Choosing an Accountant in Spain, How & Why
Sponsored by BCN Business Services.
Do you need an accountant or a gestor? Not sure? Their roles can be confusing. We sat down with Gert-jan Geerse from BCN Business Services (BCNBS) to get a better understanding of what they do and how to choose the right fit for your company.
According to Spain’s Ministry of Industry, there were approximately 2.9 million small or medium sized businesses active in November 2020, with 1.6 million companies with no employees and another 1.1 million companies with under 10 salaried employees.
This means that in addition to selling and executing, 93% of small business owners must manage the required processes for accounting, human resources and tax reporting, and must decide whether to hire someone to help them with these non-operational aspects of their business or navigate these waters alone. Should you try to manage this on your own?
Why should entrepreneurs and small companies use an accountant?
Whether you run a Spanish SL company or are a freelancer, there are a number of fiscal requirements in Spain that need to be fulfilled. Most companies will be required to submit a quarterly and annual tax return to Hacienda (Spain’s tax authority). Figuring out which forms to send to Hacienda, when they are due and how to respond can be confusing and challenging. And expensive—especially if you incur fines for submitting the wrong forms or make a mistake in filling them out.
Entrepreneurs should concentrate on running their businesses: deciding how to execute the business plan, implementing sales and marketing strategies, working on product development and lavishing attention on the customer. Dealing with the Spanish authorities can be a particularly gruesome and time consuming experience.
Also, Hacienda can be merciless when it comes to the penalties for simple mistakes on forms. This is a particular way that an accountant adds value to business owners. Moreover a good accountant can be a great partner for your business, and can often help with some important planning, access to funding in addition to standard bookkeeping.
Should freelancers use apps versus an accountant?
The reasons mentioned above also apply to freelancers; the problems often faced by freelancers are even greater since they are doing everything on their own they have even less time to manage administrative tasks.
We have seen the rise of some apps that have been developed, which may resonate with some entrepreneurs. But they have significant drawbacks and limitations, one of which is that apps and inexpensive web services leave important legal decisions up to the user—who is often ignorant of the law, what their alternative options are and what special considerations can be applied to their situation. Apps do not—cannot—advise you about your specific situation nor will they assume any responsibility for any errors made when using them.
In general, an app cannot provide the trust and understanding a human can. A good accountant will advise you based on your specific situation and will either recommend or provide specific systems to use. Unfortunately, not all accountants nor systems available on the web are good!
What are some key mistakes to avoid when selecting an accountant or a gestor?
Price. The cheapest provider often turns out to be quite expensive in the long run. In the best of circumstances, this is due to basic mistakes in data entry, incorrect form submissions and unexpected charges for services that are necessary to comply with statutory filings, but which are beyond the scope of the work which was initially agreed upon.
In Spain, the use of a gestor is common. Gestor is an ambiguous term, but a gestor is someone who helps manage general business administrative tasks and accounting for a company. The gestor industry is unregulated—meaning anyone can market themselves as such—and leads to significant variations in competencies. There are many unqualified gestores, so due diligence is highly recommended: perform reference checks on Google, review for any publications (for example on Linkedin) and ask for recommendations.
The gestor profession is a clear example of an old-fashioned and backward industry; 80% of the local accountants still operate on paper only, something that is very inefficient, expensive and error prone.
Make sure your prospective gestores have the local connections needed to operate in a Latin country and that they are familiar with processes and procedures for your sector. For example, there is often industry specific knowledge that is invaluable, such as licensing for import and export businesses, tax filings for real estate investments or obtaining a NIE for foreign investors.
Be sure your accountant also speaks your language effectively and truly understands your current and probable future needs. A common mistake that expats often make is assuming that accounting rules and procedures for small businesses in Spain are the same as in other countries.
Lastly, ensure prospective accountants use modern systems and closely examine their online presence, whether they provide 24/7 accessibility and paperless work processes, as well as PAE and digital ID’s, etc.
What are the key tax obligations for a company in Spain?
While fiscal obligations are often specific to a company’s sector, the most common obligations which need to be made include:
- Monthly or quarterly and annual VAT declarations.
- Quarterly and annual retained income tax declarations (employees and professionals).
- Quarterly and annual retained income tax declarations (rent).
- Distributed dividend tax declarations.
- Quarterly and annual company tax declarations.
How much should one expect to pay for an accountant?
One should expect to calculate the price for an accountant based on the services needed and provided. But, because the industry is not regulated, the range in cost is significant and can be confusing when trying to compare apples to apples. This is partially because some clients do not know which services they need and also because some accountants do not openly share all of the information to the public.
For example, it is not uncommon to find an offer on the internet at 10% percent of the price of a boutique firm with seasoned professionals. But understanding precisely what is included can be difficult to ascertain.
Some accountants and bookkeepers base their pricing model on the number of employees a client’s company has, or on the number of monthly invoices it issues. Traditionally this has been an indicator by some accountants to calculate the amount of hours to complete the paperwork involved for a new client. However, with cloud based systems that use electronic processing, this mentality is more of an indicator of an antiquated way of working and may indeed be a big red flag.
At BCN Business Services, our prices depend on the service level selected, and we offer three levels to choose from. Our pricing is set to facilitate a long term relationship with our clients. We speak with our clients to understand their needs and then share with them the service levels we deem make the most sense. Many of our customers were unhappy with the service they received from their previous accountant and are happy to pay a little bit more for a more reliable and professional team.
What are the key differences in running a business in Spain versus other countries?
In Spain, dealing with the authorities is often confusing and frustrating due to the many different entities and systems involved. Many people complain they often give inaccurate and sometimes contradictory information. Hacienda’s objective is to maximize tax income for the state, whereas in other countries the tax authorities have a more supportive role to help foment business and industrial development.
In order to deal effectively with the local authorities, business owners need a mix of technical and social skills. When the government’s information systems do not work (as is often the case), being able to access real people and get them to solve your problem for you is still incredibly important and can save your life. An effective accountant is not only highly competent in keeping your accounts, but also experienced in solving the problems which routinely crop up.
What are notarios for and are they necessary?
Notarios are people who “give faith,” as they like to say in Spain. Notarios basically guarantee that the persons and companies, and the agreements they enter into, are real and legitimate—something that blockchain technology could easily replace in the near future. This is similar to the procuradores that help process cases in Spain’s courts. Both roles have been highly criticized recently as the value they provide is increasingly questioned.
BCN Business Services is an English-speaking consultancy firm providing complete services to foreign entrepreneurs in Spain. Areas of expertise include immigration, registration, company formation, accounting, taxes, personnel administration, real estate, insurance and related legal issues. You can learn more at bcnbs.com and follow on LinkedIn.
Sponsored by BCN Business Services.
