Breaking Startup Bureaucracy in Portugal

This is our first guest post, and it comes from the guys at Entrepreneurs Break (EB), a collective of people making sure that talking about startups is not plagued by bullshit. They are based in Lisbon but have organized talks, invited speakers and shared their collective experience in several Portuguese universities.

Instead of writing feel-good inspirational quotes, the EB team went ahead and made a guide to navigate the not-so-exciting seas of legal and fiscal matters. Clearly, if you want to build a company, these will be on your mind a lot, so this is precious help. The document was written with the help and supervision of professional accountants so you can be sure this is for real.

Recently Portugal and its entrepreneurial environment have showed up on radars from tech blogs and investors. The quality and availability of talent are in our favor and the red tape has been reduced greatly. If you have been thinking about starting a business in Portugal, this is the place to start to figure out how.

This guide was written by Pedro Carmo Oliveira, Co-founder @ Entrepreneurs Break

download the PDF

continue reading for the full text

Breaking startup bureaucracy in Portugal

1. Do I really need to register my company?

First of all, creating your startup is not registering your company. And, please don’t make a very common mistake first-time-entrepreneurs usually do: please don’t mix up ‘registering a company’ and ‘registering a brand’ as they are two different things. Take these into consideration before embarking on the #startuplife vessel.

This article serves best those who are already working on a product/service since we address the practicalities (including all the fun bureaucracy) about creating a company in Portugal. Nevertheless, we won’t be going into ‘how to’ details since there are many online resources out there. Still, essential links are supplied to make your life easier.
Disclaimer: all statements mentioned in this article were re-checked but they’re volatile due to governmental changes.

2. Official resources and official entities you need to interact with, and relevant
stakeholders

2.1 MOST IMPORTANT (AND OFFICIAL) LINKS:

Guia do Empreendedor (Entrepreneur’s Guide)
This government portal provides very detailed information on what are government obligations as well as yours.
Also, legal and commercial input is given, such as by-law deadlines for activities related to enterprise constitution, HR legalities, etc). Unfortunately this website does not have English translation.

Portal da Empresa (Business Portal)
Portal da Empresa is the national online platform for establishing a business in Portugal. So, starting a business has to go through this website (if you want to register online)… This is the place to go. You will bump into a step-by-step e-form and help is provided along the way. It’s fairly easy to go through it but takes some time. One afternoon should be enough.

2.2 PUBLIC ENTITIES YOU’LL HAVE TO DEAL WITH:

  • Autoridade Tributária e Aduaneira (tax and customs authority) that is part of Ministério das Finanças (Tax Office).
  • Instituto dos Registos e Notariado (registry and notary institute)
  • Segurança Social (social security)
  • ViaCTT (post-office portal)

2.3 STAKEHOLDERS INVOLVED (BESIDES PUBLIC AUTHORITIES):

  • Founders
  • TOC (chartered accountant)
  • Investor(s)
  • Lawyer: among your family & friends surely there’s a black sheep aka lawyer. No need to hire a law firm, you probably wouldn’t have money for that anyway
  • Bank

Summing up all these stakeholders, you’ll end up with, at least, ten entities you’ll have to deal with (directly or indirectly) so, before registering your company, try really hard to test your startup assumptions first.

3. High-level steps to register a company

3.1 STUFF REQUIRED FROM YOU:

  • Cartão de Cidadão (national electronic ID card)

If you don’t have one, you can apply for one at Loja do Cidadão (Citizen’s Store). My advice is to go to smaller shops with way less people like Azores regional government shops (Rede Integrada de Apoio ao Cidadão) because almost nobody goes there to apply for his/her national electronic ID card (Cartão do Cidadão).

  • USB card reader

You and your co-founders and investors will need this device to digitally sign the founder’s agreement (social pact). The card reader will cost you about 12,00 € so try to borrow it from someone you know because you will probably not use it a lot.
When authenticating online using the USB card reader, make sure you’re using a Windows PC and Internet Explorer (!). If this does not work then try Firefox and pray a bit. Chrome will probably not work and Macs and Linux… forget about it.

  •  Time & patience

Loads of it.

3.2 WHERE TO START:

  • Go to “Portal da Empresa” and register the company by following the steps mentioned over there.
  • The minimum social capital per founder is 1,00 €.
  • The whole online registration process will cost you 180,00 €. You’ll have to pay 50,00 % more if you decide to register through one of the IRN’s (Instituto dos Registos e Notariado) physical stores. There are several payment options; one of them is via ATM service.

4. Follow-up activities after registering your company

  • After registering the company, give all the data to your TOC (make sure you already got one before registering the company), which includes: founders’ agreement (also referred to as social pact), court you’re assigned to in case of legal issues, and link to the online permanent certificate of your recently created company. If you don’t perform these tasks in time you’ll get a fine.
  • Create a bank account and deposit the social capital.
  • Make sure you give your TOC all the bank paperwork including proof that the social capital was in fact deposited at your bank account.
  • Plus, don’t forget to set an activity start date (your TOC can set this date this for you) during the following days.

5. Cash and first payment related tips

  • Unfortunately we are still required to put the social capital in… banks (Deutsche bank vs Santander vs any other). Deutsche bank requires an initial deposit of around 200,00 € while others ask for higher sums, so check some banks and their conditions before picking one.
  • The typical TOC’s cost is:
    0,00 € until company starts earning cash. After that: a fixed fee and/or % commission of your sales;
    Monthly fee. The good thing about paying for a TOC service puts more pressure on the service provider since you’re a actual customer paying for a contracted service. But, please don’t forget to read the terms & conditions before hiring;

Register your company when you know for sure which date you will have to pay your first bill or send out the first receipt to one of your clients.

  • If you are going to register your company but don’t want to start paying social security bills right away, ask your TOC to postpone the company’s activity start date.
  • Never ever be late on payments or communicating something official (e.g. company start date) to any State entity. I assure you that the Portuguese State is a hypersonic machine when it comes to sending you a fine… it already happened to me.

6. Other quick tips

  • Find a really good TOC. Search for someone that really helps you out, knows what he/she is talking about and makes suggestions as well (pro-active person).Also, many TOCs won’t ask for a fee until your startup begins activity as a registered company.
  • Register your brand (http://www.marcasepatentes.pt) before registering your company. Registering a brand can be done by associating the brand to yourself; so, there’s no need at all to associate the brand to a company.
    Example: two co-founders that want to register a brand (name and logo) and associate the brand to themselves can do that by registering at the marcasepatentes.pt site and will cost them around 105,00 €.
  • ViaCTT is your company’s official mailbox so make sure you’re registered over there and notifications settings are correct.

Even though this is not at all the scope of this article, there are several books that can really help you validate your startup’s hypotheses and further prepare you to be a leaner entrepreneur:

Business Model Generation
Founder’s Dilemma
The Entrepreneur’s Guide to Customer Development
The Lean Startup


Pedro Carmo Oliveira
Co-founder @ Entrepreneurs Break

Um comentário em “Breaking Startup Bureaucracy in Portugal”

Deixe uma resposta

O seu endereço de e-mail não será publicado. Campos obrigatórios são marcados com *