When the entrepreneur has decided on the business he wants to start in Portugal, he has to put it into practice. One of the first steps is to choose the type of company that best matches the business.

There are two main types of companies: (1) companies with only one partner and (2) companies with two or more partners.

1 – Companies with only one partner

In Portugal it is possible to start a company with just one partner, regardless of whether the partner is Portuguese or foreign. The foreign citizen does not need to live permanently in Portugal nor does he need to associate with a Portuguese, as in many other countries.

The sole partner has two types of company at his disposal:

Sole Entrepreneur – a person invests his own assets in the business, the liability of the partner being unlimited.

This corporate model has some advantages, namely, no initial share capital is required; and the start of business activity is simpler and less bureaucratic. However, the partner will have the disadvantage of having his personal assets allocated to the business, potential debts may affect the family and, even more, he will have greater difficulty in obtaining bank credit.

One-partner company – a single-partner partnership with liability limited to the value of its share.

In this type of company, the single partner has several advantages, such as, for example, the partner run alone the company and the investment in the share capital is very small (one euro is enough). The partner’s personal assets and the company’s assets remain completely separate, so personal assets are not responsible for corporate debts.

The disadvantages of this type of company are some, such as, for example, it is mandatory to hire an accountant (called Technical Official of Accounts), the bureaucratic process of starting the company, among others. Obtaining bank credit is more difficult, as it is for the individual entrepreneur.

2 – Types of companies with two or more partners

In Portugal, it is possible to start a partnership in which the partners are only foreign citizens, or between foreign and Portuguese partners. There is no limitation or legal condition for the exercise of business activity depending on nationality, regardless of country. Foreign citizens enjoy the same rights, duties and the same business freedom as Portuguese citizens.

Partnership by Shares – a company with two or more partners whose capital is divided by shares (percentages).

This type of company has several advantages: there is no minimum limit to the company’s capital; there is an absolute separation between the company’s assets and the personal assets of each partner, each partner is only responsible up to the limit of the value of their share in the share capital, and it is easier to obtain bank credit.

The disadvantages of this type of partnership are: more complicated bureaucratic procedure to start the company, it is mandatory to hire an accountant (called a technical officer of Accounts) and keep a very organized accounting, each partner does not run the company alone, among others.

Joint-stock company: a company in which the share capital is divided into shares that can be freely traded. Generally, it has a minimum of 5 members.

This type of company has some very interesting advantages, namely, ease of selling the company’s shares, easier access to bank credit and investments, the liability of each shareholder is limited to the value of the subscribed shares only and, once again, there is total separation between the shareholder’s personal assets and the company’s assets.

The joint-stock company has some disadvantages, such as the company’s capital cannot be less than €50,000.00 and must be divided into shares of equal par value, monitoring outside the company is mandatory; the start-up procedure is complicated and expensive. It is also important to consider that the joint-sotck company requires the hiring of a “Revisor Oficial de Contas” who supervises the accounting processed by the “Técnico Oficial de Contas”.

In addition to the types of companies described, there are some other more specific types that are suitable for more specific situations.