How to start own business
The Ministry of Labor has developed an information guide for third-country nationals, providing information on the right of residence in Romania, labor and social protection, etc. This guide can be found at the following address:
Also, the website of the National Trade Register Office provides details regarding the professions regulated by special laws that can be practiced without registering in the Trade Register, but also regarding those for which the law specifies the conditions in which they can be practiced. Thus, the following would be someof the liberal professions practiced under special laws:
- financial officer;
- authorized accountant, etc.
The professions to be registered would be:
- driving instructor;
- marketing agent, etc.
The full list can be consulted at the following address:
Those who want to start their own business may address the Chamber of Commerce of the county in which he / she is located. Within the Chamber of Commerce one can access the Unique Business Assistance Service. Thus, a consultant can provide assistance with the following activities:
- verify and reserve the company name;
- identifies the main activity object and secondary objects;
- draws up and completes all documents and forms necessary for the establishment of the company (constitutive act, declarations, contract, compulsory forms, etc.);
- prepares and defends the file for the Trade Registry Office etc.
The type of company chosen depends broadly on the type of business carried out. The following options are available: Self-Employment, joint stock company, limited liability company etc. Each type of company has certain advantages and disadvantages. Below there are the advantages and disadvantages of the most representative types of company (self-employment and Limited liability):
For the self-employed, the advantages are the following:
- lower starting costs (about 250 RON for fees charged by the Trade Registry);
- low administration costs;
- accounting can be done even by the person who requested the self-employment and there is no need for an accrediting accountant. When choosing to hire an accountant, the costs of accounting services are much lower than in the case of a LLC;
- only some statements will be submitted to NAFA (National Agency for Fiscal Administration);
- a self-employed person may have employees;
- the self-employed can benefit any time from the profit, without sharing dividents or submitting the year into official documents; of course, the taxes to be paid for that profit will be taken into account;
- the process of terminating self-employment is much simpler and requires lower costs;
- a self-employed has only three obligations to the state budget: 16% tax on net income, 5.5% gross health income, and 31.3% of the monthly income declared by the insured (income for which the person chooses to be insured) contributions to the Health Insurance Fund;
- there are certain categories of self-employed who do not owe retirement contributions.
Disadvantages of the self-employed:
- in order to be self-employed, it is mandatory to submit documents proving the applicant’s training and professional experience in the requested field of activity: diplomas, certifications, employment records proving professional experience, etc;
- NACE codes are the only ones that can be selected for the activity in which the self-employment authorization is sought; this means that a self-employed cannot work in any field;
- Health and Insurance Funds contributions will be paid if the self-employed does not register any early income; in this case the taxes regarding the minimum wage will be set as the basis for calculation;
- in case the self-employed registers debts, the liability of the individual is maximum. In order to pay off all debts, entrepreneurs can even sacrifice their personal belongings.
LLC (Limited Liability Company)
The advantages of this legal form are:
- it is not mandatory to submit documents proving the training and professional experience of the company’s founders in any field of activity;
- you can choose more than one NACE code to carry out more economic activities in different areas;
- there are no limits regarding activity;
- if debts are registered, the liability of each associate is limited to the share capital he or she has deposited at the time of the establishment of the company;
- LLCs have access and can participate in private or public auctions;
- starting with February 1, 2013, all companies that earn less than € 65,000, irrespective of the number of employees, pay only 3% of income tax (replacing 16% of their profit). The advantage is clear for companies with lower costs, and in some cases, this micro tax makes a LLC more advantageous from a tax point of view than even a self-employed.
- young entrepreneurs (less than 35 years old) can discover the benefits of the program for the establishment of LLC-D companies, where they can apply for non-repayable support from the state (up to EUR 10,000) and may benefit from various tax cuts, such as those set up by the Trade Registry;
The disadvantages of this legal form are:
- the establishment of a LLC requires a higher investment than with a self-employed. The fees charged by the Trade Registry are 550 lei (in the case of the establishing a LLC with a unique associate);
- in establishing a LLC, a minimum shared capital of 200 lei is mandatory;
- accounting activities are performed by an authorized accountant who shall make and sign all declarations and reports submitted to the tax inspection bodies; accounting services costs are higher than for a self-employed and, in general, administration costs are higher.
- In addition to the 16% profit tax (or 3% on income in the case of a micro-enterprise), the LLC associates will be required to pay another 16% dividend tax. It is the only legal way to get money from the company (as opposed to the self-employed. Moreover, if an associate does not have other resources of income, such as a salary, the state will apply and retain the social security contribution from the dividends;
- closing a LLC involves a complicated procedure, which takes a long time (about 2 months) and requires higher costs.
The necessary documents for starting companies can be found at the following addresses:
- to set up a LLC
- for starting up an Individual Enterprise
- for starting up a Family Enterprise
Iaşi Chamber of Commerce and Industry has made a scheme for the easier understanding of the procedures regarding starting up a company (fig.1):