Founding a business concern or establishing a branch in Bajardo

Who has not dreamed at least once of living independently in the Mediterranean area or of moving their business enterprise or freelance activity here?
This sounds very attractive. Though of course the process of becoming an entrepreneur in southern Europe is by no means short and easy, usually it is linked with many hurdles and obstacles.  The first years are a challenge for every settler and require a lot of flexibility, energy and patience. Not all settlers achieve their set goal. Mistakes are often  made, one is not qualified enough, or simply one does not have what it takes.
But this should not discourage you.
On one hand we are at your disposal to counsel you, and on the other hand some general conditions in the meantime have changed, particularly the funding criteria and the tax concessions have been extended.

There are many successful ideas in your country that could achieve success here, too.

Our professional counsellors will provide you with valuable help, so as to avoid at least basic mistakes. Below is an overview on the most important issues.

Forms of self-employment

To become self-employed one does not necessarily have to become an entrepreneur, because there are other forms of self-employment. A clear distinction is not very easy to make, yet the distinction is important, because it entails civil and fiscal differences.

Freelance activity/work
Freelancers are not entrepreneurs in the sense of Art. 2082 ZGB. There are "unregulated freelance activities" (e.g. artists, writers, job consultants) to practise which you do not need to be registered in any professional roll, and "regulated freelance activities", to practise which you must comply with certain conditions:

·  education (e.g. university degree for doctors, lawyers, etc., high-school diploma for surveyors)

·  several years of internship

·  state examination

·  registration in the appropriate professional register

·  following the professional conduct guidelines ( e.g. pledge of professional secrecy)

To practise a freelance activity you must:

·  have a VAT number

·  pay pension funds to INPS or to the appropriate professional fund

·  keep the accounting (books, tax declarations, tax payment, etc.) 

There is no strict rule about who is a freelancer and who isn't - there are a series of borderline cases. We inquire for you at the chamber of commerce, to find out what category your future activity falls in.

Occasional freelance activity
With this form of freelancing the professional service is of an occasional nature (e.g. holding a conference).  For this you need no VAT number and no registration or application and no payment into INPS funds is required. The job is only subject to a 20 per cent withholding tax.

Steady and coordinated collaboration
This form of work is applied to an ever-increasing amount of people. With this kind of employment you work for a particular company, without being a direct employee of the company. Unlike the usual work relationship, it is an autonomous relation on an equal footing between the contractor and the collaborator.
"Coordinated" collaboration means that the activity must be carried out in accordance with the company's goals.
"Steady" collaboration means that services are not provided on a one-time-only basis, but that they are provided on a long-term basis (e.g. administrator, auditor, consultant). For this form of employment you do not need a VAT number. A 20 % deduction tax is withheld directly by the employer. You must in any case register with INPS, and the pension funds are paid by the collaborator for a third of the import and by the employer for the remaining two thirds. Furthermore the type of activity must be described in the tax declaration. 

Entrepreneurial activity
"An entrepreneur is a person who as a job practises an organised business activity with the goal of producing or exchanging goods or services" (Art. 2082 ZGB).
Three aspects therefore characterise the entrepreneur:

·  practising a business activity

·  organising the necessary instruments for the business

·  practising the activity as a profession

Entrepreneurs, unlike freelancers, must be registered in the business register at the chamber of commerce. Here two further terms must  be explained: the material basis for practising the activity is the azienda. It does not need to be property of the entrepreneur. He or she may also practise his/her business activity based on a rental/franchising contract. The ditta is the name by which the entrepreneur practises his/her activity. The entrepreneur has rights to the exclusive use of the chosen firm name.

Franchising
Franchising is becoming increasingly popular in Liguria, too. Founding a new business from scratch often entails a lot of problems and risks. In franchising the risk is reduced, since a finished, tested concept is bought. Franchise-systems are to be divided in various branches, usually, depending on the kind of business activity, they are divided in the following forms:
production franchising: the franchiser supplies the franchisee with the know-how for production or for processing and for product distribution (e.g. Coca Cola).
distribution franchising: the franchiser provides the franchisee with name, brand, know-how and marketing. The franchisee pays a certain amount of money and is granted the right to sell the wares. In exchange the franchiser guarantees that no other franchisees will open a shop in the area (e.g. Body-Shop, Palmers).
services franchising: in this case the franchiser provides services (e.g. travel agencies, real estate agencies, language schools).

Legal forms

The choice of a legal form is an important choice for your enterprise, because it has personal, fiscal, commercial and social consequences. Therefore it must be well pondered. Consider, though: there is no “ideal” legal form! Each has its pros and cons, and it depends on what purpose it should serve. The legal form, however, may be subsequently altered.

Individual business or partnership?
The first important choice you have to make is if you want to work alone or with partners. You have various possibilities:

The individual and family enterprise:
The easiest and most common form of enterprise is that in which there is only one proprietor, who decides alone what choices to make. Proprietor means that you are both the owner of the enterprise and you can also be the manager, but it does not necessary mean that you are alone. You can hire workers or be supported by family members. Choosing this legal form means that there is no fixed start-up capital. But you must also consider that you carry unlimited liability for the debts of your enterprise, and you are the only one responsible for the obligations you have taken on. Therefore, since you carry the full risk of the enterprise, you also have the whole profit.
A particular form of the individual enterprise is the family enterprise, which is fiscally important. A family business enterprise is that in which spouses, relatives (up to thrice removed) and in-laws (up to twice removed) work together. The family member who provides his/her work to the family enterprise as a profession has the following rights:

·  livelihood according to the family’s economic situation

·  sharing in the family enterprise profits and the goods purchased therewith

·  rights on the company growth (increase of the enterprise value as time goes by)

·  pre-emptive right in case the company is alienated 
The family company is still a sort of individual enterprise and can never have the legal form of a partnership or of an limited liability company. Founding a family company is informal.

The company:

The business activity can also be practised together by more than one person. A company is different from an individual enterprise in the following issues:

·  the capital is paid in by more than one person

·  liability and risk are shared 

·  responsibility is also shared
An individual enterprise can be transformed subsequently into a company.
Each company is based on an agreement, that regulates the rights and duties of the partners and the relations with third parties. For instance it is decided how much of the capital or of work each must bring in, how gains and losses are to be divided, what tasks each partner has, etc. The agreement must be in written form. There are various forms of company. They are divided in partnerships, corporations and cooperatives.

Partnership
In partnerships each partner has rights and duties and usually responsibility for his/her actions. There are the following forms: simple partnership, public commercial partnership and limited partnership.

Simple partnership
The simple partnership is – from a historical point of view – the basic form of partnership and the provisions made for it in the Codice Civile (civil law book) regarding liability, management, etc., are also valid for the other forms of partnership. In choosing this form no commercial activities can be carried out, therefore this is not suitable for business activities. This form is used in agriculture and in the founding of music bands . For the founding, changing and disbandment of this form a simple application at the Chamber of commerce is enough. The partnership agreement is not bound to a particular form, an oral agreement is sufficient. No minimum capital is required.

Unlimited partnership (snc)

It is the most common kind of partnership. The snc is formed by two or more partners, who have full and joint liability:

·  the partners carry unlimited liability to the full extent of their business and personal property

·  each partner is liable to the full extent of the import of a company debt, but can, if he/she has paid this on his/her own, take the same amount from the partner (joint liability).

Founding this partnership requires going to a notary and is formally simple. A minimum capital is not prescribed. If it is not otherwise specified in the founding document, each partner has the same rights in managing and representing the company. An important point is the collaboration among partners. The single partners must work in the company. The company capital belongs to all partners together. Risks and profits are shared.

Limited partnership
This form of company comes into being when on one hand there are people, who have a capital they wish to invest, and on the other hand there are practical people- lacking financial strength - who are entrepreneurs and therefore take onto themselves unlimited responsibility. There are two kinds of partners

·  unlimited partners: they are also responsible with their personal estate in connection with the partnership, they run the job

·  limited partners are only liable for the capital invested and are a sort of loan givers for the unlimited partners, with additional rights with regards to the accounting books, profit sharing, etc. According to the law the limited partner takes part in the profits and losses, since he/she has provided a part of the capital. An important point is that limited partners cannot participate in the management of the partnership, otherwise they lose the advantage of limited liability (and become therefore unlimited partners).  

In the partnership agreement the unlimited and limited partners are defined precisely. The formalities to found the company are the same as in the snc.
 
Corporations

Corporations have their own legal status, that is separate from the partners’ personal legal status. The corporation therefore carries its own rights and duties and has various bodies (shareholders’ meeting, board meeting and sometimes board of auditors). A minimum capital is prescribed.
The corporation is a suitable legal form especially for medium- and large-sized companies. There are various forms: limited liability company, joint-stock company and company limited by shares.

Limited liability company
In a corporation the partners are responsible towards the creditors only to the extent of their capital investment.  This is especially suitable for agreements among partners who, though they work in the company, wish to reduce the risk to their capital investment, with no personal liability.  To provide creditors with a certain protection, the law prescribes a minimum capital investment in the company. The so-called corporate capital is of a minimum of 10,000 €  and when the company is founded at least 3/10 of this amount are to be deposited in cash in a bank to serve as deposit. This amount is given back with no interests after the termination of all the founding formalities. Instead of cash, other objects of equivalent value may be used, the sworn assessment of the value of which by an expert is required. All changes in the corporate agreement must be written in front of a notary with public certification and approved by local officers and registered in the chamber of commerce. The management can be taken on by one or more of the partners or by a third party.
The bodies of the limited liability company are the partners’ meeting, the board of directors or director and the board of auditors (only mandatory for companies with over 100,000 € of corporate capital). The accounting in the case of this legal form is complex and involves the keeping of books such as the partners’ book, records of the meetings and decisions of the partners, directors and auditors. The board of directors or the director must write a report every year at the end of the business year with the account of gains and losses, and must submit it to the partners’ meeting for approval. The report must be registered at the chamber of commerce.
If a corporation produces losses, there is a capital reduction and a loss coverage by means of a payment to the partners.

Single-person corporation
A limited liability company can be also founded by a single person. In this case there is only one partner. The registration of the corporation form must in this case include specific details about the single-person status. In some situations this kind of corporation entails unlimited liability for the single partner. 

Joint-stock company and share limited partnership

Since the joint-stock company and the partnership limited by shares (società in accomandita per azioni) are quite expensive in comparison with the others we will not go into them here.

Cooperative
Even cooperatives have, like corporations, their own legal status that is separate from that of the partners. Even though they are similar to corporations in the limitation of liability, there are some major differences:

·  The cooperative differs from a corporation not that much in its structure, but in its goals. At the basis of a cooperative is the idea of solidarity among members. The most important aspect of the activity is not the profit, but the support of the members, that gain economic advantages with their participation in the cooperative.

·  To found a cooperative there is no need for a minimum capital. Therefore it may be founded with a very small capital. The minimum investment per partner is currently 25 €.

· Each partner may at the same time be an employee of the cooperative. The salary, though, is substantially higher in comparison with a dependent employee of the same category.

·  Cooperatives are also different from corporations in the position of the single partners. Members of a cooperative take all enterprise decisions following the motto "one person - one vote". Each partner has a vote in the partner meeting, regardless of the capital investment amount.

·  Cooperatives are subject to mandatory review. This differentiates them substantially from traditional business enterprises. The review ensures transparency and is a guarantee for  members as well as clients.

To found a cooperative a minimum number of nine members is prescribed. The bodies are the board of directors, the board of auditors and the members' assembly.
Cooperatives are well-suited for manual labour or when for instance a group of employees wants to take over the whole enterprise or a branch of it (outsourcing). 

Small cooperative (piccola società cooperativa)

There is also the possibility to found small cooperatives. The rules of cooperatives apply to it, with the exception of the rule on the number of members, that is in this case between a minimum of three and a maximum of eight.
The small cooperative is a simplified form, in which direction is taken by the member assembly itself (instead of having a board of directors or a director). The board of auditors is only mandatory in case of a company capital of over 100,000 €.
The small cooperative is a very flexible legal form, since on the one hand the liability is limited and on the other side the company capital may be very small. Fewer conditions need to be fulfilled. It is especially suitable for young entrepreneurs in activities in the service sector (technological innovation or social services).

Funding
Good funding is a necessary basis for successfully building an enterprise. 

Proprietors' equity
Proprietors' equity is the basis for your investments and is evaluated as a measure of proprietor risk. The lack of capital makes your project undoubtedly more difficult, but it is not a reason for immediately abandoning your business idea. There are no general rules about how much of the capital in the percentage of the total capital must be your own.

If your own capital is not enough for your project, you should look for partners.

By means of public subsidies and funding, as well as by investment loans, leasing and other forms of outside financing, you can gather additional capital.

Outside capital  
To found a business enterprise you can choose among the following funding solutions: 

Investment loan

Investment loan has a medium to long term duration (i.e. 4-10 years) and works as funding for fixed assets (buildings, machinery, etc.). To obtain the loan adequate securities (mortgage, guarantee, etc.) are demanded. High investment loans can endanger the result  of the enterprise because of the high interest rates and redemption instalments.