Starting a company can be an excellent decision for those seeking financial autonomy and growth opportunities. However, to maximize the benefits, it’s essential to understand the advantages of owning a company, the deductible expenses, and the different taxation regimes available in Portugal.
Advantages of Having a Company
- Autonomy and Professional Growth – Having a company allows you to manage your own business, make strategic decisions, and expand your operations according to your goals.
- Tax Benefits – Depending on the chosen legal structure, you can benefit from more advantageous tax regimes than those applicable to self-employed individuals.
- Access to Financing – Companies generally find it easier to obtain bank credit and investment to expand their businesses.
- Separation of Assets – In the case of incorporated companies, the personal assets of the partners/shareholders can be protected from the company’s debts.
- Greater Credibility – A company conveys greater trust to clients, suppliers, and investors, facilitating strategic partnerships.
Deductible Expenses
To optimize the company’s tax burden, it’s fundamental to know the expenses that can be deducted from taxes. Some of the main ones include:
- Personnel expenses: Salaries, meal allowances, social security contributions, and professional training.
- Rent and facility charges: Office rent, water, electricity, and telecommunications.
- Materials and equipment: Purchase of computers, furniture, and other essential goods for the activity.
- Travel expenses: Fuel, transportation, and accommodation for business trips.
- Marketing and advertising: Investments in marketing campaigns, social media, and website development.
- Consulting and external services: Fees for accounting, legal, and specialized advisory services.
The correct classification and justification of these expenses are crucial to avoid problems with the Tax Authority.
Taxation Regimes
In Portugal, there are different taxation regimes, and it’s important to choose the most suitable one for your type of business:
Simplified Regime
- Aimed at small businesses and self-employed individuals with a turnover of up to €200,000.
- Taxation is based on a calculation using coefficients, without the need for organized accounting.
- Simple and easy to manage, but may not be advantageous for businesses with many expenses.
Organized Accounting Regime
- Mandatory for companies with turnover exceeding €200,000.
- Taxation is based on the company’s actual profit, allowing the deduction of all eligible expenses.
- Requires the support of a certified accountant.
Special Taxation Regime for Groups of Companies (RETGS)
- Applicable to corporate groups holding at least a 75% stake in other companies within the group.
- Allows the consolidation of results from group companies for Corporate Income Tax (IRC) purposes, optimizing the overall taxation.
Choosing the appropriate taxation regime can significantly impact the company’s tax burden and profitability.
Conclusion
Having a company in Portugal brings numerous advantages, from greater autonomy to tax benefits. However, it is crucial to know the deductible expenses and the most suitable taxation regime for your business. With strategic planning and support from accounting professionals, you can ensure efficient management and optimize your tax burden.
If you need support in creating and managing your company, FA Accounting is ready to help you with personalized solutions. Contact us and discover how we can make your business more efficient and profitable!
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