will partners or external financing be involved?
- Bureaucracy: Do you prefer simple management or a professional structure?
- Image: Does a corporate form give you an advantage?
Conclusion
For small activities or with irregular income, it is usually more practical to start as a freelancer. If the business grows, the risk increases, or you need a more solid image and asset protection, the optimal choice is to switch to an SL. Remember that you can start as a freelancer and transform into a company when the activity requires it.
Do you have doubts about your case? A Gestoría in Palma de Mallorca can analyze your situation and help you Create an SL in Palma de Mallorca or optimize your taxation as a freelancer.
Limited Company or Freelancer
Choosing between registering as a freelancer in Palma de Mallorca or incorporating a Limited Company (SL) in Spain depends on your expected turnover, the risk of the activity, the need to protect your assets, and your growth plans. In this guide, we explain the key differences and in which cases each option is more suitable. If you need help, you can count on a Gestoría in Palma de Mallorca expert in entrepreneurship and Creating an SL in Palma de Mallorca.
Main differences between freelancer and SL
| Aspect | Freelancer | Limited Company (SL) |
|---|---|---|
| Incorporation | Quick and simple, few procedures | More formal: statutes, public deed, and registry |
| Liability | Unlimited (you are liable with your assets) | Limited to the capital contributed (min. €3,000) |
| Taxation | IRPF 19%–47% (depending on tax brackets) | Corporate Tax 25% (15% for the first two years with profits) |
| Initial Cost | Very low, no minimum capital | Minimum share capital €3,000 |
| Social Security | Flat rate from €80/month (depending on requirements) | Corporate freelancer (generally higher fee) |
| Accounting obligations | Simplified (income/expense books) | Formal accounting, books, and annual accounts |
| Image and financing | Less corporate, more limited credit | Professional image and better access to financing |
| Growth and partners | Focused on individual activity (possible subcontracting) | Allows multiple partners, scalability, and investor entry |
When is it better to be a freelancer?
- If your annual income is moderate (approx. €41,400–60,000 or less) and the activity is of low risk.
- When you want to start quickly, with little bureaucracy and minimal initial costs.
- If you don’t plan to incorporate partners or need a corporate structure.
When is it convenient to create an SL?
- If you expect a high turnover and want a fixed rate of 25% on CT (15% for the first two years with profits).
- To protect your personal assets from debts and claims.
- If you plan to grow, attract investment, or improve your image with clients and banks.
- When you need to professionalize the business with rules for partners and governance.
If you are considering Creating an SL in Palma de Mallorca, our Gestoría in Palma de Mallorca can handle the statutes, name reservation, deed, model 036, census registration, books, and commercial registry.
Quick decision checklist
- Risk of the activity: Do you need to limit liability?
- Expected turnover: Will it exceed ~€41,400–60,000 annually?
- Scalability: Will partners or external financing be involved?
- Bureaucracy: Do you prefer simple management or a professional structure?
- Image: Does a corporate form give you an advantage?
Conclusion
For small activities or with irregular income, it is usually more practical to start as a freelancer. If the business grows, the risk increases, or you need a more solid image and asset protection, the optimal choice is to switch to an SL. Remember that you can start as a freelancer and transform into a company when the activity requires it.
Do you have doubts about your case? A Gestoría in Palma de Mallorca can analyze your situation and help you Create an SL in Palma de Mallorca or optimize your taxation as a freelancer.
Gestoría en Palma de Mallorca.
Si buscas una gestoría cerca de ti, asesoramos a empresas en el ámbito laboral, fiscal y contable. También somos una gestoría administrativa en Palma y realizamos traspasos de vehículos.
