Entrepreneurs and self-employed workers have spent a year living with a law that took a long time to arrive and has not quite convinced its intended beneficiaries. We review its main strengths as well as its shortcomings.
The Law was adopted by the Congress of Deputies on September 19, 2013, with the intention of laying the foundations for business creation. However, as Javier Benavente Barrón, founder and president of Alares and, above all, an entrepreneur and business owner, points out, "this law could have represented a significant quantitative leap in the creation of companies, as well as in strengthening the willingness and courage of many people to create their own jobs and their own businesses." Instead, Benavente, who is also president of the Spanish Association of Personal Services Companies, believes "that this has not been the case" because its "potential was reduced to a minimum until July of this year." Even so, Benavente points out that "this is better than nothing."
Main shortcomings
Julia Sainz, head of Avalmadrid's New Business Department, also believes that it was a necessary law and that it has some good features, but also some flaws that will need to be corrected. Among the main shortcomings, Sainz points out that the cash-basis VAT scheme has not worked well. This measure, one of the Law's main pillars, was intended to allow SMEs and self-employed workers to defer VAT payments until they received payment for the invoice. In fact, in September, Finance Minister Cristóbal Montoro admitted that the proposal was not working as expected, among other reasons because of opposition from large companies.
The CEOE points out that the law "has served as a stimulus or incentive to some extent, but not as a decisive boost, since measures encouraging hiring and reductions in Social Security contributions have failed, as have initiatives aimed at training in entrepreneurship. The organization states that "we business owners miss a chapter on the underground economy aimed at encouraging it to emerge and become regularized. Javier Benavente adds that "obviously, the Law we have is a step forward, although clearly insufficient; it lacks the boldness and courage to address this issue once and for all. Positive results? Yes. A decisive boost to job creation? No, nowhere near what it could be, although something is better than nothing; it would be worse if nothing had been done."
Flat-rate contribution
The president of Alares does not agree with the approach taken in the Law regarding a flat-rate contribution for a fixed period, regardless of the business's results. "Time flies, and businesses take a long time to start producing any results," says Benavente. For the business owner, the focus should be on "turnover or profits; that is what really matters, since that is what pays contributions to the state, not how long it takes to achieve them—especially during a period like the one we are living through, when consumption has fallen to incredible levels and being able to pay the rent or even afford to go to the market becomes quite an adventure. There is no consumption, so there are no sales." For Benavente, "it is obvious that those who make the laws have never been entrepreneurs, let alone business owners," and he regrets that proposals put forward by business associations are ignored.
Bureaucracy: "legislate less and better"
The CEOE believes that greater administrative efficiency is necessary. "For business owners, it is essential that there be a profound simplification of administrative procedures to foster and promote the competitiveness and efficiency of our legal framework. We have said it on various occasions: there should be fewer laws, and they should be better."
According to the organization, "Spanish companies must deal with four different levels of government (local, regional, national, and European), which makes it even more necessary for us to try to establish a clearer, simpler, more efficient, and coordinated legal system. Otherwise, our companies will be disadvantaged when operating in an increasingly competitive and global environment."
Julia Sainz of Avalmadrid also highlights this need, since, as she points out, "the procedures for creating companies have been reduced, but business owners' perception is that it is still more difficult to create a company in Spain than in other countries."
Imitate those who do it well
Javier Benavente says that "the government should copy measures that have already been successfully implemented in other countries and try to innovate and improve them so that we can be even more competitive than those countries that are currently ahead." Specifically, he points to France and other European countries where schemes such as the "Auto-Entrepreneur" exist. For the president of Alares, this measure has demonstrated its success through the creation of millions of jobs and significant revenue for the state.
What about financing?
Another of the Law's fundamental pillars was financing. The law was intended to strengthen the public system of guarantees and public backing; however, Sainz argues that more financing alternatives could be opened up, such as greater involvement by the ICO.
Source: Dirigentes Digital
http://www.dirigentesdigital.com/articulo/pymes-y-emprendedores/216702/ano/1/ley/emprendedores.html
Written by: Sandra Moya
