Business as a whole in Portugal is clearly dominated by
small and micro businesses. This trend has been a constant for many
years already and is still growing. In fact, crashing numbers of
real unemployment and the possibility to establish a company with
just 1 Euro of share capital contribute to the growth of small
businesses in Portugal.
There are two ways to operate a really small business I Portugal
– one is non-corporate, like self-employment, and the other
is establishing a small company.
Though overall operating costs vary from business to business,
there is a part of the cost born by every incorporated business, no
matter the size of the company or its revenues. This part of the
expense is imposed by the Government and thus, I call it official
costs of operating a business. Let us see what the laws preview for
a small company in Portugal.
Chartered Accountant. In Portugal, all limited
liability companies including single-partner companies are subject
to the organized accounting system. In simple words, any
incorporated company, no matter its size or invoicing volumes, is
obliged to hire a chartered accountant. The cost of chartered
accountant services rounds up to € 150,00 per month +VAT. In
the northern regions, this cost might be lesser. Thus, one of the
mandatory monthly costs is as follows:
€ 150,00 + 23% = € 184,50
Certified Invoicing Software. As of 2014,
there is no freedom in designing private digital invoices. All the
invoicing work, with the exception of the pre-printed and filled in
by hand, must be done through a computer programme certified by the
Portuguese Tax Authority. One of the cheapest certified invoicing
software packages costs around € 200,00 per year, resulting in
the following monthly cost:
€ 200 : 12 = € 16,70
Payroll (multiplied by the number of employees):
Salary. The minimum salary in Portugal is
€ 530,00 as of 01/01/2016. It is to note here that annual
holiday subsidy and Christmas subsidy are obligatory and cannot be
lower than the agreed salary. For the simplicity sake, it is
considered that a Portuguese employee receives 14 salaries per
annum. Therefore, a minimum monthly cost of the company directly
related to the salary payment shall be roughly calculated in this
€ 530 x 14 : 12 = € 618,33 per month
Social Security contributions. One more
expense with a nice name. Social Security fee is paid both by the
employee and the employer. From the 34,75% due to the Social
Security on every salary and even subsidies, the employer's
share is 23,75%. Thus:
€ 530 x 23,75% = € 125,88
€ 125,88 x 14 : 12 = € 146,86 per month
Insurance Against Accidents at Work (multiplied
by the number of employees):
Such insurance is mandatory for all companies with no exception,
regardless of its size or the number of workers. Equaly, it is
mandatory for each employed person. It is yet another cost to add
to the employee-related expense. The value may vary depending on a
range of factors. On average, though, the expense with the
insurance rounds up to 1% of the salary per employee:
€ 530 x 1% = € 5,30
€ 5,30 x 14 12 = € 6,18 per month
Safety at Work Training and similar
To add to the above, there is a cost associated to the safety at
work training, work hygiene audits, occupational health checks,
etc. The Portuguese laws establish that every employee shall
receive such training annually. The training shall be provided by a
certified training company and shall include at least 35 training
hours. I have not carried out a comparative cost study to be able
to give a figure here. However, the existence of such cost shall be
born in mind when planning a business activity.
Summarizing the Official Cost
Summarizing the cost of a smallest limited liability corporate
unit existing in Portugal, i.e. a single-partner limited liability
company with 1 employee with minimum salary, the official part of
the operating cost amounts to:
Chartered Accountant: € 184,50
Certified Invoicing Software: € 16,70
Salary: € 618,33
Social Security contribution: € 146,86
Insurance against accidents at work: € 6,18
Average monthly cost: €
As mentioned before, this is the official cost alone and does
not include rentals, utilities, office supplies, inventory,
marketing budget, repairs and maintenance or other variables.
Naturally, the given figures shall be adjusted in accordance with
the actually paid salaries and related social security charges.
Another important line in the budgeting may be licensing, both
national and local. However, licensing is not a universal request
and merits a separate story.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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