Startup which company form to choose?
Among the various bureaucratic steps to be faced when setting up a startup, the choice of the company form represents a fundamental step in terms of tax, legal and financial responsibility implications.
The Italian legal system provides for different types of companies. Some of them are not suitable for a nascent company, while others are extremely similar to each other and, therefore, a more careful analysis is required to better stand the differences.
Profit-for-profit and Non-Profit company
The legal form
Different company models, each with its own peculiarities, are made available by the Italian legislation to anyone wishing to set up a new company. As for newly established startups, the choice of company form must necessarily fall on one of the following:
• S.p.a. (joint stock company);
• S.a.p.a. (limited partnership limited by shares);
• S.r.l. (limited liability company);
• Cooperative companies
It is advisable to take into consideration the “dimensional” and “organizational” aspects in order to be able to make an informed choice suitable to meet one’s needs. In order to answer the question – which company form to choose? – it is essential to understand the peculiarities of each model, in order to carry out an exhaustive assessment of which is the most pertinent to the needs of the startup.
S.R.L. and S.R.L.S: what are the characteristics?
Limited liability companies are undoubtedly among the most widespread, they are characterized by perfect financial autonomy and a structure that can be largely modeled on the needs of the business. The minimum share capital limit for setting up this type of company is 1 euro and, in turn, it differs in two different cases:
- Share capital of less than 10,000 euros and equal to at least 1 euro – only contributions in cash are allowed and must take place at the time of incorporation. The company must pay from 5 to 20% of the annual net income into a “reserve” fund until reaching the threshold of 10,000 euros, added to the share capital.
- Share capital equal to or greater than 10,000 euros – at least 25% of the declared capital must be paid in cash (the remaining amount can also be paid at a later time by the shareholders).
Simplified limited liability companies (S.R.L.S.) are distinguished from S.R.L. traditional as they require lower initial costs, no notary fees and revenue stamps, however they are more rigid and limited. In fact, they are forced to adopt a standardized constitutive act imposed by law.
S.P.A.: why choose it?
The joint stock company has several characteristics in common with the limited liability company, such as financial autonomy, however it differs substantially due to the organizational model which is more complex and burdensome.
The minimum capital required, for example, is 50,000 euros, and the presence of a board of statutory auditors is mandatory.
The S.p.A. is undoubtedly more demanding, and has a mandatory governance structure. Usually, the choice to set up this type of company derives from the opportunity to employ a broader social base and the need to raise capital more easily.
S.A.P.A.: what are they?
The limited partnership limited by shares is a particular company form in which two different groups of shareholders coexist:
- limited partners, partners excluded from the administration, who are liable for corporate obligations with their own contribution only;
- the general partners, managing partners who manage the company by right, personally and without limitation.
This specific corporate model has never had a significant diffusion, except in some sporadic cases.
Among the corporate forms that an innovative startup can take, the cooperative society model deserves a mention.
It is characterized by its mutualistic and solidarity purpose. Unlike other types of companies, their main purpose is not to distribute profits. In fact, cooperatives aim to satisfy the needs of members understood as individuals, through the production of consumer goods or services at more favorable conditions than those on the market.
It should be noted that consumer cooperatives sell their goods not only to their own members, but also to third parties. Among the advantages of the shareholders, in this case, there will also be the profits achieved.