2.2. What does it mean to be a self-employed professional?

Hi again!

In this video, we will discover what it means

to be an individual entrepreneur, also called self-employed workers.

An individual entrepreneur or business person

is a natural person who performs a certain economic activity

in a regular, personal and direct way for profit.

If you have a business activity that you want to carry out personally,

with a simple structure, with no constitution cost

and affordable maintenance, the best way of setting up

your business would be as an individual entrepreneur.

What are the advantages and disadvantages of becoming

an individual entrepreneur? Read on…

With regard to the advantages:

- The constitution procedures are very simple

and less expensive than other legal entities.

- There is no minimum share capital required.

- Self-employed people have to contribute to the Social Security system

under the RETA (special system for self-employed workers)

and can get discounts on their instalments

if they meet the established requirements.

On the other hand, the disadvantages

compared to other legal entities are:

- The responsibility of the self-employed person is unlimited;

in other words, they are liable with their present and future assets

for all the debts incurred by their business activity.

- Their image when dealing with third parties in order

to contract their services is weaker as an individual business person

than if they have a company-style business structure behind them.

- Getting financing from banks is more expensive.

In terms of taxation, self-employed workers pay tax

to the Tax Agency progressively in the same way as Personal Income Tax

(known as IRPF in Spain). This means that the tax

payable to the Tax Agency is based on business performance;

i.e. the profits made from the activity, and the amount payable

is calculated on a sliding scale that increases as profits grow.

See you soon!