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A client who owned a consulting business was weighing whether to work as an autónomo or incorporate an SL (Sociedad Limitada) for tax and liability-limitation reasons. We compared the tax burden: the progressive IRPF of up to 47% for sole traders versus the flat 25% Corporate Tax (Impuesto de Sociedades) — with a reduced 15% rate for newly created companies during their first two profitable years — and analysed the additional accounting and administrative costs of an SL. The client incorporated the SL, gaining limited liability and a lower effective rate on reinvested profit while keeping flexibility over dividend distributions.
