Spain vs Estonia for business formation or freelance working

There's a lot to think about, when you come to choose whether to define yourself as a freelancer, and/or form a limited company. And that's before you decide WHERE to do the latter!


Maya Middlemiss

a year ago | 4 min read

Are you a freelancer, or do you own/run a business of one?

That was an interesting question, because I do actually operate as a limited company, even though I usually describe my work as freelancing. But does it even matter, when deals get done between individual human beings, in any case? People do business with people, after all, not legal entities.

So I don’t feel the need to say to people "I run a writing business," not least because I feel like that raises all sorts of expectations in their mind about my activities and intentions for the future. I will never be a startup bent on growth - I simply prefer that my business as a separate legal entity does the statutory and contractual stuff, while I maintain a freelance mindset when it comes to being creative.

I was writing about that this week, while reflecting on the different structures you can choose to operate as a business within Estonia, where my company is legally located.

Obviously I was researching this for the article.and prior to that had a little need to understand the many different possible legal structures on offer. I never went to business school! A private limited company does well for 99% of us, and if not, then you need to get professional advice from someone who’s done a lot more due diligence than I did.

Of course if you operate in location-independently then you get to throw into the mix questions of where to constitute your business, something I’ve also been writing about, comparing options for freelancing AND opening a limited company in Spain as well as Estonia.

So, why have a company at all?

One question I still get asked though ,is why even have a limited company, if you’re not intending on scaling up or employing people..?

For me, there are a number of good reasons.

Firstly, I like the fact of limiting liability.

My business is a separate legal person from me – which has a number of potential advantages. As a journalist my regular beat is pretty non-controversial, but that doesn't mean it’s possible to indemnify every risk of somebody suing my backside off over some perceived damage. So, I like having that separation. I enter contracts as my business rather than myself personally, which offers some protection. I often see freelancers taking huge risks sometimes, with very little to protect them, if anybody decided they were negatively impacted by something they had done.

Obviously there’s the perception as well, that somebody is being invoiced by business and contracting with a business. So even if it’s still just one person, it comes across as a little more professional. I may not be interested in impressing people socially by telling them I own a business, but when I’m trying to get paid, that’s different!

Not only is it extremely easy and frictionless to raise an invoice from my Xolo portal, that invoice comes from my company BlockSparks OÜ rather than from me. So do any required reminders for payment (which can be automated - not me chasing, it's my business...)

Some of the startups I’ve worked with over the years have been pretty early stage and tenuous, but I am glad to say my record of bad debt is extremely low. I’ve no idea whether being able to invoice as a business has affected that or not, but I feel like it might help a little.

Separation of church and state

The divide helps me financially and practically too, because it means I can keep a very rigid separation in my head between what is a business asset or source of funds, versus my own personally.

It means I can smooth the income I pay myself out of the business to account for the typical freelancer rollercoaster, in both workload and cashflow – something I often found challenging as a freelancer, when everything was in one bucket. I don't go the full Profit First system of multiple accounts, but even being able to think about whether a bill is a pre-tax business expense, or the opposite, is valuable. It also helps, when thinking about assets too - while it makes little practical difference in day-to-day life whether something like a piece of tech is 'mine' or the business', it does make sense when considering renewals and servicing, etc.

This has interesting parallels too, when I write about the future of money, as opposed to work. The politics of cryptocurrency is all about decentralisation and distribution to the edges, divide and rule!

And the power of web3 brings everything full circle back around to the future of business anyway...Does anybody want to place a bet, on whether Spain or Estonia will be the first to add the Decentralised Autonomous Organisation (DAO), to their business formation options?

Not that it's likely to be a relevant choice for autonomous sole traders... But, it will represent the logical extreme, from my first experiences as owner of a Spanish limited company (in 2009) which involved rubber stamps and bound documentation.So, bring it on! And I hope I get to write about it when it happens 😎

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Created by

Maya Middlemiss







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