Establishment of an LLC
If you have a good idea from which you want and hope to make money, you have to go through the bureaucratic procedure (not in the wrong sense, on the contrary) of setting up a company. There are several options, but the best remains that of an LLC, ie a Limited Liability Company, even if only for the fact that the state imposes the lowest taxes for it. What is certain is that in the private environment in Romania, most companies are SRLs or PFAs. And this is certainly not accidental at all.
What is a SRL
It is somehow the equivalent of having a business and having an LLC. In fact, an LLC is a legal entity that has rights and obligations. In short, an LLC is a company where the founders have limited liability in relation to third parties, at the value of the invested capital. Or, in other words, the founder is an entity separate from the company, and the creditors cannot pursue the assets of the founder. The owner or owners of the company are liable before the law only with the starting capital of the company, whose minimum value is 200 lei. Each LLC must clearly indicate this start-up capital in any future economic relationship with any business partner so that it knows what is the maximum coverage of any economic activity. An LLC can have a maximum of 50 associates, but it can also be assumed by a sole partner.
A SRL can operate in any field of activity, there are practically no restrictions. SRL falls into the category of micro or small enterprises, with certain turnover ceilings. This status allows companies to apply for and receive grants from the state. They may benefit from exemption or various tax reductions, such as those charged by the Trade Register. A company on the structure of a Limited Liability Company, regardless of the share capital, can participate in tenders and can conclude contracts.
One option is SRL-D, meaning Debut Limited Liability Companies. These are LLCs that are set up by people who previously did not have any company registered with the Trade Register, and their activity is limited to only a few fields. SRL-D can receive non-reimbursable state aid and are exempt from some obligations, as long as they limit their activity to certain areas.
As for state taxes, they are low. An LLC with incomes below 100,000 euros has a tax rate between 1 and 3% on income, depending on the number of employees, as follows:
- 1% for LLCs that have at least two employees;
- 2% for micro-enterprises with a single employee;
- 3% for those who have no employees.
An LLC is set up in about three days, costs little, but is difficult to dismantle, with some additional costs. The legal provisions require that the company's accounting documents be prepared by a certified accountant. This aspect can be put on the list of disadvantages that an SRL has. Also here we note the fact that the money from the company, legally, is difficult to withdraw, only in the form of dividends, for which a 5% tax is paid.
The general opinion is that an SRL is the simplest form of economic activity and offers business opportunities, from simple to complex, and any legislative difficulties can be easily solved, most often the collaboration of an accountant being sufficient, at least in the initial stages of the business.
Law 31 of November 15, 1990 is the one that regulates the establishment of a Limited Liability Company. It has undergone, over time, several changes, completions, which have gradually adapted the law to reality, as well as the repeal of some provisions. The last update of the law was at the beginning of 2019, following the amendments made by Law no. 163/2018.
How to set up an LLC
It may seem complicated to set up a Limited Liability Company type company, but the whole procedure can be completed in three days, and some of the documentation can be prepared using online services. And if you are among those who fail to manage when it comes to documents and steps to follow in a bureaucratic path, you have the option to use the services of a consultant specializing in such services.
Somewhere, setting up an LLC is like the moment a child is born. It needs a name to be recorded in the documents. Exactly the same with an SRL. It is ideal to have several variants of names to find the "free" one. You can also do these checks online, on the Trade Register website. For this, you need an account, which you can do here and you can fill in virtually "Company name verification / reservation request", using this form. Another option is to send the completed application by e-mail, fax or mail, or to actually submit it at the counter. There are offices of the Trade Register