Small businesses that want to start up have before them the option of establishing themselves as a civil society, which hardly requires investment from entrepreneurs and is simple to manage.
Next, we explain how it works.
What is a Civil Society?
A civil partnership is a private collaboration contract between several people who are going to jointly develop an activity and that is not governed entirely by the desire for profit, but that still distributes its profits among its investors.
These people become partners, either industrialists, if their contribution is in the form of work, or capitalists, if what they provide is money or goods.
How to Form a Civil Society?
To create a civil society, a private or public document must be drawn up (the public deed is mandatory if what is contributed is real estate or real rights) of constitution of the company, which includes the name of the company and the parties, the registered office, the corporate purpose, etc.
It is not necessary to register it in the Mercantile Registry, but you must take the contract to the Treasury to obtain the NIF and register with the IAE.
You will also have to pay the Tax on Transfers and Documented Legal Acts (1% of the value of the assets contributed if they exist).
Likewise, the partners will have to register in the special regime for self-employed workers and request the employer’s number in case of going to hire workers.
Finally, the opening license will have to be obtained, if applicable, at the Town Hall where it is going to operate.
How do Partners in a Civil Partnership get Paid?
The partners cannot have a payroll or invoice the company, as it happens with the limited company; in a civil, they collect through dividends. In this way, they first pay 25% corporate tax and then the rate applicable to the dividends collected.
Characteristics
Civil society has a number of characteristics:
- It requires a private contract, which details the business activity, the contributions of each partner, the percentage participation of each partner in profits and losses, the administration and representation system, and the causes of liquidation and dissolution.
- It must have a minimum of two partners, whose liability for debts contracted against third parties is personal and unlimited. In addition, partners must register as self-employed, except in exceptional cases.
Taxed in corporation tax. - It is governed by the Commercial Code in commercial matters and by the Civil Code in terms of rights and obligations.
- A minimum share capital is not required and this consists of both money and goods or work, services or activity in general.
- It can have different forms of administration and representation: sole administrator, joint or joint administrators.
- Its dissolution occurs when: the duration stipulated in the contract ends, its corporate purpose or activity concludes, the contributions are not met, due to death, insolvency or incapacitation of one of the partners or due to seizure of the corporate assets due to the debts of a partner.
Types of Civil Partnerships
According to its structure, civil society can be of two types:
- Particular, which has a specific and defined object, such as a company or the exercise of a specific profession.
- Universal, which includes more than one objective and is usually made up of various partners.
- It can be: of all the assets present, in which the partners are the owners of all the common assets of the company and of the benefits obtained from them; and of all earnings, which includes everything that the partners acquire for their work for the duration of the partnership.
- Civil partnerships can also be of different types depending on how they are incorporated, and can be private or public.
Final Words
Examples of civil partnerships range from charities, to local sports clubs, through private schools, professional associations or workers’ associations.
Several professionals in the same trade, such as doctors, can also form a civil society to provide healthcare and share the total benefit as agreed, as well as from different disciplines, such as advisers, lawyers or insurance brokers, to provide tax and legal advice. .