Establishment of a company and startup
Before establishing your startup it is essential to know the regulatory framework in which you will operate and to follow some tips for success; below you will find out how to set it up, what type of company to choose, the costs, the fulfillments, the requirements and above all who to contact to receive the best advice for starting up your business and getting off on the right foot.
How to establish a company
It may seem like a very complicated thing, but establishing a company sometimes takes very little time. It is essential to have a clear idea of what you want to do, with whom, and with what. In any case, it is always essential to know the types and above all the general rules, in order to understand what steps to take, how much it costs and who to contact.
There are two basic types: partnership companies and corporations. Let’s take a detailed look at the characteristics of each type of establishment:
- establishment of partnership companies: partnership companies are characterized by a strong personal relationship with their members. In fact, the shareholders are liable with their personal assets for the debts and obligations of the company (unlimited liability towards creditors);
- establishment of corporations: corporations are characterized by a less personal relationship with their members. In fact, in this case, it is the company that guarantees the debts and obligations of the activity and the shareholders are liable only within the limits of the amount paid (limited liability)
Choosing which type of company to establish depends on many aspects, such as the peculiarities of the activity and the liabilities that are intended to be attributed to the shareholders. Partnership companies are used less because members have unlimited liability, and they are more suitable for small businesses. Corporations, on the other hand, are chosen more often because they protect the shareholders and limit their liabilities.
Types of corporations
There are many types of corporations with a series of peculiarities that we will see below:
- Limited Liability Company (LLC): this type of corporation is currently the most widespread and flexible; it can be established with a minimum capital of €1 and the members participate with shares that may have a different value for each member;
- Joint stock company: this type of company is suitable for large companies and has a minimum capital of €50,000. With this type, shareholders can participate with shares with a fixed value that is the same for everyone;
- Partnership limited by shares: this type of company is a variant of the joint stock company that makes it possible for you to have two different categories of shareholders, those who can manage the company and who in the event of errors must compensate for damages (general partners) and those who cannot administer and who are liable for debts only within the limits of their participation (limited partners)
Limited liability companies
Limited liability companies are currently the most widely-used especially in the world of startups and there are some types that we will take a look at in detail:
Ordinary limited liability company
The limited liability company is the most widely-chosen joint stock company, it can be established with reduced costs and quickly and with the inclusion of digitization principles within the company law, also online.
The limited liability company is recommended to start any business quickly and without any particular requirements. In fact, it does not require particular requirements regarding innovativeness in carrying out the activity and it is ideal for starting a new business. The limited liability company is the most popular type of corporation in Italy.
The innovative startup is an ordinary limited liability company that has the advantage of enjoying numerous benefits. However, the activity must have as its main objective the production, development, and marketing of innovative services or products with a high level of technology. It can be established quickly but some specific requirements must be met in order to be registered in the special section.
The Startup is recommended for starting an innovative business.
Simplified limited liability company
The simplified limited liability company is a particular type of limited liability company that has reduced set-up costs compared to a normal limited liability company, but it has many limitations. In particular, the shareholders can only be natural persons, the capital stock cannot exceed €9,999 and it is not possible to customize the statute. The only advantage of the simplified limited liability company is that it can be established without the need of resorting to a notary public.
Clearly, each company has its own rules, both in terms of functioning and, above all, of liability, but at least for their creation, it is possible to establish some common guidelines.
How to establish a company: general rules
In order to establish a company, it is necessary to follow a procedure whose duration and formalities vary according to the type of company chosen and the activity to be carried out.
In general, the procedure for establishing a company takes place in three stages:
- preparation of the articles of association and the statute;
- stipulation of the articles of association;
- registration of the articles of association in the business register and carrying out further obligations.
Articles of association
The articles of association are nothing more than the contract that gives rise to the company and contains its essential aspects, such as the type of company, name, registered office, object, and capital stock. Often its drafting is left to an accountant or, frequently, to the notary public.
The law sets a minimum content of the articles of association but nothing prevents it from being extended by customizing it and the mandatory content of the articles of association varies depending on the type of company, although in all cases, the articles of association must contain the following information:
- complete personal information of the shareholders (surname and name or, in the case of a company, name or company name; place and date of birth for natural persons; domicile and citizenship or, in the case of a company, registered office);
- company name;
- municipality where the registered office and any secondary offices are located;
- corporate purpose i.e. the purpose of the company;
- contributions from each shareholder, their value and method of evaluation.
For corporations, further information is required relating to the amount of the subscribed and paid-up capital, the administration and control system chosen, and the people entrusted with administration and control.
The articles of association must be drawn up in writing or online and signed by all shareholders in a single session in the presence of a notary public or by videoconference with a recognized electronic signature.
The statute of the company contains the general rules of the company itself, therefore its functioning, the powers of the bodies, and the relationships among the shareholders. It is attached to the articles of association and constitutes the social contract among the partners. It is a kind of internal regulation.
Obligations to fulfill
After the signing of the articles of association, the notary public and the directors of the newly established company must fulfill some obligations:
- Registration of the deed of the articles of association in the business register
- Deposit of company officers in the business register
- Registration and notification of the start of activities at the REA (Economic Administrative Register)
- Request for attribution of tax code and VAT number at the Revenue Agency
- VAT declaration for the start of business activity
- Certified notification of the start of business activities, the so-called SCIA (Certified notification of commencement of business activities), in case of regulated activities (this is a self-declared certificate necessary to begin some types of activities);
- Opening of a tax position at INPS (the principal agency of the Italian public retirement system) (in the case of employees);
- Opening of an insurance position at INAIL (a public non-profit agency safeguarding workers against physical injuries and occupational diseases) (in the case of employees/term-contract collaborators);
- Registration of any secondary offices with permanent representation;
- Activation of a certified email address (PEC);
- Registration of the articles of association;
- Indication of company data in the company documents, correspondence and on the Internet;
- Preparation of the company books;
- Communication to the employment Services (in the case of employees)
Effects of registration in the business register
From the moment of registration in the business register:
- the corporations acquire legal status and become to all effects an autonomous subject of law: this means that only from this moment on does the company exist and can it operate;
- partnership companies become fully effective in relation to third parties, even if they are already born at the time of the signing of the articles of association.
Notification to the Revenue Agency
The company must also communicate its establishment to the Revenue Agency (the so-called VAT declaration of the start of business activities) even if the exercise of the business does not start at the time of the establishment.
SCIA (Certified notification of commencement of business activities)
If the company carries out a so-called “regulated” economic activity (i.e. an activity that can be exercised only if it has special technical-professional requirements), the certified start-up report (SCIA) must be submitted. To check whether the objective of the company activity is subject to SCIA, it is possible to consult the website of the Chamber of Commerce of the territory or the website www.italiasemplice.gov.it edited by the Minister for Simplification and Public Administration.
Communications to INPS (the agency for the Italian public retirement system) and INAIL (the Italian public non-profit agency safeguarding workers against physical injuries and occupational diseases)
If the company at the time of the establishment has employees or term-contract collaborators, it must open a tax position at INPS and an insurance position at INAIL in order to pay the related compulsory contribution and insurance premiums.
Opening of a PEC (Certified email address) account
When registering the articles of association in the business register, the company must indicate a certified email address (PEC) which will, from that moment on, be the email address where it will receive all notifications from private citizens and public administrations.
How much does it cost to open a company?
The question of how much it costs to establish a company is a legitimate question that a startupper asks him/herself before starting his/her own business activity, or when, after having established the sole-proprietorship or as a partnership, given the company’s significant achievement in size, the continuation as a sole-proprietorship becomes too limiting.
By way of a simply illustrative, non-exhaustive and non-binding example, we will restrict ourselves to analyzing the limited liability companies:
- Establishment of an ordinary limited liability company: it requires short deadlines, in the main cities it takes 72 hours. On average, the cost is around €1,500 + VAT + €600 of taxes and includes the online creation of the articles of association and the statute, consultancy with an expert and the establishment with the notary public;
- Establishment of an innovative startup: it is possible to establish an innovative startup in 72 hours in the main cities by complying with some additional requirements. On average, the cost is around €1,500 + VAT + about €200 of taxes and includes the online creation of constitutive documents, consultancy, and establishment with the notary public; unfortunately, today it is no longer possible to establish an innovative startup without going to the notary public, as the Council of State canceled the legislation that allowed it, accepting an appeal from the National Council of Notary Publics;
- Establishing a simplified limited liability company: it usually takes a few weeks. On average, the cost is around €150 + VAT + €320 of taxes and also in this case it includes the online creation of the articles of association, consultancy, and establishment with the notary public.
Obviously these cost estimates may vary depending on the notary public office, the accountant, and the consultant(s) chosen.
Innovative Startup: requirements and obligations
Obviously, before establishing a startup, it is necessary to be familiar with the requirements that the law imposes.
According to the relevant legislation (Legislative Decree 179/2012, art. 25, paragraph 2) an innovative startup is a corporation, established also in a cooperative form, which complies with the following objective requirements:
- it is a new company or established no more than 5 years previously;
- it is resident of Italy, or of another country of the European Economic Area but with a production site or branch in Italy;
- It has an annual turnover of less than 5 million euros;
- it is not listed on a regulated market or on a multilateral trading platform;
- it does not distribute and has not distributed profits;
- the statute of the innovative startup must have as its exclusive or prevailing corporate purpose the development, production, and marketing of a product or service with a high technological value;
- it is not the result of a merger, demerger or sale of a business unit.
Finally, a startup is innovative if it meets at least 1 of the following 3 subjective requirements:
- it incurs R&D and innovation expenses equal to at least 15% of the higher value between turnover and cost of production;
- it employs highly qualified personnel (at least 1/3 PhDs, PhD students or researchers, or at least 2/3 with master’s degrees);
- it is the owner, depository or licensee of at least one patent or owner of a registered software
So far we have seen that in order to register in the special section of innovative startups it is necessary to have the aforementioned requirements; let’s now take a look at the specific requirements of innovative start-ups.
With the entry into force of the conversion law 12/2019 of the decree regarding Simplifications (Legislative Decree. n. 135/2018) starting from 2019, the bi-annual update of the descriptive information entered during registration in the special section of the Register of Enterprises, originally foreseen by paragraph 14 of art. 25. Therefore, innovative startups must only carry out the annual confirmation of the requirements – foreseen in paragraph 15 – and also complete their personalized profile on the startup portal: startup.registroimprese.it.
Only once a year, after the filing of the financial statements and by June 30, must the innovative startups send a Single Communication to the Chamber of Commerce, competent for the territory, for the confirmation of the possession of the innovative startup requirements and update or confirm the information declared during registration, under penalty of loss of special status and the impossibility of continuing to enjoy the relative benefits. Failure to fill in the personalized profile on the portal will result in the blocking of the procedure for confirming the requirements and if the non-fulfillment continues beyond the deadline of June 30, the company will lose the special status of innovative startup.
Consultancy for business startup with B-PLANNOW®
“A good startup should have the potential for large dimensions already integrated into its initial conception”
We are firmly convinced of the affirmation of this visionary of the startup world, therefore, B-PLANNOW® provides you with all-round strategic advice for you to know what company to choose and in which part of the world, for you to understand how to establish an innovative startup and, above all, for you to get your idea off to a good start!
B-PLANNOW® offers you:
- assistance in choosing the type of company in Italy;
- assistance on how to eventually establish a company abroad;
- assistance in drafting the statute and the “innovative” corporate purpose;
- identification of the requirements imposed by the MISE (Ministry of Economic Development) in order to be defined as an innovative startup;
- assistance in drawing up the self-certification for the company’s application for registration in the special register of innovative startups;
- assistance in the initial filling in of the information on the MISE IT platform: startup.registroimprese.it (obligation of law)
- general strategic assistance (by way of example, the conferment of capital stock, conferment of patents, shareholder agreements, exceptions to ordinary corporate regulations, flexible labor regulations, remuneration by means of tools for capital participation, etc.).
Now that you know everything about how to establish a company, which type to choose, the costs, the obligations, the requirements, all you have to do is contact us, talk to us about your company and set it up together also in work for equity!