Self Employment

Self Employment
2 Dec 2013

When it comes to self employment, many foreign residents find work simply by supplying a service to the expatriate community. An example is hairdressing of the "have scissors - have car - will travel" variety. Many carrying out this service have qualified in their own country snd many in my experience seem to make money out of it.

Your own business

Unfortunately, there is no sure way of starting a business so as to guarantee its success but what you can do though is to make the odds go in your favour. Carry out as much research as possible into all relevant aspects and in addition you can seek the opinion and advice of the appropriate professionals such as lawyers, business consultants etc and also the people who have gone before you. You could limit your liabilities by forming a limited liability company. If, following your research you find the area is saturated with similar businesses to the one you intend to start you must ask yourself whether or not another business along the same lines could be sustained, or on the contrary, if competition is light is it because business won't support it?

If you really do want to run a Spanish business and feel you have what it takes, then you should give it a go. In the final analysis it may be better to try and fail than not to try at all if your attempt can be made on the basis of speculation, then so much the better. If however, it’s nothing but a gamble then maybe in the interest of your family it’s perhaps best avoided.

If your business is concerned only with the expatriate community, it is conceivable that the need to speak Spanish will not be as pressing. However, from time to time you will need the services of someone who can, in order to deal with some of the tasks which occasionally crop up.

You can find businesses for sale in Spain by reading the UK quality press, the English press in Spain and of course, the Spanish press if you speak the language.

Should you buy a business property as opposed to leasing it, one thing which is very important for you to bear in mind is that any debt, business or otherwise, which there may be against the property will be automatically transferred to you when you buy. You or your lawyer, it doesn't matter who, should ascertain that the business is free from all charges before you contemplate its purchase.

If your intention is to start or buy a Spanish business, you should take legal advice to ensure that you comply with existing legislation. Many don't bother and survive but others fall on stony ground. Minor breaches are often dealt with in a manner which would be considered quite severe in most parts of Northern Europe. You cannot just turn up in Spain and hang your sign on the door. Everything you intend to do is covered by a mass of laws, rules and regulations, ignorance of any is not a defence and if admitted your honesty may serve only to make the situation worse.

One of the easiest ways to own a Spanish business is of course to buy an existing one. The hard work should have been done and the necessary proof of its success should be in the paperwork somewhere. As with starting a business from scratch, you still need to do a considerable amount of research but of a different nature.

With an existing business you need to find out as much as possible about its history - how many times its changed hands and why? Is anything planned locally, which may affect its performance, such as motorways, building projects etc. If you are wise, you will not rely on the seller for this information.

One of the problems which exist when buying a business from a fellow countryman is both parties can become too friendly. Obviously the seller wants this because it helps but for the buyer, it causes defences to be lowered and much to be taken on board which remains unsubstantiated.

Previously mentioned, is that people don't sell thriving businesses without having a very good reason. If you ask, you will be given a reason but as to whether or not it’s the right one is for you to definitely find out. Unless you know for certain, believe nothing and check everything. Take professional advice but even then, don’t assume that it will be totally unbiased or absolutely accurate.

If it is possible, work for a while within the business you hope to buy. This way you will be able to compare "this year - this time last year" figures.

Finally, and again although previously mentioned, give very careful thought about starting a business with a partner or fellow director. In Spain, for whatever reason, most such arrangements fail. It is quite common for the one who can, to do most and eventually get fed up with the unproductive burden of a passenger. This can lead to problems which may be difficult if not impossible to resolve and in worse case scenarios, lead to the loss of the business together with much or all of the investment.

It is not unusual to find a Spaniard who speaks four or more languages and quite normal to find others who speak two or three quite fluently. The desire among Spaniards to learn foreign languages has increased considerably over the past 10 years and today it is believed that there are over 20,000 English teachers working in Spain. The good news is that there are not enough of them. If you hold the appropriate teaching certificates (depending upon which part of Spain you intend to live in) it may well be that you will find work almost immediately or in a relatively short period of time. In some of the major cities, such is the shortage of English teachers that some schools will accept them without formal qualifications.

If those that claim to know are correct, then Spain has more language schools than any other EU country, catering both for children and adults. As with all schools, standards vary and you should as far as possible examine carefully what's on offer before signing any contract.

Spanish parents, in common with most others, want their children to do well at school, particularly with English, the importance of which is well recognised. There is a constant demand among them for English teachers, particularly during the summer months when their children may not have done as well as was hoped for with their English studies during the term and perhaps not faired too well with the end of term examinations.

You can make your services known simply by placing small advertisements with local schools, universities and any retail outlet which will carry your advertisement. In time you will become established when "word of mouth" should ensure a steady stream of students willing and able to pay for your services.

If you want to live in Spain, can and are prepared to teach English, then you probably won't have too much difficulty in finding work. However, as previously mentioned, schools and similar institutions don't pay particularly well and you may find it necessary or desirable to supplement your income with private tuition. There may be expat parents wanting their children to do extra curricular lessons in English in order to keep up to date with the English curriculum as they are now being taught the Spanish one in School.

Obviously, the longer you are in the market, the easier it will become for you. When you are attracting levels of work which prove difficult to deal with, you may choose to review your fees, attracting an income better suited to reflecting the stress experienced by teachers of most subjects.

Advertising

One form of advertising which is apparently quite successful and which the writer has only ever seen in Spain, consists of taking an A4 size piece of paper, three quarters of which contains your advertisement and the remaining quarter which is carefully cut with a series of straight lines so as to produce 20 or so tabs still connected to the body of the page.

Print your telephone number or contact details on each tab, which can then simply be torn off by an interested person who can contact you at his or her leisure. No problems with looking for pen or paper, it’s already been done for them. You can also see how well your advertisement is working and ensure that the advertisements are replaced as and when necessary once the tabs are taken.

Supermarket & other shop notice boards are a good start but in Spain, this type of effective advertising can be seen almost everywhere you go.

Employing others

Many foreigners, the majority of whom are British, do well enough with their own business so as to warrant employment of others.

As their business grows and develops they look around for suitable employees to help and in the early days these are quite often recruited from the ranks of fellow countrymen. If the need for employees continues, recruitment is likely to involve Spanish Nationals.

When this happens you need to be very careful for a variety of reasons. Regardless of nationality, all of your employees will be entitled to all the benefits of Spanish labour law. You will be required to pay social security payments and redundancy payments if you have to dismiss a member of your work force.

Cash in hand

This is the method used by many employers new to Spain and is calculated to avoid the very heavy social security payments required for their staff. Paying cash is a total disaster and a time bomb. The only thing which is not known is when the disaster is going to befall the owner.

For example- If you employ someone for 12 months and pay him cash in hand for this period of time and he then claims that you have not paid him for the past six months you have a real problem.

You can hardly claim that no employment exists because he will be able to prove by witnesses who have seen him working that an employment most certainly did exist. Although hard to swallow, you need to pay his blackmail because if he involves the legal process you are going to face some pretty hefty fines, including some concerned with health and safety etc. This trick is quite often pulled by expats who know the situation well when it comes to cash in hand payments.

Holidays

Most employers are quite surprised to learn that their employees in Spain are entitled to 14 months salary for 11 months work. We say most employers.

This is to do with the Spanish custom of an extra month’s pay at Christmas and another months pay for their summer holidays. This is on top of the months paid vacation!

Having now got your employee, although the truth of the matter is more akin to him having got you, you will now learn of the difficulty which exists in firing him or her for anything less than serial murder or treason. In no time at all workers become protected and cannot be fired for any reason apart from gross incompetence or some act of illegality which makes their presence impossible for you. If you dismiss any employee for any other reason be prepared to pay out a large sum by way of redundancy.

Grants

More constructive perhaps than paying cash in hand may be to ask your lawyer to ascertain just what is available for you by way of government grants. At the last count there were several plans in place calculated to help small businesses and the foreigner starting an enterprise in Spain.

Make sure you take advice though. Once you employ anyone, regardless of any scheme this may be under, Spanish law is likely to consider the employment as legally binding.

Indefinite Contracts

Be very careful of temporary contracts which do not give a definite time period or state a date on which the contract lapses unless renewed. In some cases Spanish employees have taken advantage of this type of contract in a most effective way.

Having just employed a new worker you may find that he works for a while at his new job and then simply fails to show up for work. He does not contact you and you cannot contact him. Somewhat annoyed, you eventually replace him and determine to do better with your next recruitment effort.

Time passes and the incident is forgotten until one day, out of the blue you receive notification from the Spanish labour court that you are being charged with unfair dismissal by the missing employee. Suffice to say that he wants his Social Security paid up for the time he has been absent and he also wants damages of £10-15,000 for the "suffering" he has undergone!

Of course, there is no element of truth in any of this. The Spanish know this just as well as you do but they have a long history of coming down in favour of the employee despite overwhelming evidence which makes a mockery of many of the claims being made.

Fraudulent Claims

At this stage you now face a long and very expensive process to prove that the claim against you is not only without foundation but fraudulent. You may do as many others have done when faced with the same situation - accept the fact that you have been well and truly "turned over" and settle on the best possible terms to yourself.

The only protection you ever had against this happening was to have formally dismissed the worker when he failed to appear for work and it became obvious that he was not going to return. A telegram to his home address would have constituted legally acceptable notice for failing to appear at his place of work.

Back to where we started. It's not surprising that many employers just don't want to become involved with what really is a miserable situation when it comes to employing people. This situation is not at all uncommon throughout Spain but it is illegal.

Labour inspectors do check on establishments and fines start at £2,000 for each unregistered employee found. As in so many situations in Spain, employment requires advice from a competent expert in Spanish labour law

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